CFA Institute Sustainable-Investing Question Answer
An asset manager considering environmental risks would most likely use:
A.
qualitative analysis only
B.
quantitative analysis only
C.
both qualitative and quantitative analyses
The Answer Is:
C
This question includes an explanation.
Explanation:
An asset manager considering environmental risks would most likely use both qualitative and quantitative analyses. Combining these approaches provides a comprehensive understanding of the environmental risks associated with investments.
Qualitative Analysis: This involves evaluating non-numerical information, such as company policies, management practices, and environmental impact reports. It helps assess the company's approach to managing environmental risks and its commitment to sustainability.
Quantitative Analysis: This involves analyzing numerical data, such as carbon emissions, energy consumption, water usage, and waste generation. It provides measurable metrics that can be compared over time and against industry benchmarks.
Holistic Assessment: Using both qualitative and quantitative analyses allows asset managers to gain a complete picture of a company's environmental performance. It helps identify potential risks and opportunities, leading to more informed investment decisions.
[References:, MSCI ESG Ratings Methodology (2022) - Highlights the importance of integrating both qualitative and quantitative analyses in evaluating environmental risks., ESG-Ratings-Methodology-Exec-Summary (2022) - Discusses the benefits of a holistic approach to environmental risk assessment using diverse analytical methods., , , , , ]
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