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  1. Home
  2. CFA Institute
  3. Certificate in ESG Investing
  4. CFAInstitute.ESG-Investing.v2025-07-09.q208
  5. Question 1

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Question 1/208

Which of the following is most likely to cast doubt on a director's independence?

Correct Answer: A
Holding cross-directorships can cast doubt on a director's independence because it creates potential conflicts of interest. When a director serves on multiple boards, especially if those companies have business relationships or overlapping interests, it may compromise their ability to act independently and objectively. This issue is recognized in various corporate governance codes and guidelines, which highlight the importance of directors being free from relationships that could interfere with their judgment.

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Other Question (208q)
Q1. Which of the following is most likely to cast doubt on a director's independence?...
Q2. An asset manager considering environmental risks would most likely use:...
Q3. Which of the following statements about voting is most accurate?...
Q4. An investment in a fund developing low-cost community housing is best categorized as:...
Q5. Negative screening for ESG factors in portfolios:...
Q6. Performance materiality:
Q7. Over the last several years a company has traded at an average price-to-earnings ratio (P/...
Q8. Engagement teams with a history of governance-led engagement are most likely to be organiz...
Q9. Which of the following statements is aligned with the Pensions and Lifetime Savings Associ...
Q10. To fall in scope of mandatory compliance with the EU's Corporate Sustainability Reporting ...
Q11. Using the "shades of green" methodology developed by the Center for International Climate ...
Q12. When accounting for a critical weakness in a company's environmental management process, a...
Q13. Which of the following is best described as a risk management framework for assessing envi...
Q14. Investment in fossil fuels is permitted under:...
Q15. A discount retailer facing a consumer boycott due to its poor working conditions will most...
Q16. Which of the following is most likely a secondary source of ESG information?...
Q17. Which of the following technologies is most likely to be viewed by investors as a strategi...
Q18. Which of the following is an example of indirectly sourced primary ESG data?...
Q19. Which of the following is most likely a reason for concern regarding the quality of a comp...
Q20. An ESG scorecard for sovereign debt issuers has the following information: Country 1 No ca...
Q21. A situation in which a company making good strides toward more sustainable practices but i...
Q22. According to the United Nations Principles for Responsible Investment (PRI), modern fiduci...
Q23. With respect to ESG integration, adjusting financial model inputs based on an evaluation o...
Q24. According to the UK Investor Forum which of the following is a key success factor for effe...
Q25. Regrowing previously logged forests is most likely an example of climate:...
Q26. Which of the following tests defines the internal theoretical cost on carbon emissions to ...
Q27. The European Union (EU) Ecolabel:
Q28. Which of the following statements about materiality is most accurate?...
Q29. Which of the following is most likely an example of a negative externality?...
Q30. The Task Force on Climate-related Financial Disclosures (TCFD) recommends measuring carbon...
Q31. In France, shareholders eligible for being awarded double voting rights are:...
Q32. Among asset owners, which of the following is most likely a challenge to ESG integration?...
Q33. A common characteristic of the EU Paris-Aligned Benchmarks and the EU Climate Transition B...
Q34. With regard to screening, exclusions that are not supported by global consensus are best d...
Q35. Using surface water in a business activity is best characterized as a:...
Q36. One of the steps in developing an ESG scorecard is to:...
Q37. ESG integration should be considered as part of:...
Q38. Jurisdictions are most likely to impose extraterritorial laws in relation to:...
Q39. The rules that can be used to construct ESG exchange-traded funds (ETFs) include:...
Q40. Which of the following statements about the assessment of ESG risks is most accurate?...
Q41. Which of the following subclasses is most likely to have the highest level of ESG integrat...
Q42. Which of the following is the main driver of stewardship efforts?...
Q43. Negative screening of tobacco-related companies is best grouped into which of the followin...
Q44. A company's external auditor formally reports to the:...
Q45. When screening individual companies, a practice of avoiding the worst ESG performers best ...
