Polishing knowledge from Mock tests

Question 1

4 possible risk responses under the standards COSO ERM framework

Answer 1

Avoid: eliminate the risk or prevent it from happening.

Reduce: lessen the likelihood or impact of the risk.

Share: Transferring or spreading the risk (e.g., through outsourcing, insurance, or hedging).

Accept: Acknowledging the risk and deciding to proceed without any mitigation, typically because the cost of mitigation outweighs the potential impact.

Question 2

sus linked loan VS sus linked bond

Answer 2

Sustainability bonds need to combine environmental and social objectives to be considered sustainability bonds. Sustainability-linked loans are not required to have social and environmental performance targets.

Question 3

Types of ecosystem services

Answer 3

Regulating services protect or enhance ecosystems, and depend on supporting services.

Supporting services, such as species habitat and genetic diversity, are fundamental conditions that enable the existence of all other services

Provisioning services generate resources,

Cultural services represent non-material benefits that humans enjoy,

Question 4

Green vs climate vs sustainable finance

Answer 4

Green finance refers to sustainable finance that focuses on environment-related risks and opportunities that often include climate change but not necessarily.

Climate finance refers exclusively to financial flows relating to climate change, whether mitigation or adaptation.

Question 5

shadow carbon price VS internal carbon price

Answer 5

Internal carbon price (e.g., a company internal tax on emissions that is invested into sustainability projects)

Shadow carbon price (an estimated cost of carbon used for project selection purposes). Using this metric, a company may select one project over a rival project with a higher carbon intensity

Question 6

Halocarbons + example

Answer 6

Halocarbons are a powerful class of GHGs, with high GWPs. Though halocarbons exist in very small quantities, they have a disproportionately high influence on radiative forcing.

Question 7

Map of how sus relates to climate, and other concepts

Answer 7

Climate finance falls under the ESG landscape per figure 1 (p.33)

Question 8

green vs sustainability vs social bonds

Answer 8

Sustainability bonds are a combination of green and social bonds. Sustainability bonds must simultaneously address both environmental and social objectives.

Green bond proceeds are allocated for environmental projects

Social bonds are bonds with earmarked proceeds for projects that will bring social benefits.

Question 9

Def of scope 3 emissions for a city

Answer 9

occur outside the city boundary as a result of activities taking place within the city boundary.

Question 10

N2O, CO2, CH4, Halocarbons - sorted by their GWP

Answer 10

CO2 - 1
CH4 - 28
CO2 - 273
Halocarbons - 100s to 1000s

Question 11

Who designed RCP scenarios

Answer 11

The RCP-based scenarios designed by the IPCC

Question 12

Who designed transition risk scenarios

Answer 12

IEA

Question 13

methane GWP

Answer 13

28

Question 14

N2O GWP

Answer 14

roughly 265

Question 15

Ozone gwp

Answer 15

N/A - Ozone depletes relatively rapidly and has no GWP

Question 16

HalocRBONS gwp

Answer 16

from 100s to 1000s

Question 17

Why do we use topographical / geolocation data

Answer 17

Understand exposure

Question 18

5 transition risks

Answer 18

Policy risk – New climate laws, carbon taxes, bans on fossil fuels.

Technology risk – Obsolete tech due to greener alternatives.

Legal risk – Litigation over emissions or climate damage.

Market risk – Demand shifts away from carbon-heavy products.

Reputational risk – Public backlash for polluting behavior.

Question 19

Indirect physical risks

Answer 19

Supply chain risk
Maybe others

Question 20

Green loan principles

Answer 20

1. Use of proceeds (eligibility for green projects)
2. Process for project evaluation and selection
3. Management of proceeds (funds must be tracked)
4. Reporting (annually, on the use of proceeds, expected impact, description of green projects)

Question 21

Ratchet mech

Answer 21

NDCs are reevaluated and strengthened every 5 years at COPs

Question 22

COP 15 where it was and outcomes, when it was

Answer 22

2009
While COP15 (Copenhagen) ended with no binding treaty, it was the first COP to establish the aspirational goal that global warming be kept to below 2°C..

Question 23

Bank of England case study read

Answer 23

.

