SCR

SCR practice questions, page 6 of 6, with answer review and explanations.

Question 26

In response to a survey showing consumers consider sustainability a key factor in purchasing decisions, a group of cosmetics companies announce a collaboration to develop an environmental impact assessment and sustainability framework for cosmetics products. The framework enables customers to evaluate the environmental impact of products they purchase. The framework draft includes definitions of climate, green, and sustainable finance. Which of the following definitions is appropriate for the proposed framework?

  1. Green finance refers exclusively to financial flows relating to climate change such as mitigation or adaptation.
  2. Green finance refers to sustainable finance focused on environmental risks and opportunities.
  3. Sustainable finance refers to public sector funding of projects relating to ESG and sustainable development.
  4. Climate finance is a subset of green finance and broadly refers to any financial transaction that considers climate issues.

Question 27

A credit loan officer at a commercial bank reviews a loan application from a company engaged in coal-fired power generation. The loan officer examines transition risks associated with the company’s business strategy. What policy risk driver should the loan officer identify?

  1. Prices of solar photovoltaic panels have declined since 2015.
  2. Activists and advocacy organizations increasingly file lawsuits against fossil fuel-based power companies.
  3. Lending to a coal-fired power plant will hurt the bank’s public image.
  4. A government proposes legislation to mandate closure of all coal-fired power plants by 2035.