Organizing companies according to their sustainability attributes, such as resource intensity, sustainability risks, and innovation opportunities, best describes the:
A.
Morningstar sustainability rating
B.
Sustainable Industry Classification System (SICS)
C.
Task Force on Climate-related Financial Disclosures (TCFD) framework
TheSustainable Industry Classification System (SICS)is developed by SASB (Sustainability Accounting Standards Board) and is specifically designed to classify companies based onsustainability-related characteristics, not just their financial or industry traits. These attributes includeresource intensity, sustainability risks, and innovation opportunities, which help investors evaluate how material ESG issues affect different industries.
“The SICS system organises companies according to their sustainability attributes such as resource intensity, sustainability risks and innovation opportunities.”
This contrasts with the Morningstar sustainability rating (which scores ESG performance), and the TCFD (which is a disclosure framework), makingSICSthe accurate choice.
[Reference:CFA UK Level 4 Certificate in ESG Investing – Official Training Manual (2021), Chapter 8: ESG Integrated Portfolio Construction and Management, , ]
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