SASB FSA LEVEL 1 TEST QUESTIONS
AND ANSWERS
Coalitions - Answer- A formal group of companies and organizations formed, sometimes
temporarily, in pursuit of combined action toward a specific outcome. Members often
collaborate and collectively communicate goals and developments related to the
particular topic.
Company (or Security) Valuation - Answer- The process of determining the economic
value of an entire business. May consider factors such as future earnings,
management, capital structure, asset value, risks, and other factors
Company-Tailored Narrative - Answer- Specific language in a disclosure that can be
understood only in the context of the reporting company
Comparative Analysis - Answer- Often part of fundamental analysis, aims to compare
industry peers or security values to assess their intrinsic value, which may or may not
be accurately reflected by market capitalization or stock prices
Comply-or-Explain - Answer- Provisions that require disclosure of particular information,
but allow reporting entities to omit the information and provide an explanation for the
omission
Conceptual Framework - Answer- A document that defines the principles and
characteristics of the standard-setting process, ensuring all standards are developed
consistently, providing something to resolve questions that emerge throughout the
standard-setting process, and allowing users of the standards to understand the
process and have confidence in the quality of the standards
Corporate Governance Codes - Answer- Rules, either mandatory or voluntary, that
define standards and responsibilities for corporate boards to protect shareholder
investments, including standards for ethical behavior and responsible decision making.
Credit Risk - Answer- The risk of a borrower defaulting on its ability to make required
repayments (interest or principal) resulting in a loss to the lender
Data Aggregators - Answer- Organizations that compile raw data, often presenting it in
a format to support analysis.
Disclosure Platforms - Answer- A software-based interface that supports ESG report
preparation and disclosure by establishing workflows
and supporting data management.
, Disclosure Topics - Answer- The topics in SASB Standards that represent the industry-
specific impacts of general sustainability issue categories. Metrics are used to measure
company
performance on a disclosure topic.
Discussion and Analysis (D&A) Metrics - Answer- Narrative data used to explain
processes, practices, risks, past events, or to otherwise provide important context to
quantitative metrics.
Double Materiality - Answer- Materiality has two components: financial materiality, or
that which applies to the value of a company; and environmental and social materiality,
or that which applies to a company's impacts on broader society.
Dynamic Materiality - Answer- Information that is material can change over time. An
ESG issue that is not critical to a company's success may
become critical as markets, resource availability,
regulation, customer awareness, or other factors shift over time.
Enterprise Risk Management (ERM) - Answer- As defined by COSO, "the culture,
capabilities
and practices, integrated with strategy-setting
and performance, that organizations rely
on to manage risk in creating, preserving and
realizing value."
Enterprise Value - Answer- A measure of a company's total market value,
representative of the amount of money needed to purchase the company. It's calculated
by adding market capitalization to short-tern and long-term debt, then subtracting all
cash and cash equivalents
Accounting Metrics - Answer- Quantitative and/or discussion and analysis metrics
intended to measure performance on a sustainability disclosure topic.
Activity Metrics - Answer- Metrics used to quantify the scale of a business. They are
used in conjunction with accounting metrics to normalize data and facilitate comparison.
Actual Impacts - Answer- A form of financial impact that is actively observable and
measurable. They represent actual trends, events, or upcoming changes that are
occurring or will occur with a high degree of certainty.
Acute Impacts - Answer- Impacts on a company's financial condition or operating
performance that may be rare or unlikely but can have significant consequences, such
as extreme weather events or unanticipated accidents.
AND ANSWERS
Coalitions - Answer- A formal group of companies and organizations formed, sometimes
temporarily, in pursuit of combined action toward a specific outcome. Members often
collaborate and collectively communicate goals and developments related to the
particular topic.
Company (or Security) Valuation - Answer- The process of determining the economic
value of an entire business. May consider factors such as future earnings,
management, capital structure, asset value, risks, and other factors
Company-Tailored Narrative - Answer- Specific language in a disclosure that can be
understood only in the context of the reporting company
Comparative Analysis - Answer- Often part of fundamental analysis, aims to compare
industry peers or security values to assess their intrinsic value, which may or may not
be accurately reflected by market capitalization or stock prices
Comply-or-Explain - Answer- Provisions that require disclosure of particular information,
but allow reporting entities to omit the information and provide an explanation for the
omission
Conceptual Framework - Answer- A document that defines the principles and
characteristics of the standard-setting process, ensuring all standards are developed
consistently, providing something to resolve questions that emerge throughout the
standard-setting process, and allowing users of the standards to understand the
process and have confidence in the quality of the standards
Corporate Governance Codes - Answer- Rules, either mandatory or voluntary, that
define standards and responsibilities for corporate boards to protect shareholder
investments, including standards for ethical behavior and responsible decision making.
Credit Risk - Answer- The risk of a borrower defaulting on its ability to make required
repayments (interest or principal) resulting in a loss to the lender
Data Aggregators - Answer- Organizations that compile raw data, often presenting it in
a format to support analysis.
Disclosure Platforms - Answer- A software-based interface that supports ESG report
preparation and disclosure by establishing workflows
and supporting data management.
, Disclosure Topics - Answer- The topics in SASB Standards that represent the industry-
specific impacts of general sustainability issue categories. Metrics are used to measure
company
performance on a disclosure topic.
Discussion and Analysis (D&A) Metrics - Answer- Narrative data used to explain
processes, practices, risks, past events, or to otherwise provide important context to
quantitative metrics.
Double Materiality - Answer- Materiality has two components: financial materiality, or
that which applies to the value of a company; and environmental and social materiality,
or that which applies to a company's impacts on broader society.
Dynamic Materiality - Answer- Information that is material can change over time. An
ESG issue that is not critical to a company's success may
become critical as markets, resource availability,
regulation, customer awareness, or other factors shift over time.
Enterprise Risk Management (ERM) - Answer- As defined by COSO, "the culture,
capabilities
and practices, integrated with strategy-setting
and performance, that organizations rely
on to manage risk in creating, preserving and
realizing value."
Enterprise Value - Answer- A measure of a company's total market value,
representative of the amount of money needed to purchase the company. It's calculated
by adding market capitalization to short-tern and long-term debt, then subtracting all
cash and cash equivalents
Accounting Metrics - Answer- Quantitative and/or discussion and analysis metrics
intended to measure performance on a sustainability disclosure topic.
Activity Metrics - Answer- Metrics used to quantify the scale of a business. They are
used in conjunction with accounting metrics to normalize data and facilitate comparison.
Actual Impacts - Answer- A form of financial impact that is actively observable and
measurable. They represent actual trends, events, or upcoming changes that are
occurring or will occur with a high degree of certainty.
Acute Impacts - Answer- Impacts on a company's financial condition or operating
performance that may be rare or unlikely but can have significant consequences, such
as extreme weather events or unanticipated accidents.
