MPF exam Relevance of ESG Factors in MPF Investing ESG 因素與強積金投資的關係 Practice questions

Question 1

In MPF investing, which statement best describes sustainable investing?

Accepted Answer

Considering ESG factors in both investment and risk management processes

Answer

Considering ESG factors only when selecting investments, without considering them in risk management

Answer

Replacing investment risk management with corporate donations and charitable activities

Answer

Selecting long-term investments solely by reference to companies’ past profits

Question 2

Wing-yan Chan, an employee in Hong Kong, believes that ESG risks can be ignored because MPF funds invest over several decades. Which response is most appropriate?

Accepted Answer

ESG risks evolve and may affect members’ long-term interests, so they should be included in investment and risk management

Answer

This is correct because ESG risks affect only short-term investments

Answer

This is correct as long as the fund’s recent returns are satisfactory

Answer

ESG risks need to be considered only when members are about to retire

Question 3

An investment manager assesses companies held by an MPF fund against ESG criteria. Which statement about this analysis is NOT correct?

Accepted Answer

The ESG assessment can replace the assessment of all other material financial risks

Answer

ESG factors can serve as indicators when assessing company prospects

Answer

A company’s ESG issues may involve financial risks

Answer

The analysis helps consideration of how the relevant risks affect scheme members

Question 4

Under the MPF System, which statements about addressing material financial risks, including ESG risks, are correct? (i) Trustees must consider the effects on scheme members’ interests; (ii) investment managers must also consider those effects; (iii) both must consider an appropriate and responsible response; (iv) neither needs to address an ESG risk until the fund has suffered a loss from it.

Accepted Answer

(i), (ii) and (iii) only

Answer

(i) and (ii) only

Answer

(ii), (iii) and (iv) only

Answer

(i), (ii), (iii) and (iv)

Question 5

Ka-man Lam, an employee in Hong Kong, learns that her MPF fund’s investment manager has identified a material ESG risk at a company that may affect members’ interests. The manager dismisses it as merely a corporate image issue and leaves it out of investment analysis and risk management. Which response is most appropriate?

Accepted Answer

The manager should assess the risk’s effects on company prospects and members’ interests, and consider an appropriate response

Answer

The approach is appropriate because ESG matters cannot affect a company’s financial prospects

Answer

The approach is appropriate because only the trustee has a responsibility to consider ESG risks

Answer

Any ESG issue requires the immediate sale of the entire investment in the company

Question 6

How is the responsibility of MPF trustees and investment managers to consider material ESG risks that may affect scheme members’ interests characterised?

Accepted Answer

Both a stewardship obligation and a fiduciary duty

Answer

A stewardship obligation only, because fiduciary duty does not cover ESG risks

Answer

A fiduciary duty only, with no stewardship obligation involved

Answer

A voluntary commitment applying only to constituent funds with a sustainable investment objective

Relevance of ESG Factors in MPF Investing ESG 因素與強積金投資的關係

Long-Term Investing and Evolving Risks 長期投資與持續演變的風險

Responsibilities of Trustees and Investment Managers 受託人及投資經理的責任

Sustainable Investing Covers Both Processes 可持續投資涵蓋兩個過程

Using ESG Criteria to Assess Company Prospects 以ESG準則分析公司前景

Practice