Question 24

4 TCFD disclosure pillars

Answer 24

1. Govnance - oversight by management / board
2. Strategy (scenario analysis)
3. Risk Management
4. Metrics & targets (ghg emissions, target setting)

Question 25

5 key features of TCFD recommendations

Answer 25

1. Forward-Looking Information** - use of **climate scenario analysis** - understand resilience of business strategies under different climate scenarios 2. Financial Impact Focus** - Disclosures should link **climate risks/opportunities** to the company’s **revenues, expenditures, assets, liabilities, and capital**. --- 3. Mainstream Financial Filings** - including disclosures in **annual reports or public financial filings**, not separate sustainability reports. 4. Consistent and Comparable** - Aims for disclosures that are: - **Standardized** across industries - **Comparable** across companies --- 5. Sector-Agnostic but Scalable** - The framework is: - Applicable to **all sectors** - Scalable for **small to large companies** - Includes **sector-specific guidance** for high-risk industries (e.g., energy, transport, banking) --- 6. Covers Risks *and* Opportunities** - Goes beyond risk mitigation: - Identifies **growth, innovation, and investment** opportunities from the low-carbon transition

Question 26

CC and ESG relation

Answer 26

Climate change and ESG do share an interrelationship yet the correct and accurate description of this relationship is one climate change is not an exclusively ESG issue,

Question 27

Debt costs def

Answer 27

It's essentially the interest rate or yield the bank pays on its own debt.

Question 28

Distribution of current emissions by continent

Answer 28

Of current (as of 2017) emissions at regional levels, Asia accounts for over half (53%), with North America at 18%, and Europe at 17%.

Question 29

rel btw SSP and RCP

Answer 29

SSPs by themselves do not show emission pathways. SSPs can combine with multiple RCPs. SSPs have not previously been included in IPCC reports but will be from 2021 onwards. Combined SSP-RCP trajectories (solid lines) follow similar paths as RCP trajectories

Question 30

SASB founded in...

Answer 30

SASB it was founded in 2011,

Question 31

LEAP approach

Answer 31

Framework of TNFD framework Locate - identify where business interacts with nature Evaluate dependencies and impacts on nature Assess - R and opportunities from N related impacts Prepare - for disclosure with TNFD framework

Question 32

Double materiality + who introduced it

Answer 32

Double M = fin M + impact M fin M - how sus issues impact fin performance of the company impact M - how company's activities impact society, env, economy GRI introduced double materiality.

Question 33

3 major gases of the atmosphere

Answer 33

Nitrogen (N₂) ~78.08% Oxygen (O₂) ~20.95% Argon (Ar) ~0.93% CO2 - ~0.042% (~420 ppm, rising)

Question 34

Deadline for Net 0

Answer 34

2050

Question 35

Carb sink + example

Answer 35

environments or systems that absorb more carbon than they release Forests Undisturbed soils, wetlands, argicult lands Grasslands Urban green spaces CCUS

Question 36

Which scenario SSP RCP are we now on?

Answer 36

SSP2 (bus as us) + RCP 4.5 (2 -2.5 increase temp)

Question 37

Orderly, disorderly transition, hothouse scen

Answer 37

Orderly - We start reducing emissions early and follow a predictable, steady path. LOW transition risk. Lower physical R Disorderly - Delayed / inconsistent action, then drastic change later. HIGH transition risk, higher physical R Hothouse: no transition. HIGH physical risk.

Question 38

Hazards vs drivers

Answer 38

Hazard - event / process that can cause harm (heatwave, drought, rising sea level) Driver - underlying factor that influences likelihood / intensity of a hazard (GHG emissions, deforestations, etc.)

Question 39

Exposure vs vulnerability

Answer 39

Exposure - degree to which smth is exposed Vulnerability - degree to which a system / community / asset can experience harm A low-income community with poor infrastructure being more vulnerable to flooding, even if it's exposed to the same flood hazard as wealthier areas.

Question 40

Emission intensity f

Answer 40

GHG emissions / unit of output.

Question 41

Where do Chinese green loans majorly go?

Answer 41

The vast majority of Chinese green loans went to clean transport (45%) and clean energy (29%) (section 5.3.2).

Question 42

Nature Based solution def

Answer 42

“Actions to protect, sustainably manage, and restore natural or modified ecosystems, that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits.” e.g. planting trees on rooftops

Question 43

When was def of sus development offered

Answer 43

late 1980s by the Brundtland Commission. This definition became widely accepted "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

Question 44

According to the COSO ERM framework, tracking performance for ESG and climate risks consists of three sub-components

Answer 44

risk identification risk assessment and prioritization implementation of risk responses

Question 45

Clean development mechanism

Answer 45

By Kyoto - Developed countries to invest in emission-reduction projects in developing countries and get carbon credits

Question 46

Issuing tariff on a country def

Answer 46

When a country issues a tariff on another, it imposes a tax on imported goods to increase their cost.

Question 47

Fiduciary duty def

Answer 47

the legal obligations that one party (like an asset manager, lawyer, or trustee) has to act in the best interest of another party (like a pension fund or client).

Question 48

Externality def

Answer 48

unintended side effects of an economic activity that affect third parties.