[GreFin20] GreFin20 Principles and Practice
of Green and Sustainable Finance
Certification Exam Preparation
Question 1. **Which term best describes financial activities that aim to generate measurable
environmental benefits while also delivering a financial return?**
A) Green Finance
B) Sustainable Finance
C) ESG Investing
D) Transition Finance
Answer: A
Explanation: Green Finance focuses specifically on projects that deliver environmental
outcomes, such as renewable energy or pollution reduction, alongside financial returns.
Question 2. **What is the primary distinction between “Light Green” and “Dark Green”
investments?**
A) Light Green invests only in renewable energy; Dark Green includes any ESG factor.
B) Light Green has a lower proportion of proceeds earmarked for green projects; Dark Green
has a higher proportion.
C) Light Green is regulated by the EU Taxonomy; Dark Green is not.
D) Light Green requires third‑party verification; Dark Green does not.
Answer: B
Explanation: “Shades of Green” refer to the intensity of green labeling; Dark Green products
allocate a larger share of proceeds to eligible green assets.
Question 3. **The “Tragedy of the Horizon” refers to:**
A) The difficulty of aligning short‑term investor horizons with long‑term climate risks.
B) The inability of markets to price carbon emissions accurately.
C) The collapse of fossil‑fuel‑dependent economies after 2030.
,[GreFin20] GreFin20 Principles and Practice
of Green and Sustainable Finance
Certification Exam Preparation
D) The over‑optimism of climate models beyond 2100.
Answer: A
Explanation: The term describes the mismatch where investors focus on near‑term returns
while climate risks manifest over longer horizons.
Question 4. **Which of the following is NOT a Sustainable Development Goal (SDG) directly
linked to climate action?**
A) SDG 7 – Affordable and Clean Energy
B) SDG 13 – Climate Action
C) SDG 9 – Industry, Innovation and Infrastructure
D) SDG 16 – Peace, Justice and Strong Institutions
Answer: D
Explanation: While SDG 16 is important, it does not directly address climate mitigation or
adaptation like the other listed goals.
Question 5. **Under the EU Taxonomy, an economic activity is considered “substantially
contributing” to climate mitigation if it:**
A) Reduces CO₂ emissions by at least 10% relative to a baseline.
B) Aligns with the EU’s 2050 net‑zero target and meets technical screening criteria.
C) Is certified by a third‑party environmental auditor.
D) Generates any renewable energy, regardless of efficiency.
Answer: B
Explanation: The EU Taxonomy sets strict technical screening criteria that must align with the
EU’s 2050 climate neutrality goal.
,[GreFin20] GreFin20 Principles and Practice
of Green and Sustainable Finance
Certification Exam Preparation
Question 6. **Which greenhouse gas has the highest global warming potential over a 100‑year
horizon?**
A) Carbon dioxide (CO₂)
B) Methane (CH₄)
C) Nitrous oxide (N₂O)
D) Sulphur hexafluoride (SF₆)
Answer: D
Explanation: SF₆ has a GWP of about 23,500 over 100 years, far exceeding CO₂, CH₄, and N₂O.
Question 7. **The IPCC “RCP 2.6” scenario is characterized by:**
A) Business‑as‑usual emissions leading to >4°C warming.
B) Rapid decarbonization achieving net‑zero by mid‑century.
C) Moderate emissions with 2°C warming by 2100.
D) A focus on adaptation rather than mitigation.
Answer: B
Explanation: RCP 2.6 assumes strong mitigation efforts, limiting warming to around 1.5‑2°C.
Question 8. **A “stranded asset” in the context of climate transition risk is:**
A) An asset that has been physically damaged by a natural disaster.
B) An asset that loses economic value due to regulatory or market shifts toward low carbon.
C) An asset that is illiquid and cannot be sold.
D) An asset held in a foreign jurisdiction with restricted access.
Answer: B
, [GreFin20] GreFin20 Principles and Practice
of Green and Sustainable Finance
Certification Exam Preparation
Explanation: Stranded assets become uneconomic because of policy changes, technology
advances, or market preferences for low‑carbon solutions.
Question 9. **Which principle is central to the circular economy model?**
A) Linear extraction‑production‑disposal.
B) Reducing resource input and keeping products in use through reuse, repair, and recycling.
C) Maximizing short‑term profit from resource extraction.
D) Prioritizing fossil‑fuel‑based energy for manufacturing.
Answer: B
Explanation: Circular economy emphasizes resource efficiency, product life extension, and waste
minimization.
Question 10. **The Glasgow Financial Alliance for Net Zero (GFANZ) primarily aims to:**
A) Provide grants for renewable energy projects in developing countries.
B) Mobilize private capital to achieve net‑zero emissions by 2050.
C) Set binding emission caps for member banks.
D) Regulate carbon pricing across all jurisdictions.
Answer: B
Explanation: GFANZ is a coalition of financial institutions committing to align their portfolios
with net‑zero pathways.
