Sustainable Investing Certificate Sustainable-Investing Reddit Questions

TheInternational Corporate Governance Network (ICGN)requirescomprehensive engagement reporting, which goes beyond justvoting activity. Investors must discloseengagement outcomes, stewardship efforts, and ESG considerations in investment decisions.

PRI signatories (A)must submitmandatoryESG reports, not voluntary ones.

Disaggregating ESG drivers (C)is actuallymore difficult, as ESG factors are deeply interconnected.

Cultural dynamics are not a primary engagement dynamic identified by PRI.The key dynamics that drive engagement value include:

Learning dynamics (B): Mutual knowledge-sharing between investors and companies

Communicative dynamics (C): Effective dialogue leading to ESG improvements

Anenvironmental litigation costis afirm-specificrisk that increases uncertainty in a company’s cashflows, thereby raising itscost of capital (discount rate)in a DCF model.Higher discount rates reflect higher risk perceptions, reducing the present value of future earnings.

In contrast, asector-wide carbon tax (B)affects all firms in the industry and is often incorporated into pricing structures, reducing itsfirm-specific impact on discount rates.Launching a sustainable product (A)might lower risk perception, potentially reducing the discount rate instead.

TheEU Green Taxonomyprovides aclassification system that defines which economic activities are environmentally sustainable, ensuringinvestors and companies align with EU climate goals.

It does not classify all businesses by ESG scores (A).

It does not mandate investment in climate solutions (C), but encourages it.