Sustainability Accounting Standards Board (SASB) Level 1 Practice Test

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• What is tracking error?
• What do data aggregators do for investors?
• Which component focuses on setting strategy and objective-setting for ESG-related risks?
• Traditional financial statements tell an increasingly smaller part of the story—as little as what percent?
• Why is materiality important to financial disclosures?
• What is the purpose of Environmental Profit and Loss (EP&L)?
• What is the difference between Accounting Metrics and Activity Metrics?
• What is the difference between structured and unstructured data in ESG information, and give examples?
• Do SASB standards always focus on greenhouse gas emissions as the main metric of climate change impact?
• What are resolutions in the context of ESG?
• For lenders, credit ratings agencies, and insurance underwriters, what information is material?
• What does GAAP stand for?
• What are some examples of Disclosure Guidance Issuers? What is their typical role?
• Which of the following is a challenge related to data types in sustainability reporting that can impair comparability?
• What are the two key principles IFRS recommends for Management Commentary?
• Which statement about industry analysis is accurate?
• SASB reporting is used to meet unique disclosure objectives alongside additional frameworks. Which statement is accurate?
• What is the primary purpose of thematic bonds?
• Which of the following is listed as a major sustainability disclosure standard?
• What is IFRS and who oversees it?
• Which are examples of non-GAAP reporting?
• What is the universal owner approach?
• Double materiality comprises which two concepts?
• Which of the following is NOT listed as a SASB reporting channel?
• What is EP&L?
• What is short-termism?
• Which of the following is NOT a category of institutions demanding sustainability information?
• What is the difference between industry-agnostic and industry-specific data for investors?
• What tasks are guidance issuers not responsible for?
• Which tasks are typically pursued at the start of the fiscal year when pursuing SASB reporting?
• What are some thematic bonds, and what do they do?
• What are unstructured data examples in ESG context?
• Define data assurance.
• Which statement best contrasts norms-based screening with positive screening?
• What is the difference between frameworks and standards?
• What is a tilt in index fund construction?
• Are data or ratings/analytics providers typically nonprofit organizations?
• Which statement best describes momentum ESG investing?
• In the SASB risk-management process, which phase surfaces the subset of sustainability topics likely to be business-critical due to financial materiality?
• Before widespread adoption, how did leading companies disclose non-financial information?
• Which of the following describes how SASB incorporated industry input into standards?
• What questions are considered to assess a project proposal's potential updates to SASB standards?
• What is thematic investing?
• Which phase focuses on ongoing review and revision of ESG-related risks?
• Which of the following is NOT listed as a major type of company information relevant to sustainability standards?
• General Issue Categories are
• Which of the following is NOT one of SASB's four fundamental principles for topic disclosure?
• What are the three pillars of reliable information?
• In the SASB risk-management process, which phase guides decisions to accept, avoid, reduce, or transfer a risk (or to ignore, embrace, enhance, or share an opportunity) based on assessments and benchmarking?
• Which statement about SASB's emphasis on financial materiality is true?
• In the most rigorous assurance engagements, what is evaluated to assess data integrity?
• Which statement best describes reasonable assurance?
• Who is the 'front line' in determining if and how sustainability information will be assured?
• Which organizations are cited as coalitions and alliance organizations offering guidance to companies, such as WBCSD, We Mean Business, and the Climate Group?
• In the auto industry, SASB focuses on which aspect of emissions?
• What is fiduciary duty and how is it changing?
• What governance documents regulate SASB's process for standard setting?
• Data assurance provides confidence to which groups?
• What is the role of audits in reliable data collection?
• What is the IASB's relationship to IFRS?
• How can asset managers apply stewardship to their investments via proxy votes?
• Which relationship is observed between higher ESG ratings and market volatility?
• Materiality helps regulators determine whether enforcement action is appropriate for false, misleading, or incomplete disclosures.
• Stewardship codes were first introduced in which country and year?
• What is the role of an audit committee in reliable data collection?
• Which investing approach is defined by avoiding objectionable or low-performing investments such as weapons manufacturers or tobacco companies?
• Which of the following is NOT one of the three pillars of reliable information?
• Which of the following is an objective of SASB disclosure besides the three primary goals?
• Which standards and frameworks cater to investors?
• Which of the following lists correctly identifies the three fundamental and four enhancing characteristics of qualitative information as defined by IFRS?
• Which of the following best describes intangible assets?
• Which two considerations must sustainability disclosure guidance balance, and how do disclosure standards help achieve that balance?
• In the banking sector, which emission focus does SASB emphasize?
• What is the role of corporate governance codes?
