Chapter 5: New Form of Finance

Question 1

Conventional Finance Includes these areas

Answer 1

Risk and Profitability

Question 2

Sustainable Finance Includes these areas

Answer 2

Risk, Profitability and Sustainability

Question 3

ESG Financial Reporting is… (3)

Answer 3

1. Sustainable Finance
2. Company Responsibility
3. Investor Information

Question 4

3 Finance Areas in Sustainable Finance

Answer 4

1. Solidarity
2. Social Responsibility
3. Green

Question 5

Solidarity Finance
and examples

Answer 5

Socially useful projects
Examples: Job placement, combat inadequate housing

Question 6

Socially Responsible Finance

Answer 6

Reconciles financial, social and environment performance

Question 7

Green Finance
and example

Answer 7

Environmentally-friendly projects
green bonds

Question 8

Conventional Finance Outlook (2)

Answer 8

• Saving on most profitable project
• No consideration of social or environment

Question 9

Green Financing Outlook (2)

Answer 9

1. Savings into projects not harming environment
2. Circular, efficient, clean economy

Question 10

Impact Financing

Answer 10

Investments made to generate positive, measurable, social and environmental impact with a financial return

Question 11

Impact Financing Targeted Returns

Answer 11

range of returns from below market to market rate, depending on investors’ strategic goals

Question 12

Impact Financing Addresses these real world challenges (4)

Answer 12

1. Sustainable agriculture
2. renewable energy
3. microfinance
4. affordable and accessible basic services

Question 13

Socially Responsible Investment (SRI) Funds breakdown (4)

Answer 13

• Financial Assets
• Portfolio Management
• Include ESG Criteria in decision making
• Financial objectives with sustainable development objectives

Question 14

Impact Funds breakdown (4)

Answer 14

• economic projects
• Financial for ecological transition
• tangible results
• measurable/observable targets for positive impact

Question 15

EU Action Plan Objective

Answer 15

Reorient capital flows towards sustainable investment to achieve sustainable and inclusive growth

Question 16

EU Action plan risk management

Answer 16

Mainstreaming sustainability into risk management

Question 17

EU Action Plan Vision

Answer 17

transparency and long-term vison in financial and economic activity

Question 18

European Sustainable Finance System. Order (CSRD, Taxonomy and SFDR) from Top to Bottom

Answer 18

SFDR -> CSRD -> Taxonomy

Question 19

Taxonomy is the ___ of the European Sustainable Finance System and becoming ____ in other regions

Answer 19

Heart
Mandatory

Question 20

Green House Gas (GHG) activites (4)

Answer 20

1. Industries
2. Power Generation
3. Agriculture
4. Transports

Question 21

3 Scopes of Green House Gases

Answer 21

1 = Direct Impact
2 = Indirect Impact
3 = Indirect impact down value chain

Question 22

GHG Scope 1: Direct Impact

Answer 22

Production Machinery, transport, furnaces, boilers

Question 23

GHG Scope 2: Indirect Impact

Answer 23

Energy purchased by company (electricity, steam)

Question 24

GHG Scope 3: Indirect Impact not in scope 1 and 2

Answer 24

upstream activities: raw materials Downstream: product end, employee and business travel

Question 25

2 types of risks with Climate change

Answer 25

Physical and Transition

Question 26

Physical Risks Category 1-2

Answer 26

1. High 2. Chronicle

Question 27

Physical Risks Category 1: High

Answer 27

Climate related natural disasters

Question 28

Physical Risks Category 2: Chronicles

Answer 28

Rising average temperature, seas level, precipitation changes

Question 29

Physical Risks Category 1: High Financial impact (3)

Answer 29

- micro level - destruction of capital/business - shocks in space/time

Question 30

Physical Risks Category 2: Chronicles Financial impact (3)

Answer 30

- macro level - decline in productivity - diffuse

Question 31

Transition Risks Category 1-4

Answer 31

1. Regulatory 2. Technological 3. Consumer Behaviour 4. Transition Dynamic

Question 32

Transition Risks Category 1: Regulatory

Answer 32

Climate policy risks, non compliance

Question 33

Transition Risks Category 2: Technological

Answer 33

Tech innovation or lag

Question 34

Transition Risks Category 3: Consumer behaviour

Answer 34

Change in consumer behaviour, distrust, reputation

Question 35

Transition Risks Category 4: Transition Dynamics

Answer 35

Interaction between players around the transition dynamic

Question 36

How to Assess Planetary Bounds (3)

Answer 36

1. 9 biospheres of Earth stability 2. Not exceeding planet thresholds 3. Scientific Data

Question 37

Stakeholder Material Analysis Matrix X-Axis Y-Axis Boxes

Answer 37

X-Axis : Company Relevance Y-Axis : Relevance For Third Parties Weak, Medium, Strong Boxes