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Certified ESG Analyst CESGA Exam QUESTIONS AND CORRECT
ANSWERS| ACCURATE REAL EXAM WITH FREQUENTLY TESTED
QUESTIONS|ALREADY A GRADED|GUARANTEED PASS|LATEST
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what were the pioneers of green bonds? multilateral development banks or corporate issuers? - CORRECT ANSWER- multilateral development banks
what do the GBs promise investors? - CORRECT ANSWER- environmental benefits
why can GB promise investors environmental benefits - CORRECT ANSWER- provide a direct link between the financing side and the investment side
why the green bond market has boomed in recent years? - CORRECT ANSWER- bc of the paris agreement in 2015
what makes the global commitments to a low carbon transition? - CORRECT ANSWER- the paris agreement in 2015
when is the paris agreement - CORRECT ANSWER- 2015
what is green bond framework? - CORRECT ANSWER- a document that clearly articulates the proposed use of proceeds for the bonds
is green bond framework provided before or after the issuance? - CORRECT ANSWER- before
can green bond framework be assessed by an independent third-party opinion? - CORRECT ANSWER- yes
when does the sovereign bonds start to emerge? - CORRECT ANSWER- 2016, keep increasing untill 2022
what makes the largest portion of global green bond market? - CORRECT ANSWER- non financial corporate
what is the largest deal in development bank & what is the amount - CORRECT ANSWER- EIB, 4.3B USD
what is the largest deal in financial corporate & what is the amount - CORRECT ANSWER- BOC, 4.7B USD
what is the largest deal in government-backed entity & what is the amount - CORRECT ANSWER- EU, 6.9B USD
what is the largest deal in local government & what is the amount - CORRECT ANSWER- province of ontario, 2.1B USD
Sustainability Bond Guidelines (SBG)
what are the four pillars that the leading green bonds framework rest on? - CORRECT ANSWER- 1. use of proceeds
- process for project evaluation and selection
- management of proceeds
- reporting
what do the principles recommend to improve transparency? - CORRECT ANSWER- 1. publish a green bond framework
- engage external reviews
when was the first green bond issued? who issued that? - CORRECT ANSWER- 2007, by European investment bank to fund climate-related projects
what is the total issuance volume of green bond in 2020 - CORRECT ANSWER- more than 1T USD
when was the first sovereign GB? who issued that? What did they fund? - CORRECT ANSWER- 2017, the french treasury issued to fund the country's energy transition project
who leads the way in the insurance market? supported by which two regulation and policy? - CORRECT ANSWER- Europe, supported by European Green Deal and the regulatory effort (EU Green bond standard)
what is the main advantage of Green bonds? - CORRECT ANSWER- their risk is no different from the general issuer risk
what do you call when the return of the ESG bonds is lower than the non-ESG bonds - CORRECT ANSWER- greenium
Is EU Green bond standard involuntary or voluntary? - CORRECT ANSWER- it serves as a voluntary high-quality standard to promote the growth and environmental ambitions in the green bond market
when does the EU GBS apply? - CORRECT ANSWER- 21 Dec 2024 (Regulation includes a transitional period of 1 year)
what are the four things listed in the Green Bond Standard? - CORRECT ANSWER- 1. Voluntary but restrictive
- New requirements
- External reviewers
- Increased transparency
- ivovlve coupon step-ups
- occasionally (optional), step-downs linked to the achievement of pre-defined, time bound SPTs
what is an innovative example of SLB? - CORRECT ANSWER- Chile's issuance of its first sovereign SLB
what are the details of Chile's sovereign SLB? amount & maturity year & amount of coupons step-ups - CORRECT ANSWER- USD2B, 2042 maturity deal, coupon step- ups of up to 25bps total
what are the details of the coupon step-ups of Chile's issuance of sovereign SLB? - CORRECT ANSWER- - failure to cut GHG emissions by 15.4% by 2023 would incur a coupon step-up of 6.25bps
- failure to reach peak emissions between 2020 and 2030 would incur a coupon step-up of 6.25 bps
- failure to increase renewables installed capacity by 60% by 2032 would incur a coupon step-up of 12.5 bps
SIBs marks has continued to be on the rise during recent yers. How many bonds are launched in how many countries? and how many captial was raised? - CORRECT ANSWER- 239 bonds across 40 countries, and up till July 2024, US$517.13 million of capital was raised
