CFA Institute Exam ESG-Investing Topic 1 Question 5 Discussion

Actual exam question for CFA Institute's ESG-Investing exam

Question #: 5
Topic #: 1

An emissions trading system (ETS) permits a high allocation of free allowances to energy-intensive companies. The most likely objective of this practice is to:

Amaintain a low unit price for emissions.

Bprevent the offshoring of emissions into other jurisdictions.

Cincrease the quantity of emissions allocated to the participants in the ETS.

Show Suggested Answer

Suggested Answer: B

Free allowances in an ETS are often allocated to energy-intensive companies to prevent the offshoring of emissions, also known as 'carbon leakage,' where companies relocate to jurisdictions with laxer environmental regulations. (ESGTextBook[PallasCatFin], Chapter 3, Page 153)

by Tuyet at Nov 15, 2024, 05:42 PM

Limited Time Offer

25%

Off

Get Premium ESG-Investing Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Currently there are no comments in this discussion, be the first to comment!