Single Choice 48) SCENARIO: Ahad Farah is an ESG investment advisor. He meets with a new client, Fiona MacLeod, who asks him to advise her on constructing an equity portfolio using an ESG integrated approach. Fiona explains to Ahad some of her expectations for the portfolio, including the two statements made below: Expectation A: Over a long time horizon, I expect the ESG portfolio construction approach to have little negative impact on investment returns. Expectation B: I want the portfolio construction approach to allow me to engage with companies with a poor ESG record to persuade them to improve the sustainability of their business practices. Fiona asks Ahad whether these statements are consistent with following an exclusionary ESG investment approach. Fiona also tells Ahad that she is sometimes confused about which investments are defined as ESG investments and the approaches used to integrate ESG into a portfolio. In response, Ahad makes two comments: Comment 1: There are a small number of approaches to ESG integration in portfolio construction. These are globally agreed by the investment industry. Comment 2: There are globally agreed definitions of what is considered an ESG investment. Ahad then asks Fiona whether she would like to discuss the asset allocation of her portfolio to consider the possibility of adding fixed interest securities to the asset allocation. He also adds that green bonds might be suitable for her investment objectives and identifies two characteristics of green bonds to help Fiona understand how they operate: Characteristic A: Green bonds are suitable for thematic investors because their proceeds are ringfenced for eligible green projects. Characteristic B: Green bond proceeds may be used for climate change-related adaptation projects or mitigation projects. QUESTION: Are Fiona's two expectations consistent with following an exclusionary approach? Expectation B is consistent, but Expectation A is not consistent Expectation A is consistent, but Expectation B is not consistent Both expectations are consistent O Neither expectation is consistent

48) SCENARIO: Ahad Farah is an ESG investment advisor. He meets with a new client, Fiona MacLeod, who asks him to advise her on constructing an equity portfolio using an ESG integrated approach. Fiona explains to Ahad some of her expectations for the portfolio, including the two statements made below: Expectation A: Over a long time horizon, I expect the ESG portfolio construction approach to have little negative impact on investment returns. Expectation B: I want the portfolio construction approach to allow me to engage with companies with a poor ESG record to persuade them to improve the sustainability of their business practices. Fiona asks Ahad whether these statements are consistent with following an exclusionary ESG investment approach. Fiona also tells Ahad that she is sometimes confused about which investments are defined as ESG investments and the approaches used to integrate ESG into a portfolio. In response, Ahad makes two comments: Comment 1: There are a small number of approaches to ESG integration in portfolio construction. These are globally agreed by the investment industry. Comment 2: There are globally agreed definitions of what is considered an ESG investment. Ahad then asks Fiona whether she would like to discuss the asset allocation of her portfolio to consider the possibility of adding fixed interest securities to the asset allocation. He also adds that green bonds might be suitable for her investment objectives and identifies two characteristics of green bonds to help Fiona understand how they operate: Characteristic A: Green bonds are suitable for thematic investors because their proceeds are ringfenced for eligible green projects. Characteristic B: Green bond proceeds may be used for climate change-related adaptation projects or mitigation projects. QUESTION: Are Fiona's two expectations consistent with following an exclusionary approach? Expectation B is consistent, but Expectation A is not consistent Expectation A is consistent, but Expectation B is not consistent Both expectations are consistent Neither expectation is consistent