where are SIB currently concentrated? developed countries or developing countries? How many are issued in low and middle income countries? - CORRECT
ANSWER- they are concentrated in developed countries, with only 33 impact bonds issued in low- and middle-income countries
what is the aim of public-private-partnership? - CORRECT ANSWER- to improve a social outcome through the collaboration of government, service providers and external investors
what are the sectors contracted by impact bonds - CORRECT ANSWER- - social welfare: 79
- employment: 70
- Health: 45
- Educaiton: 45
- criminal justice
what is impact investors - CORRECT ANSWER- they are willing to cover the upfront costs and assume the performance risk of a social or health programme
what is the main critique of SIBs? - CORRECT ANSWER- due to the complex financial and contractual mechanisms, SIBs may be an expensive method of operating social programmes
describe the risk of SIBs - CORRECT ANSWER- due to their contingent payment structure, SIBs are more similar to structured products or equity in terms of investment risk
Textiles (73)
when is the new EU Deforestation regulation effective? - CORRECT ANSWER- 30 Dec 2024
what is the detail of the new EU deforestation Regulation? - CORRECT ANSWER- mandates the due diligence for companies dealing in various products like cattle, cocoa, coffee, palm oil, rubber, soya, and wood to prevent deforestation
what is the difference between the new EU Deforestation Regulation and the EU timber regulation? - CORRECT ANSWER- it broadens its scope to include other commodities linked to deforestation
under the new EU Deforestation Regulation, what should companies do? - CORRECT ANSWER- businesses must ensure their products listed in the regulation including beef, leather, chocolate, furniture, palm oil derivatives and paper-based iteams, are 'deforestation-free' when entering or being exported to the EU market
Businesses, either operators or traders will be required to ensure that products are 'deforestation-free'
in 2023, there is an increase in the share of asset managers implementing ESG criteria in commodities, what is the percentage of the increase? - CORRECT ANSWER- 15%
what is one of the challenges with regard to investing in commodities - CORRECT ANSWER- exchange-traded commodity contacts (on oil, gas, metals, agriculture products)
what is the most used RI technique? - CORRECT ANSWER- exclusing the most controversial groups of commodities
which regulations help corporates to look into their supply chain when they are trying to invest in commodities? - CORRECT ANSWER- CSDDD Corporate Sustainability Due Diligence Directive at EU-level
what are the two ways to invest in commodities? - CORRECT ANSWER- 1. supply chain considerations
- direct investments in companies that are engaged in commodity extraction and trading
what is the advantage of invest in companies that are engaged in commodity extractiona and trading - CORRECT ANSWER- they can differentiate between good and bad practices & take resource scarity considerations into account from a thematic ESG investment perspective
what are the top drivers of ESG considerations in commodities in 2023 - CORRECT ANSWER- 1. Concern about ESG factors
- Reputation or regulatory risk
- high energy prices
what is the example of 'insufficient captial/investment to prevent the emergence of sustained bottlenecks' - CORRECT ANSWER- refineries have shown increasing demand for second-generation biofuels feedstocks -> led to an increase in used cooking oil prices by 90% between mid 2022 and Jan 2023
under which protocal, countries are allowed to trade the allowance of emissions of units not 'used' - CORRECT ANSWER- under the article 17 in the Kyoto protocol
how do people call the market that companies used to trade allowance of emissions? - CORRECT ANSWER- carbon market
what are the two types of carbon markets? - CORRECT ANSWER- 1. compliance carbon markets
- voluntary carbon markets
what is compliance carbon markets - CORRECT ANSWER- mandatory regime with legally binding emissions reduction targets set by governments for firms. Usually operating under the cap-and-trade system offering carbon allowances
what are the examples of compliance carbon market? - CORRECT ANSWER- EU ETS
California Cap and Trade
South Korea ETS
China ETS
what is voluntary carbon markets - CORRECT ANSWER- subsidising companies that voluntarily reduce carbon footprint in abatement projects by providing carbon offsets
what are the examples of voluntary carbon markets - CORRECT ANSWER- gold standard