• What is true about ESG ratings and analytics providers?
• What is norms-based screening?
• Which statement best describes an index fund in practice?
• Which pair of stages begins to deliver much more value beyond incremental gains?
• What is the role of Data Aggregators?
• Which of the following is NOT one of the four climate change issues listed by the SEC's 2010 Guidance?
• What does the COSO Enterprise Risk Management (ERM) framework emphasize?
• For communities, customers, employees, suppliers, civil society, governments, and investors, what information is material?
• What is the effect of providing data visualizations and time-series data in SASB disclosures?
• How can ESG information help mitigate systemic risk?
• In private equity ESG engagement, what factor enables more frequent and robust engagement?
• SASB standards are designed to be as close as possible to which type of metrics?
• What type of guidance does a standard provide?
• SRI practices often involve excluding investments affiliated with geographic conflicts or operating in sin stock industries. Which option best describes this approach?
• Why do companies report information not required by GAAP?
• Why has stewardship become more important with rising passive investing?
• ESG integration tends to focus on which type of risk analysis in fixed-income investing?
• Which organization has acknowledged the importance of non-financial resources but has fallen short of labeling them as assets?
• Which of the following is NOT one of the four areas of a company's financial performance that a sustainability issue can affect?
• Between equity and debt, which statement best describes which tends to offer greater upside potential and which carries more risk?
• Can one organization fill multiple roles (Disclosure Guidance, Data Aggregators, and Ratings and Analytics Providers)?
• Which statement correctly describes the difference between rules-based and principles-based guidance?
• Which type of organization is described as encouraging listed companies to report non-financial and sustainability information?
• Which sustainability reporting challenge can impair cross-company comparability due to data units?
• What shift occurred in the 1960s regarding accounting measurements?
• Which of the following is one of the SASB Sustainability Dimensions?
• What is the 80/20 rule?
• Do companies with above-average ESG scores avoid major losses more than others?
• What are the four key recommendations for the MD&A section, as defined by the SEC?
• What is an index fund?
• What are the five elements IFRS recommends for Management Commentary, and what have they since recommended be added?
• What is one stated risk if a company does not release sustainability data?
• Which standards also include sustainable development in addition to enterprise value creation?
• Which of the following is a reason to pursue sustainability disclosure and improvement, according to the material?
• Which organization originally was agnostic but later added sector-specific supplements?
• What is a tracking error?
• What are the four fundamental tenets of SASB's approach?
• Explain the concept of dynamic materiality.
• When a topic from one industry standard is not financially material to the company, what may happen with SASB reporting?
• What are ESG Ratings and Analytics Providers? Provide examples.
• What is historical cost accounting?
• What is the purpose of a SASB research project?
• How are ESG considerations typically incorporated into index construction?
• Which of the following is NOT a stated use of sustainability information by investors?
• Activity Metrics are intended to be used in conjunction with accounting metrics to
• What is the primary purpose of information, communication, and reporting in ESG risk management?
• In assurance engagements, what are suitable criteria?
• What is expected one month before publication?
• Which statement best describes that sustainability information can provide insights across near, medium, and long term?
• Which statements about industry-agnostic vs industry-specific disclosure guidance are accurate?
• Which standards are industry-agnostic?
• What type of guidance does a framework provide?
• What are Disclosure Topics?
• Which seven characteristics help categorize sustainability disclosure frameworks and standards?
• What share of market value do intangible assets represent in the United States today, compared with 1973?
• Which category of information includes corruption and bribery or supply chain management?
• Upon approval, a project is added to a public standard-setting agenda. What does SASB staff provide when moving forward with an update?
• What is ECA?
• Which two stages of value creation yield incremental value?
• Which statement best describes fundamental analysis's relationship to comparative analysis and company valuation?
• Which organization collects data through an annual survey and scores companies on a report-card-like scale from A to F?
• What major regulatory reform followed the Great Depression?
• Which of the following is an example of an intangible asset?
• Which of the following are examples of data aggregators that use public information?
• Which statement describes tasks to complete three to seven months before publication?
• What are the two principles defined by IFRS for Management Commentary?
• Which statement best describes the purpose of non-GAAP reporting?
• Which are examples of data aggregators?
• Which type of mandate is associated with greater breadth of information in sustainability reporting?
• What is positive screening?
• What is FASB?
• Which risk category is associated with changes in the shape of the yield curve?
• Which statement best describes the purpose of internal controls in data collection?
• What does Representationally faithful mean in SASB's metric quality?
• Among reporting channels, which is described as a web-based format?
