SASB FSA CREDENTIAL LEVEL I EXAM
QUESTIONS AND ANSWERS
What are some large-scale issues that have profound effects on business outcomes? -
Correct Answers -population growth, resource constraints, urbanization, technological
innovation, and climate change
What kinds of information do SASB standards ask for? - Correct Answers -financially
material, decision-useful, and cost-effective sustainability information for investors
What do investors use sustainability information for? - Correct Answers -To improve
their ability to achieve above-market returns, reduce risk and volatility, protect against
diminished returns, and improve environmental and social investment outcomes (with
financial returns as an equivalent or secondary consideration).
What is a stewardship code? - Correct Answers -The stewardship code is a code
requiring institutional investors to be transparent about their investment processes,
engage with investee companies and vote at shareholders' meetings. It is focused on
improved corporate governance, but can yield improved coordination between investors
and investees in addressing ESG-related risks and opportunities.
What kind of sustainability information is relevant to a shareholder (and other providers
of capital) audience? - Correct Answers -They seek information about performance on
the sustainability topics most relevant to a company's short-, medium, and long-term
financial performance.
What kind of sustainability information is relevant to an audience of lenders, credit
ratings agencies, and insurance underwriters? - Correct Answers -They seek
information about how the company manages sustainability-related risks.
What have some studies shown as positive benefits of ESG and sustainability
integration for investors and companies? - Correct Answers -- Companies committed to
sustainability outperform in stock market performance.
- Companies focused on sustainability achieve "reduced costs, improved worker
productivity, mitigated risk potential, and created revenue-generating opportunities."
- Companies with higher sustainability or ESG ratings have lower volatility of price and
earnings per share (EPS)
- Sustainability standards lower the cost of capital for companies
, How is sustainability information useful to equity and fixed-income investors? - Correct
Answers -They use sustainability information to:
- support risk analysis
- identify signals of future volatility and value declines
- protect portfolio value
How is sustainability information useful to private equity investors? - Correct Answers -
private equity investors recognize ESG investing as a means to:
- improve portfolio performance
- mitigate risk
- generate alpha
How do 40% of surveyed CEOs see sustainability as contributing to business growth
and value? - Correct Answers -They see revenue growth and creation of "genuine
value" through:
- risk mitigation
- cost reduction
- competitive advantage gained through "new markets, products and services, resource
productivity and efficiency"
***Chapter 1 Explanation Question: Why are investors demanding quality sustainability
information? - Correct Answers -Investors source quality sustainability information to
meet their investment goals (i.e. generally to achieve a profit), but also use sustainability
information to:
- achieve above-market returns
- assess risk to protect against diminished returns and major losses
- evaluate the predictability of investment outcomes
***Chapter 1 Explanation Question: What factors drive demand for quality sustainability
information within companies? - Correct Answers -Sustainability information can
contribute to near, medium, and long-term company success by improving the
management of sustainability-related risks and opportunities through measuring and
managing KPIs.
***Chapter 1 Explanation Question: Besides companies and their investors, what other
institutions influence demand for sustainability information across capital markets? -
Correct Answers -- International, national, and local policy-based initiatives (they
stimulate sustainability disclosure by passing recommendations and guidance)
- Regulatory requirements (for the disclosure of sustainability information from publicly-
listed companies)
What were some effects of the Great Depression? - Correct Answers -- bank failures
- record unemployment rates
- declining income
QUESTIONS AND ANSWERS
What are some large-scale issues that have profound effects on business outcomes? -
Correct Answers -population growth, resource constraints, urbanization, technological
innovation, and climate change
What kinds of information do SASB standards ask for? - Correct Answers -financially
material, decision-useful, and cost-effective sustainability information for investors
What do investors use sustainability information for? - Correct Answers -To improve
their ability to achieve above-market returns, reduce risk and volatility, protect against
diminished returns, and improve environmental and social investment outcomes (with
financial returns as an equivalent or secondary consideration).
What is a stewardship code? - Correct Answers -The stewardship code is a code
requiring institutional investors to be transparent about their investment processes,
engage with investee companies and vote at shareholders' meetings. It is focused on
improved corporate governance, but can yield improved coordination between investors
and investees in addressing ESG-related risks and opportunities.
What kind of sustainability information is relevant to a shareholder (and other providers
of capital) audience? - Correct Answers -They seek information about performance on
the sustainability topics most relevant to a company's short-, medium, and long-term
financial performance.
What kind of sustainability information is relevant to an audience of lenders, credit
ratings agencies, and insurance underwriters? - Correct Answers -They seek
information about how the company manages sustainability-related risks.
What have some studies shown as positive benefits of ESG and sustainability
integration for investors and companies? - Correct Answers -- Companies committed to
sustainability outperform in stock market performance.
- Companies focused on sustainability achieve "reduced costs, improved worker
productivity, mitigated risk potential, and created revenue-generating opportunities."
- Companies with higher sustainability or ESG ratings have lower volatility of price and
earnings per share (EPS)
- Sustainability standards lower the cost of capital for companies
, How is sustainability information useful to equity and fixed-income investors? - Correct
Answers -They use sustainability information to:
- support risk analysis
- identify signals of future volatility and value declines
- protect portfolio value
How is sustainability information useful to private equity investors? - Correct Answers -
private equity investors recognize ESG investing as a means to:
- improve portfolio performance
- mitigate risk
- generate alpha
How do 40% of surveyed CEOs see sustainability as contributing to business growth
and value? - Correct Answers -They see revenue growth and creation of "genuine
value" through:
- risk mitigation
- cost reduction
- competitive advantage gained through "new markets, products and services, resource
productivity and efficiency"
***Chapter 1 Explanation Question: Why are investors demanding quality sustainability
information? - Correct Answers -Investors source quality sustainability information to
meet their investment goals (i.e. generally to achieve a profit), but also use sustainability
information to:
- achieve above-market returns
- assess risk to protect against diminished returns and major losses
- evaluate the predictability of investment outcomes
***Chapter 1 Explanation Question: What factors drive demand for quality sustainability
information within companies? - Correct Answers -Sustainability information can
contribute to near, medium, and long-term company success by improving the
management of sustainability-related risks and opportunities through measuring and
managing KPIs.
***Chapter 1 Explanation Question: Besides companies and their investors, what other
institutions influence demand for sustainability information across capital markets? -
Correct Answers -- International, national, and local policy-based initiatives (they
stimulate sustainability disclosure by passing recommendations and guidance)
- Regulatory requirements (for the disclosure of sustainability information from publicly-
listed companies)
What were some effects of the Great Depression? - Correct Answers -- bank failures
- record unemployment rates
- declining income