Question 11. **Which disclosure framework focuses specifically on climate‑related financial
risks?**
A) GRI (Global Reporting Initiative)
B) SASB (Sustainability Accounting Standards Board)
of Green and Sustainable Finance
Certification Exam Preparation
Question 1. **Which term best describes financial activities that aim to generate measurable
environmental benefits while also delivering a financial return?**
A) Green Finance
B) Sustainable Finance
C) ESG Investing
D) Transition Finance
Answer: A
Explanation: Green Finance focuses specifically on projects that deliver environmental
outcomes, such as renewable energy or pollution reduction, alongside financial returns.
Question 2. **What is the primary distinction between “Light Green” and “Dark Green”
investments?**
A) Light Green invests only in renewable energy; Dark Green includes any ESG factor.
B) Light Green has a lower proportion of proceeds earmarked for green projects; Dark Green
has a higher proportion.
C) Light Green is regulated by the EU Taxonomy; Dark Green is not.
D) Light Green requires third‑party verification; Dark Green does not.
Answer: B
Explanation: “Shades of Green” refer to the intensity of green labeling; Dark Green products
allocate a larger share of proceeds to eligible green assets.
Question 3. **The “Tragedy of the Horizon” refers to:**
A) The difficulty of aligning short‑term investor horizons with long‑term climate risks.
B) The inability of markets to price carbon emissions accurately.
C) The collapse of fossil‑fuel‑dependent economies after 2030.
,[GreFin20] GreFin20 Principles and Practice
of Green and Sustainable Finance
Certification Exam Preparation
D) The over‑optimism of climate models beyond 2100.
Answer: A
Explanation: The term describes the mismatch where investors focus on near‑term returns
while climate risks manifest over longer horizons.
Question 4. **Which of the following is NOT a Sustainable Development Goal (SDG) directly
linked to climate action?**
A) SDG 7 – Affordable and Clean Energy
B) SDG 13 – Climate Action
C) SDG 9 – Industry, Innovation and Infrastructure
D) SDG 16 – Peace, Justice and Strong Institutions
Answer: D
Explanation: While SDG 16 is important, it does not directly address climate mitigation or
adaptation like the other listed goals.
Question 5. **Under the EU Taxonomy, an economic activity is considered “substantially
contributing” to climate mitigation if it:**
A) Reduces CO₂ emissions by at least 10% relative to a baseline.
B) Aligns with the EU’s 2050 net‑zero target and meets technical screening criteria.
C) Is certified by a third‑party environmental auditor.
D) Generates any renewable energy, regardless of efficiency.
Answer: B
Explanation: The EU Taxonomy sets strict technical screening criteria that must align with the
EU’s 2050 climate neutrality goal.
,[GreFin20] GreFin20 Principles and Practice
of Green and Sustainable Finance
Certification Exam Preparation
Question 6. **Which greenhouse gas has the highest global warming potential over a 100‑year
horizon?**
A) Carbon dioxide (CO₂)
B) Methane (CH₄)
C) Nitrous oxide (N₂O)
D) Sulphur hexafluoride (SF₆)
Answer: D
Explanation: SF₆ has a GWP of about 23,500 over 100 years, far exceeding CO₂, CH₄, and N₂O.
Question 7. **The IPCC “RCP 2.6” scenario is characterized by:**
A) Business‑as‑usual emissions leading to >4°C warming.
B) Rapid decarbonization achieving net‑zero by mid‑century.
C) Moderate emissions with 2°C warming by 2100.
D) A focus on adaptation rather than mitigation.
Answer: B
Explanation: RCP 2.6 assumes strong mitigation efforts, limiting warming to around 1.5‑2°C.
Question 8. **A “stranded asset” in the context of climate transition risk is:**
A) An asset that has been physically damaged by a natural disaster.
B) An asset that loses economic value due to regulatory or market shifts toward low carbon.
C) An asset that is illiquid and cannot be sold.
D) An asset held in a foreign jurisdiction with restricted access.
Answer: B
, [GreFin20] GreFin20 Principles and Practice
of Green and Sustainable Finance
Certification Exam Preparation
Explanation: Stranded assets become uneconomic because of policy changes, technology
advances, or market preferences for low‑carbon solutions.
Question 9. **Which principle is central to the circular economy model?**
A) Linear extraction‑production‑disposal.
B) Reducing resource input and keeping products in use through reuse, repair, and recycling.
C) Maximizing short‑term profit from resource extraction.
D) Prioritizing fossil‑fuel‑based energy for manufacturing.
Answer: B
Explanation: Circular economy emphasizes resource efficiency, product life extension, and waste
minimization.
Question 10. **The Glasgow Financial Alliance for Net Zero (GFANZ) primarily aims to:**
A) Provide grants for renewable energy projects in developing countries.
B) Mobilize private capital to achieve net‑zero emissions by 2050.
C) Set binding emission caps for member banks.
D) Regulate carbon pricing across all jurisdictions.
Answer: B
Explanation: GFANZ is a coalition of financial institutions committing to align their portfolios
with net‑zero pathways.
Question 11. **Which disclosure framework focuses specifically on climate‑related financial
risks?**
A) GRI (Global Reporting Initiative)
B) SASB (Sustainability Accounting Standards Board)
