Free Preparation Discussions
MENU
CFA Institute Sustainable-Investing Exam Questions
- Topic 1: Introduction to ESG Investing: This section of the exam measures skills of Investment Analysts and Portfolio Managers and covers the foundational concepts of environmental, social, and governance (ESG) investing. It focuses on defining ESG investment, different responsible investment approaches, sustainability concepts, benefits and challenges of ESG integration, and key global initiatives in ESG.
- Topic 2: The ESG Market: This domain targets Financial Analysts and Institutional Investors, examining the size, scope, relevance, and key drivers of the ESG market. It also discusses risks and opportunities within the ESG investment landscape, helping candidates understand market dynamics and trends.
- Topic 3: Environmental Factors: This section measures skills of Environmental Analysts and Sustainability Specialists by exploring environmental issues such as climate change, resource management, biodiversity, and pollution. It covers systematic relationships, material impacts, and methodologies for environmental analysis at country, sector, and company levels.
- Topic 4: Social Factors:Focused on Social Analysts and Corporate Social Responsibility (CSR) Professionals, this domain reviews social factors impacting investments. It includes systemic relationships and material impacts related to labor practices, diversity, equity, inclusion, and social opportunities at multiple levels.
- Topic 5: Governance: This section assesses skills of Governance Analysts and Compliance Officers concerning governance structures. It covers key characteristics and models of governance, material impacts, diversity, equity, and inclusion considerations, and shareholder rights.
- Topic 6: Engagement and Stewardship: Designed for Asset Managers and Stewardship Professionals, this domain covers investor engagement strategies and stewardship principles. It highlights the purpose, importance, key principles, and practical application of engagement tactics within responsible investing frameworks.
- Topic 7: ESG Analysis, Valuation, and Integration: This domain measures the capabilities of Portfolio Managers and Equity Analysts to integrate ESG factors into investment decision-making. It addresses challenges of integration, the impact on industry and company performance, security valuation, and approaches to ESG data analysis across asset classes.
- Topic 8: Integrated Portfolio Construction and Management: Targeting Portfolio Managers and Investment Strategists, this section discusses ESG integration into portfolio construction. It covers ESG screening approaches, benchmarking, the effect on risk-return profiles, and managing ESG portfolios across various asset classes.
Free CFA Institute Sustainable-Investing Exam Actual Questions
Note: Premium Questions for Sustainable-Investing were last updated On Aug. 03, 2026 (see below)
Which of the following statements is most accurate? For ESG credit scoring, credit rating agencies test how ESG factors affect an issuer's:
Credit rating agencies analyze how ESG risks and opportunities affect a company'screditworthiness, which is directly linked to itscost of capital. The CFA UK ESG Investing Training Manual explains that ESG factors can materially affect an issuer's ability to meet financial obligations and thus alter the perceived credit risk. This risk perception translates into the rate at which the company can borrow --- its cost of capital.
'Credit rating agencies incorporate ESG into their analysis by assessing how environmental, social, and governance factors might influence the issuer's ability and willingness to meet financial obligations. For example, material environmental risks could impact a firm's future cash flows, which would in turn influence its cost of capital.'
There is no indication in the CFA UK ESG curriculum that ESG credit scoring is used to test for credit default swaps or green bond eligibility directly. These instruments may reflect ESG risks indirectly, but they are not the focus of ESG credit scoring.
Which of the following is responsible for ensuring the composition of a company's board is balanced and effective?
The Nominations Committee is responsible for ensuring that the composition of a company's board is balanced and effective. This committee is tasked with identifying and recommending new directors and ensuring that the board has the necessary skills, experience, and diversity to oversee the company effectively.ESG Reference: Chapter 5, Page 232 - Governance Factors in the ESG textbook.
Both the EU Paris-Aligned Benchmarks and the EU Climate Transition Benchmarks allow limited investment in fossil fuels, with restrictions aimed at ensuring that such investments contribute to the transition to a low-carbon economy. These benchmarks are designed to help investors transition their portfolios in line with decarbonization goals.ESG Reference: Chapter 8, Page 406 - ESG Integrated Portfolio Construction & Management in the ESG textbook.
Scope 3 carbon emissions, which include indirect emissions from suppliers and consumers, are accounted for under both the UK Task Force on Climate-related Financial Disclosures (TCFD) and the European Union's Sustainable Finance Disclosure Regulation (SFDR). Both frameworks encourage comprehensive disclosure of emissions across the entire value chain.ESG Reference: Chapter 3, Page 133 - Environmental Factors in the ESG textbook.
A company has just been assigned a lower ESG risk than its industry peers. Compared to its current price-to-earnings (P/E), the fair value P/E is most likely:
A lower ESG risk profile suggestsbetter risk management and potentially greater resiliencecompared to peers. This canreduce the risk premiumdemanded by investors andincrease the fair value P/E ratio. In practical terms, investors may be willing to pay more (higher P/E multiple) for the earnings of a company perceived to be less exposed to ESG-related risks.
For investments in wastewater treatment plants, a significant obstacle is:
Wastewater treatment plants are capital-intensive projects, requiring significant investment upfront for infrastructure and technology, which can be a major barrier to entry. (ESGTextBook[PallasCatFin], Chapter 3, Page 153)
Which of the following ESG integration techniques is an example of policy engagement? An investor:
Policy engagement refers to efforts by investors to influence regulatory frameworks. An example of this would be responding to a regulator's public consultation on ESG issues, therebycontributing to the development of ESG policies that can drive broader change across markets and industries.ESG Reference: Chapter 6, Page 280 - Engagement and Stewardship in the ESG textbook.
- Select Question Types you want
- Set your Desired Pass Percentage
- Allocate Time (Hours : Minutes)
- Create Multiple Practice tests with Limited Questions
- Customer Support
Stephanie Carter
12 days agoCharles Peterson
21 days agoRachel Jackson
1 month agoSharon Scott
2 months agoMaria Peterson
2 months agoRyan Anderson
3 months agoMatthew Jones
3 months agoHeather Flores
3 months agoBrian Mitchell
3 months agoLaura Morgan
3 months agoAshley Anderson
3 months agoCynthia Anderson
3 months agoYuki
4 months agoMaile
4 months agoNathan
4 months agoIrving
5 months agoAdela
5 months agoMaryanne
5 months agoTamar
6 months agoBrittni
6 months agoRosalind
6 months agoDestiny
6 months agoShalon
6 months agoLoise
7 months agoWhitney
7 months agoElza
7 months agoFlorinda
7 months agoElbert
8 months agoGracie
8 months agoTerrilyn
8 months agoKristofer
8 months agoNieves
9 months agoGilma
9 months agoRodolfo
9 months agoPamella
9 months agoHerschel
10 months agoAron
10 months agoSang
10 months agoLigia
10 months agoJulio
11 months agoGianna
11 months agoPilar
11 months agoMicah
11 months ago