CFA Sustainable Investing Certificate (Formerly ESG Certificate) Practice Exam

The rationale for identifying the requirement regarding a minimum of 10 tonnes of certified emissions reductions per US $1 of debt as not being a criterion under the Green Bond Principles (GBP) or Green Loan Principles (GLP) is anchored in the frameworks’ flexible nature. Both GBP and GLP emphasize the use of proceeds from bonds or loans towards projects that deliver positive environmental impact. However, they do not stipulate a specific quantitative benchmark related to emissions reductions per dollar amount.

Instead, the principles require a qualitative assessment of the environmental benefits that the financed projects are expected to generate. This allows issuers to tailor their environmental objectives to the specific projects being funded, without imposing a rigid quantitative threshold. The other requirements, such as providing a description of environmental benefits, having a clear selection process for eligible projects, and maintaining detailed reporting, are integral to ensuring transparency, accountability, and the effective communication of the environmental impacts of the financing.