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

Limited Time Offer

25%

Off

Get Premium ESG-Investing Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Stephen

4 months ago

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

upvoted 0 times

...

Annelle

4 months ago

I thought it was about profit, not revenue.

upvoted 0 times

...

Verda

5 months ago

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

upvoted 0 times

...

Jannette

5 months ago

Totally agree, it's revenue that matters here.

upvoted 0 times

...

Latricia

5 months ago

It's based on revenue, right?

upvoted 0 times

...

Herminia

5 months ago

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

upvoted 0 times

...

Elly

6 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.

upvoted 0 times

...

Tambra

6 months ago

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

upvoted 0 times

...

Elly

6 months ago

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

upvoted 0 times

...

Annabelle

6 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.

upvoted 0 times

...

Carolann

6 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.

upvoted 0 times

...

Annamae

6 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.

upvoted 0 times

...

Lashon

6 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.

upvoted 0 times

...

Lillian

11 months ago

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

upvoted 0 times

Javier

10 months ago

C) net assets

upvoted 0 times

...

Cora

10 months ago

B) revenue.

upvoted 0 times

...

Arletta

11 months ago

A) profit.

upvoted 0 times

...

Kimberlie

11 months ago

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

upvoted 0 times

Dalene

9 months ago

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

upvoted 0 times

...

Noelia

10 months ago

C) net assets

upvoted 0 times

...

Billy

10 months ago

B) revenue.

upvoted 0 times

...

Lorean

10 months ago

A) profit.

upvoted 0 times

...

Sherell

12 months 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.

upvoted 0 times

...

Dan

12 months 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.

upvoted 0 times

Ronald

11 months ago

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

upvoted 0 times

...

Ronald

11 months ago

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

upvoted 0 times

...

Dawne

12 months 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.

upvoted 0 times

...