Practice Test Geeks(CFM) Certified Fund Manager Practice Test
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ESG & Sustainable Investing Flashcards

7 cards from real CFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 ESG & Sustainable Investing flashcards as text

  1. Which organization publishes the annual Global ESG benchmark that many US institutional investors use as a reference for stewardship?

    Answer: Principles for Responsible Investment (PRI)

    PRI produces annual signatory assessments and stewardship benchmarks that guide institutional investors on responsible ownership practices.

  2. The Task Force on Climate-related Financial Disclosures (TCFD) recommends disclosures in all of the following categories EXCEPT:

    Answer: Social Impact Scores

    TCFD's four pillars are Governance, Strategy, Risk Management, and Metrics & Targets — social impact scores are not a TCFD category.

  3. A fund manager assessing 'transition risk' in climate investing is evaluating risk from:

    Answer: Policy, technology, and market shifts during the move to a low-carbon economy

    Transition risks arise from the economic adjustments needed to shift to a lower-carbon world, including policy changes, new technologies, and shifting consumer preferences.

  4. ESG-themed exchange-traded funds (ETFs) that track an index have faced criticism primarily because:

    Answer: Index-based ESG ETFs cannot engage with companies on governance issues

    Passive ESG ETFs track indices and rarely engage in active shareholder dialogue, limiting their ability to influence corporate behavior.

  5. Which metric is most commonly used to measure a portfolio's carbon footprint?

    Answer: Scope 1 emissions per unit of revenue (weighted average carbon intensity)

    Weighted Average Carbon Intensity (WACI) measures Scope 1 emissions normalized by revenue and portfolio weight, making it the standard portfolio-level carbon metric.

  6. In the context of ESG, 'proxy voting' is a governance tool used by fund managers to:

    Answer: Vote on shareholder resolutions to influence corporate behavior

    Fund managers vote on shareholder resolutions — including on executive pay, board composition, and ESG proposals — as a key mechanism of corporate governance.

  7. A 'green bond' differs from a conventional bond primarily in that:

    Answer: Proceeds are earmarked for environmentally beneficial projects

    Green bonds are standard debt instruments whose proceeds are specifically allocated to climate or environmental projects, verified against frameworks like ICMA's Green Bond Principles.