vertified carbon standard
Climate action Reserve
Plan Vivo
EcoAct
how many carbon trading schemes are there in the globe? and how many global GHG emissions they are covering - CORRECT ANSWER- 36, 18%
in 2023, what was the record value of the global carbon market? - CORRECT ANSWER- US $949bn
what are the various perspectives real estate can have an impact on? - CORRECT ANSWER- - rehabilitation of public spaces
- affordable housing
- social housing
- care centeres
- green buildings
what has an enormous impact on real estate? - CORRECT ANSWER- climate change
why climate change has an enormous impact on real estate - CORRECT ANSWER- climate events cna damage real estate, but also, policy interventions to tackle climate change and to adapt to it can impact huge costs
what is a growing concern in real estate? - CORRECT ANSWER- risks are not fully captured in property value and home buyers are oblivious of certain risks
among PRI signatories, which asset class has the highest proportion of managers not having guidelines describing ESG implementation - CORRECT ANSWER- hedge funds
How much did the interest in ESG in hedge funds grow from 2018 to 2022 - CORRECT ANSWER- 8% to 30%
what are the investment strategies that have integrated ESG factors / what are the key strategies for ESG integration - CORRECT ANSWER- equity long/short
activist-oriented
credit strategies
what is the percentage of the private debt market transactions in Europe were ESG-linked loans in the first three quarters in 2022 - CORRECT ANSWER- 25%
what is the percentage of asset managers reported having set net-zero targets and percentage of asset managers tracked the carbon intensity in 2023 - CORRECT ANSWER- 35% and 75%
what are the top climate-related metric tracked by managers - CORRECT ANSWER- - carbon intensity of investee companies
- absolute emissions
- forward looking transition metrics (eg target setting)
what is the detail of equity long/short of investment strategies - CORRECT ANSWER- consider ESG factors when taking positions in companies that are deemed overvalued (poor ESG performance could be an additional factor)
what is the detail of activist-oriented of investment strategies - CORRECT ANSWER- invest in companies looking to influence their strategy from an ESG perspective looking to maximize value for shareholders.
what is the detail of credit strategies of investment strategies - CORRECT ANSWER- consider ESG factors when assessing pricing of credit spreads
what is the biggest advantage of private debt - CORRECT ANSWER- - investor can be selective and specific about the use of proceeds
- investor has more direct controls and ways to engage with debtors
what are the particular challenge in the private debt market - CORRECT ANSWER- - the nascent data collection
UN Sustainable Development Goals (SDGs) - CORRECT ANSWER- 17 goals: No Poverty, zero hunger, good health and well-being, quality education, gender equality, clean water and sanitation, affordable and clean energy, decent work and economic growth, industry, innovation, and infrastructure, reduced inequalities, sustainable cities and communities, responsible consumption and production, climate action, life below water, life on land, peace justice and strong institutions, and partnerships for the goals
Which answer is MORE correct..: Mainstreaming does define the trend toward ...
1.- Integration of environmental aspects in traditional investment process.
2.- Integration of environmental and company profitability aspects in traditional investment process.
3.- Integration of social and environmental aspects in traditional investment process.
4.- Integration of all sustainability aspects in traditional investment process.
Investor Initiatives - CORRECT ANSWER- * 4.- Integration of all sustainability aspects in traditional investment process.
Raising Public Awareness
Competitive Advantage
Gathering of Information and knowledge
Prevent regulation
Barriers to ESG - CORRECT ANSWER- Examples:
Perceived lack of business case ( 74.1% of reports)
ESG data (72.3%)
Absence of clear standards and definitions (66.1%)
Lack of investor education/knowledge (45.5%)
Missing/Unclear regulation (39.3%)
EU Action Plan Regulatory Framework Players - CORRECT ANSWER- High level expert group on sustainable Finance (HLEG)
Technical Expert Group on Sustainable Finance (TEG)
Sustainable Finance Platform
EU Action Plan (Ten Reforms in three areas) - CORRECT ANSWER- Reorient capital flows toward sustainable investment, in order to achieve sustainable and inclusive growth:
