Sustainable-Investing Exam Dumps - Sustainable Investing Certificate(CFA-SIC) Exam

Impact investingaims to generatemeasurable social or environmental outcomesalongside financial returns, specificallytargeting underserved populationsor critical social challenges—often referred to as the“bottom of the pyramid.”CFA’s sustainable investing framework identifies this direct pursuit of positive impact (often quantified through metrics like jobs created or lives improved) as the hallmark of impact investing, differentiating it from broader thematic or social investment approaches.

The best time to influence terms and disclosures in private debt markets isbefore the debt is issued—this is when lenders (investors) have the most leverage to negotiate terms and insist on ESG-related covenants or disclosures. Once funds have been allocated (or when supply of funds is ample), it’s much harder to impose new conditions.

CFA materials highlight thatpension fundsdominate the landscape of the largest asset owners globally. They managetrillions of dollarsof assets—often dwarfing insurance company general accounts or sovereign wealth funds in sheer asset base and influence on capital markets. Pension funds’ size and long-term focus are central to their prominent role in sustainable investing and stewardship.

This definition directly aligns with the CFA’s explanation ofdigital disruption—the process wherenew digital innovations or business models challenge and displace existing market players or product/service value propositions. Automation and AI are specific tools within digital disruption but do not encompass the broader concept.

Within the CFA framework,exclusionary (negative) screeningreflects values-based investment preferences—often driven by institutional asset owners such as pension funds, endowments, or family offices. These owners define criteria based on ethical, religious, or regulatory stipulations and typically require their asset managers to implement these screens in mandates. While asset managers execute the screens at the portfolio level, the initial preference originates from the asset owner. Sell-side practitioners do not typically adopt such exclusionary mandates.

Double materiality reporting involves evaluating how sustainability issues impact a companyandhow the company impacts society and the environment. TheUnited Nations Sustainable Development Goals (SDGs)are widely used as areference frameworkfor assessing and disclosing these broaderpositive or negative impacts. While the other frameworks address specific human rights and due diligence issues, SDGs provide acomprehensive sustainability frameworkrelevant to impact reporting.

Voting policies are critical inactive equity(due to direct share ownership) and important even inpassive/index fundsfor stewardship purposes. In contrast,active fixed-incomeinvestments rarely involve voting rights, making them the asset class where voting policies are least likely to be relevant.

CFA materials note thatlarger companies tend to have more resourcesfor detailed ESG reporting, which caninflate ESG ratingscompared to smaller companies. This is often referred to as areporting or disclosure biasrather than purely a performance difference. The other statements do not align with the recognized biases in ESG credit ratings.