• Which statement best differentiates a sustainability strategy from a sustainable business strategy?
• What archetype does the SEC's 2010 Guidance on climate change issues fall under?
• Which of the following is NOT among the five factors used to determine evidence of stakeholder interest for SASB standards?
• Which of the following is one of the four main characteristics of the definitions of traditional materiality?
• What prompted the development of financial information systems?
• Which example falls under policy-based initiatives demanding sustainability information?
• For shareholders and other providers of capital, what information is material?
• In the SASB risk-management process, which phase is designed to support internal decision-making by integrating SASB metrics into performance dashboards?
• How can screens be used in index construction?
• In ESG engagement for private equity, which factor enhances the ability to engage?
• What is the effect on capital costs when sustainability risks rise?
• Which of the following is a SASB reporting channel?
• What is industry analysis and why is it important to investors?
• How can screens and tilts be used together in index construction?
• Which of the following is NOT a common source of evidence used in SASB disclosures?
• Integrated reports include which type of information?
• Which of the following is NOT a component of effective ESG risk integration?
• Under the probability and magnitude test, which statement is most accurate?
• Which major type of information includes monetary losses as a result of legal proceedings associated with labor law violations?
• What describes a values-based screen in investing?
• What are the three types of organizations that significantly influence the supply and demand of quality sustainability data for capital markets?
• What trend is observed with ESG resolutions?
• What is the role of a technical protocol in SASB accounting metrics?
• Which organization issues voluntary disclosure guidance and is typically non-governmental and non-profit?
• What is the goal of IFRS Standards?
• Which standards focus on enterprise value creation?
• Under historical cost accounting, how is asset value reported on the balance sheet over time?
• What are the three goals for a SASB disclosure? What are two other objectives?
• What are the two primary characteristics of metrics used to capture performance on a sustainability topic?
• What is the role of certifications in reliable data collection?
• Which statement about the impact of sustainability information on price volatility is correct?
• How is materiality assessed under the probability and magnitude test?
• What are the two types of accounting metrics used by SASB and how are they used?
• What is the difference between Best-in-class and Momentum ESG investing?
• What is ESG integration?
• What are the three characteristics of an impact investment?
• Which task is appropriate two months before publication?
• Which of the following is a SASB Sustainability Dimension?
• Which statement best distinguishes acute sustainability impacts from progressive sustainability impacts?
• Financed Emissions refers to what?
• How does the US Supreme Court define material information?
• What is the role of examinations in data collection?
• In the universal owner approach, why is the fiduciary duty of loyalty to future generations increasingly questioned?
• Sustainability information provides better insight for predicting EPS volatility than ROE.
• How could mandated line-item disclosure reduce accurate assessment of a company's business?
• What best differentiates actual sustainability impacts from potential sustainability impacts?
• What is the role of internal controls in reliable data collection, and what are some examples?
• Which archetype provides a list of tenets to guide reporting rather than specifying exact formats?
• What are the three disclosure types that determine the usefulness of a sustainability disclosure?
• SASB's financial materiality focus helps investors by which of the following?
• Do major sustainability standards cover multiple timeframes?
• What is the role of a gap analysis in data reporting?
• What is a reported benefit of sustainability information to private equity?
• In the SASB risk-management process, which phase uses SASB metrics to support external decision-making by investors through disclosure in core communications channels?
• Which of the following statements is NOT one of the four main characteristics of traditional materiality definitions?
• Which assurance level is described as more limited in scope than reasonable assurance?
• What does fundamental analysis aim to determine?
• Why do companies internally demand sustainability information?
• What aspect of sustainability has regulatory guidance focused on so far?
• What is the main work of the CDP?
• Explain the conflict around standardization in accounting in the mid-19th century.
• Which board develops the SASB standards, and who appoints its members?
• Which component focuses on information, communication, and reporting for ESG-related risks?
• Which is NOT one of the four key areas of risk typically assessed in fixed-income investing?
• Which of the following is NOT listed as a major archetype shaping global disclosure rules?
• What are ERM processes fundamentally concerned with?
• Which statement about sector-specific supplements is true?
• Which of the following are considered supporting metrics?
• Which describes the order of SASB's structure from broad to specific?
• What are the major sustainability disclosure standards?
• In the SASB risk-management process, which phase uses SASB performance metrics to assess the likelihood, impact, and timing of a risk or opportunity?
• What are Metrics?
• Which two purposes are identified as equally important for the US SEC's existence?
• What is a common practice to signal reliability of SASB data?
• Which statement correctly describes the impact of sustainability risk on discount rates?
• Which of the following is an example of an internal control?