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

Engagement teams focusing on governance issues are often organized by sector because governance practices and challenges can vary significantly across industries, making a sector-based approach more effective. (ESGTextBook[PallasCatFin], Chapter 6, Page 283)

The ISSB (International Sustainability Standards Board) aims to standardize sustainability reporting by aligning it with financial reporting timelines.

Why B (published with financial statements) is correct:

ISSB requires sustainability disclosures to be integrated with financial reporting to improve transparency.

Why not A?

Sustainability disclosures are not yet universally required to be audited—this remains an evolving requirement, unlike financial statements, which must be audited.

The SASB Materiality Map (Option C) is designed to identify material ESG issues for specific industries and companies, helping investors:

Understand which ESG issues impact financial performance.

Assess and compare ESG risks across sectors.

Option A (Only covers equities) is incorrect because SASB standards apply to multiple asset classes.

Option B (Portfolio-level exposure) is more relevant to ESG rating agencies rather than SASB’s framework.

Greenwashingoccurs when a company or investormisrepresents or exaggeratestheir ESG commitments to attractcapital or public approvalwithoutsubstantially integrating ESG principles into decision-making.

Why C (Investor 3) is correct:

Investor 3 focuses on ESG reporting to attract capital, rather than makingmaterial improvementsin ESG performance.

This suggests that ESG isused as a marketing toolrather than being fully embedded in investment decision-making.

Companies and funds that highlight ESG in disclosures without actual performance improvementsfacegreenwashing risksand potential regulatory scrutiny (e.g.,EU SFDR anti-greenwashing rules).

Example:A fund that claims to be "carbon neutral" but continues investing in fossil fuel companies without credible transition plans.

Why not A (Investor 1)?

Investor 1 is conducting ESG risk analysis, which is alegitimate approachto ESG integration.

Identifying risks fromenvironmental regulations(e.g., carbon taxes, emissions limits) is acore part of financial risk managementand not greenwashing.

Why not B (Investor 2)?

Investor 2 integrates ESG into business value creation(e.g., improving employee retention through better working conditions).

This isa concrete, measurable ESG practicerather than an attempt to mislead stakeholders.

The ICGN Model Mandate provides guidelines for institutional investors on governance, ESG integration, and stewardship practices.

Why B (Disclose ESG risks in portfolios) is correct:

The ICGN Model Mandate states that investment managers should assess and disclose ESG risks that affect their portfolios.

This ensures transparency and helps asset owners understand risk exposures.

Why not A or C?

A is incorrect—disclosing voting activity alone does not fulfill the full engagement disclosure requirement.

C is incorrect—while long-term themes are relevant, ESG risk assessment is a more explicit requirement.