CFA Institute ESG-Investing Exam - Topic 3 Question 11 Discussion

Actual exam question for CFA Institute's ESG-Investing exam

Question #: 11
Topic #: 3

According to the framework of the Task Force on Climate-Related Financial Disclosures (TCFD): the formula for carbon intensity at the portfolio level weighs emissions based upon an issuer's:

Aprofit.

Brevenue.

Cnet assets

Show Suggested Answer

Suggested Answer: C

Monitoring focuses on tracking a company's performance and ensuring that the investment aligns with ESG objectives, leading to more efficient capital allocation based on data-driven insights. (ESGTextBook[PallasCatFin], Chapter 6, Page 283)

by Rasheeda at Mar 03, 2025, 07:14 PM

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Stephen

6 months ago

Yeah, I've heard it's tied to net assets too.

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Annelle

6 months ago

I thought it was about profit, not revenue.

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Verda

6 months ago

Wait, is it really just revenue? That seems off.

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Jannette

7 months ago

Totally agree, it's revenue that matters here.

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Latricia

7 months ago

It's based on revenue, right?

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Herminia

7 months ago

I feel like I’ve seen this before, and it was tied to revenue. I hope I’m recalling that correctly!

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Elly

7 months ago

I’m a bit confused. I thought it might relate to net assets, but that doesn’t sound right now that I think about it.

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Tambra

7 months ago

I remember practicing a question like this, and I think it was definitely about revenue. That seems to make the most sense.

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Elly

7 months ago

I think the carbon intensity is based on revenue, but I'm not entirely sure. It could also be profit, right?

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Annabelle

7 months ago

Ugh, I'm drawing a blank on the TCFD framework details. Time to quickly review my notes and see if I can jog my memory on how they calculate carbon intensity. Gotta get this one right.

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Carolann

7 months ago

Ah, I remember learning about this in class. The TCFD framework weighs emissions based on the issuer's revenue, not their profit or net assets. I'm confident that B is the correct answer here.

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Annamae

7 months ago

Hmm, I'm a bit unsure about this one. I know the TCFD is about climate-related financial disclosures, but I can't quite recall the specifics of their carbon intensity formula. I'll have to think this through carefully.

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Lashon

8 months ago

This seems like a straightforward question about the TCFD framework. I'll focus on remembering the key details about how they calculate carbon intensity at the portfolio level.

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Lillian

1 year ago

I bet the correct answer involves some kind of 'green accounting' voodoo magic. These TCFD folks are a mysterious bunch.

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Javier

12 months ago

C) net assets

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Cora

12 months ago

B) revenue.

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Arletta

1 year ago

A) profit.

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Kimberlie

1 year ago

B) revenue, definitely. If they're basing it on profit, that would just reward the companies cooking the books!

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Dalene

11 months ago

B) revenue, definitely. If they're basing it on profit, that would just reward the companies cooking the books!

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Noelia

11 months ago

C) net assets

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Billy

11 months ago

B) revenue.

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Lorean

11 months ago

A) profit.

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Sherell

1 year ago

Hmm, I'm torn between B) and C). Guess I'll have to do some more research on the TCFD framework to be sure.

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Dan

1 year ago

I'm going with C) net assets. That seems like a more comprehensive way to measure the issuer's overall financial standing and impact.

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Ronald

1 year ago

I think B) revenue might also be a good indicator of the issuer's financial performance.

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Ronald

1 year ago

I agree, C) net assets would give a better understanding of the issuer's financial impact.

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Dawne

1 year ago

I think it's B) revenue. Makes sense to weigh emissions based on an issuer's revenue, since that's a better indicator of the scale of their operations.

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Rory

1 year ago

I'm not sure, but I think it might be C) net assets because it represents the value of the company's assets.

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Paris

1 year ago

I agree with Brynn, because revenue reflects the scale of operations and therefore the emissions impact.

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Brynn

1 year ago

I think the answer is B) revenue.

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