CFA ESG Chapter 4 Questions & Answers 100% Correct!!
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CFA ESG Chapter 4
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CFA ESG Chapter 4
Long-term social changes impact... - ANSWERSgovernments, societies and economics, permanently over a long period of time.
Can environmental trends have a social impact? - ANSWERSYes, environmental trends can have a severe social impact as well.
In terms of social impact, give an example of on...
CFA ESG Chapter 4 Questions &
Answers 100% Correct!!
Long-term social changes impact... - ANSWERSgovernments, societies and economics,
permanently over a long period of time.
Can environmental trends have a social impact? - ANSWERSYes, environmental trends
can have a severe social impact as well.
In terms of social impact, give an example of one that happens because of global
warming - ANSWERSIf we get global warming, we will see migration like we have never
seen before from the places most effected. E.g., climate change impacting the bottom
2/3rds of the population.
What is the most important step when incorporating social factors in investment
decision making? - ANSWERSFocus on the most controversial/ financially material.
Remember, this book is on investment decisions, so your starting point is to focus on
the most controversial / financially material.
What was the impact of COVID-19 on companies in terms of "reshoring"? -
ANSWERSDue to supply chain impacts, many companies reduced their supply chain
risk by relocating production of strategic importance back to high-wage countries.
How would you go about incorporating social factors into the investment process? -
ANSWERS1. Determine which social factors are most controversial or financially
material in each industry.
2. Assess how exposed certain companies are to these sector and country specific
issues.
3. Assess critical social issues in their supply chain.
Name the four social factors that impact internal stakeholders. - ANSWERS1. Human
capital development
2. Working conditions, health & safety
3. Human rights
4. Employment standards and labour rights
Name the four external social factors that impact stakeholders. - ANSWERS1.
Stakeholder opposition and controversial sourcing.
2. Product liability and consumer protection.
3. Social opportunities.
4. Animal welfare.
, What must you remember with each of these eight issues? - ANSWERSThat they are
all very much sector and industry specific and some will apply a lot more to certain
industries than others.
What does human capital development cover and what are the 6 ways it can be done?
Remember, it is about how a company enhances their human capital that they already
have. - ANSWERSOrganisational activity aimed at increasing performance of
workforce.
1. Well-equipped workforce
2. Operate under latest standards and regulations
3. Remain motivated
4. Generate good culture
5. Enhances social inclusion, active citizenship and personal development
6. Increases self-sustainability, competitiveness and employability
How do you integrate human capital development into investment analysis -
ANSWERSNeed to assess, does the business...
1. Determine skills needed to meet strategic objectives.
2. Assess skills gap.
3. Assess value proposition to attract/retain/develop talent. This is time to make an
acquisition.
4. Measure KPIs over time to see if it's working.
What does health and safety cover? - ANSWERSNeed to invest in the workplace to...
1. Protect the workforce from accidents and fatalities
2. Limit workforce exposures to minimise risk of occupational diseases or injury.
3. Foster working conditions that promote well-being and mental health.
Who is entitled to human rights? - ANSWERSEveryone, without discrimination.
What is the most important foundation of international human rights? - ANSWERSThe
Universal Declaration of Human Rights (UDHR - 1948).
Where do most human rights violations occur compared to where they are rarer? -
ANSWERSMost human rights violations occur deep within supply chains, very rarely
are they in the company directly invested in.
What three pillars do the UN Guiding Principles on Business and Human Rights
encompass? - ANSWERSProtect human rights, Respect human rights, Remedy - i.e.,
employees right to sue a firm.
What does the United Nations Guiding Principles on Business and Human Rights
(UNGPs) do? - ANSWERSTakes the Universal Declaration of Human Rights and puts it
into guidance for companies and governments.
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