Q46. The consulting firm McKinsey & Company includes transparency as part of which of the f...
Q47. When assessing the investment risk of a coal mining company, the concept of double materia...
Q48. Which of the following is most likely a characteristic of good corporate governance?...
Q49. With regards to the climate, financial materiality:...
Q50. If a company faces significant environmental regulations, investors would most likely decr...
Q51. Which of the following is a challenge in ESG integration?...
Q52. With respect to ESG integration in private equity, which of the following is most likely a...
Q53. Which of the following has the long-term goal to keep the increase in global average tempe...
Q54. Scopewashing is best described as a situation in which a company's management:...
Q55. A portfolio manager of an ESG fund attempting to outperform the general market is most lik...
Q56. According to the Global Sustainable Investment Alliance (GSIA), as of 2020, the largest su...
Q57. A discount retailer facing high employee turnover due to poor working conditions will most...
Q58. Which of the following challenges do asset managers face in integrating ESG issues?...
Q59. When incorporating ESG factors into valuation inputs, which of the following would most li...
Q60. In the investment management industry, triple bottom line accounting theory:...
Q61. With respect to ESG reporting, company management has:...
Q62. According to the Capitals Coalition, the stock of renewable and non-renewable natural reso...
Q63. The divergence of ratings among ESG providers most likely....
Q64. For investors in corporate fixed-income securities, engagement is most likely to be effect...
Q65. Which of the following is a challenge of integrating ESG analysis into investment processe...
Q66. Which of the following is a form of individual engagement?...
Q67. In contrast to engagement dialogues, monitoring dialogues most likely involve:...
Q68. Which of the following statements regarding ESG ratings in the credit area is most accurat...
Q69. With respect to ESG reporting by investment managers, the 2020 version of the UK Stewardsh...
Q70. A fund focused on investing in the best ESG performers relative to industry peers across a...
Q71. Which of the following challenges is most likely related to the attribution of returns to ...
Q72. Globalization has led to a reduction in:
Q73. Which of the following countries is most likely to use a two-tier board structure?...
Q74. According to market reviews conducted by the Global Sustainable Investment Alliance at the...
Q75. In Australia, a managing director of a company is the:...
Q76. Which of the following would most likely be the initial step when drafting a client's inve...
Q77. Which of the following statements is most accurate? Faith-based Islamic investors:...
Q78. Exclusionary screening:
Q79. Which of the following statements regarding optimization of portfolios for ESG criteria is...
Q80. When integrating ESG analysis into the investment process, deriving correlations on how ES...
Q81. Which of the following statements about corporate governance is most accurate?...
Q82. Excluding investment in companies with a history of labor infractions is best categorized ...
Q83. Which of the following statements about the effects of globalization are most likely corre...
Q84. Which of the following statements about proxy voting is most accurate? The majority of ass...
Q85. Which of the following is most likely the easiest to demonstrate in attributing returns to...
Q86. When employing an ESG integration strategy, asset managers are most likely to:...
Q87. The International Corporate Governance Network's (ICGN) Model Mandate Initiative requests ...
Q88. With reference to data security and customer privacy issues, a technology company in the r...
Q89. Scorecards for ESG analysis are most likely:
Q90. In Japan, additional statutory auditors are individually appointed by the:...
Q91. Which of the following ESG investment approaches would most appropriately be used to const...
Q92. Which of the following statements about social trends is most accurate?...
Q93. Which of the following engagement styles is most likely closely aligned with passive inves...
Q94. Natural language processing (NLP) is employed as a tool in ESG investing to:...
Q95. Under which perspective did the Freshfields Report argue that integrating ESG consideratio...
Q96. Company reporting and transparency are led by the:...
Q97. Will including additional ESG constraints in a portfolio optimization model most likely af...
Q98. When searching for an asset manager with an ESG approach, in the request for proposal (RFP...
Q99. Which of the following is a success factor characteristic of investor collaboration? Inves...
Q100. With respect to exclusion policies, which of the following falls outside of the traditiona...
Q101. Which of the following most likely outlines an investment firm's ESG integration approach?...
Q102. Alignment of an investment manager's performance against a long-term ESG investor's object...
Q103. Interest by retail investors in responsible investing has:...
Q104. Which of the following types of ESG bonds provide financing to issuers who commit to futur...
Q105. Which of the following is best described as a form of engagement that requires institution...
Q106. By 2030, the European Strategy for Plastics in a Circular Economy will require:...
Q107. An ESG scorecard is best categorized as:
Q108. Which of the following investor types most likely has the shortest investment time horizon...
Q109. The signatories of the Kyoto Protocol are committed to:...
Q110. A meat-processing company does not sell its pork products in predominantly Muslim countrie...
Q111. Research on ESG integration in strategic asset allocation has tended to focus most on:...
Q112. Which of the following is one of the six environmental factors in the "Materiality Map" by...
Q113. To produce a rating, an ESG rating provider will most likely apply a weighting system to...
Q114. Alignment of an investment manager's performance against a long-term ESG investor's object...
Q115. From a company investment perspective, which of the following is the most significant soci...
Q116. During the decommissioning phase of a company's mining project, the government tightens re...
Q117. As policies on ESG issues and financial regulation across countries reach maturity, which ...
Q118. Which of the following emphasizes that short-term investment performance will be of limite...
Q119. Creating long-term stakeholder value by implementing a strategy that focuses on the ethica...
Q120. The UK's Green Finance Strategy identifies the policy lever of financing green as...
Q121. Which of the following is an example of quantitative ESG analysis?...
Q122. A challenge to ESG integration at the asset allocation level when using mean-variance opti...
Q123. Which of the following private equity investors is most susceptible to allegations of gree...
Q124. With respect to ESG reporting:
Q125. When portfolio managers upload their portfolios onto third-party ESG data provider online ...
Q126. Which of the following ESG investment approaches is most likely applicable when investing ...
Q127. An analyst derives correlations to determine how ESG factors might impact financial perfor...
Q128. Which of the following organizations is not a provider of both ESG-related and non-ESG-rel...
Q129. From a company investment perspective, which of the following is the most significant soci...
Q130. Under the UK listing regime, Class 1 transactions:...
Q131. With respect to the current state of ESG disclosure globally, issuer reporting frameworks ...
Q132. EU regulators manage the independence of audits for public companies by:...
Q133. Which of the following statements regarding ESG tools is most accurate?...
Q134. Over the past several years, the proportion of sustainable investing relative to total man...
Q135. Which of the following countries have a joint audit requirement that all public interest e...
Q136. For developed markets, an increase in inequality between the richest and the poorest popul...
Q137. According to the Stockholm Resilience Centre, which of the following planetary boundaries ...
Q138. Which of the following is part of the ASEAN Taxonomy for an economic activity to be consid...
Q139. The investor initiative FAIRR focuses on screening out companies...
Q140. Corporate governance in the UK is notable for:...
Q141. Asset owners can reflect ESG considerations through corporate engagement by:...
Q142. Are the following statements relating to investor engagement accurate? Statement 1: Invest...
Q143. The mechanism of dual-class shares most likely favors:...
Q144. Compared with younger people, older people are more likely to have:...
Q145. In the European Union, publicly listed firms are obliged to change auditors at least every...
Q146. A drawback of ESG index-based investment strategies is that they:...
Q147. Which of the following is most likely associated with positive screening?...
Q148. Which of the following is responsible for ensuring the composition of a company's board is...
Q149. Which of the following best describes a mature ESG regulatory framework? A government putt...
Q150. Compared to developed markets, ESG investing in emerging markets is most likely characteri...
Q151. The adoption of ESG investing by retail investors has generally been:...
Q152. Which of the following sectors has the highest percentage of corporate profits at risk fro...
Q153. Corporate engagement and shareholder action is the predominant investment strategy in:...
Q154. The debate around regulating the social media industry is based on risks associated with:...
Q155. According to the Brunel Asset Management Accord, which of the following is least likely a ...
Q156. In the ESG rating process, an assessment of risk, policies, and preparedness is best categ...
Q157. For engagement strategies to deliver meaningful results in a cost-effective and time-effec...
Q158. An analyst reads the following statements about wastewater treatment plants: Statement I: ...
Q159. In which country is the proposal of shareholder resolutions most common?...
Q160. The EU Paris-Aligned Benchmarks and EU Climate Transition Benchmarks both:...
Q161. Which of the following social factor scenarios is most likely to affect revenue forecastin...
Q162. Which of the following statements about ESG integration in fixed income is most accurate?...
Q163. New technologies have enabled workers to:
Q164. Determining which ESG issues are material:
Q165. Corporate disclosures in line with the recommendations of the Corporate Sustainability Rep...
Q166. According to Mercer Consulting, which of the following asset classes has the highest avail...
Q167. According to market reviews conducted by the Global Sustainable Investment Alliance at the...
Q168. Which of the following statements regarding ESG screening is most accurate?...
Q169. An investor requires a social return and will tolerate a sub-market financial return. This...
Q170. Which of the following is an example of secondary data?...
Q171. Under the disclosure guide for public equities published by the Pension and Lifetime Savin...
Q172. ESG integration is most likely enforced by regulating:...
Q173. The potential impacts of climate risk on asset allocation strategies are:...
Q174. With respect to the current state of ESG disclosure globally, issuer reporting frameworks ...
Q175. A company reduces water usage and increases usage of more expensive resources after regula...
Q176. When searching for an asset manager with an ESG approach, in the request for proposal (RFP...
Q177. A family office is best categorized as an:
Q178. Jevon's paradox refers to a situation where improvements in efficiency are offset by incre...
Q179. Suppose the average price-to-earnings (P/E) ratio for the financial industry is 10x. A fin...
Q180. Considering the climate-related impacts on a company's financials and the impacts of a com...
Q181. Which of the following statements about stewardship codes is most accurate? Stewardship co...
Q182. The mechanism of dual-class shares most likely favors:...
Q183. With regards to environmental analysis in fixed income investing, a country-level analysis...
Q184. The social factor most widely incorporated by institutional investors in their analysis is...
Q185. Which sector is likely to experience the highest share price increase through reduced carb...
Q186. Engagement is best described as a dialogue:
Q187. Measuring a portfolio's carbon intensity using the European Union's Sustainable Finance Di...
Q188. Which of the following is most likely categorized as an external social factor?...
Q189. Pension funds are most likely classified as:
Q190. Which of the following is a form of individual engagement?...
Q191. A company's Scope 2 emissions are:
Q192. low risk exposure to this factor in the short run...
Q193. Which of the following statements about corporate governance is most accurate? Companies w...
Q194. Companies subject to the EU Taxonomy are required to:...
Q195. A bond that funds offshore wind projects is most likely a:...
Q196. All else equal, a higher discount rate applied to a company's discounted cash flow (DCF) a...
Q197. Which of the following best describes a mature ESG regulatory framework? A government putt...
Q198. Which of the following principles of the UK Stewardship Code could be considered controver...
Q199. When an external auditor's performance materiality level is 60% of its overall materiality...
Q200. Carbon intensity is calculated as Scope 1 plus Scope 2 emissions divided by:...
Q201. According to Greenhouse Gas (GHG) Protocol Standards, the emissions associated with suppli...
Q202. Which of the following would most likely see its estimate of intrinsic value increased by ...
Q203. In contrast to active investors, passive investors are most likely to:...
Q204. Compared to traditional index-based funds, ESG index-based funds typically have:...
Q205. Institutional investors achieve their stewardship and engagement objectives in practice th...
Q206. In which of the following circumstances is Free, Prior, and Informed Consent (FPIC) most a...
Q207. For a board to be successful the most important type of diversity needed is:...
Q208. Which of the following investor types most likely prefers exclusions as an ESG approach?...
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