Certified Environmental Social and Governance Analyst (CESGA) EFFAS Practice Test

Which of the following investment strategies is designed specifically to promote environmental sustainability?

1. Divestment

2. Sustainable agriculture

3. Socially responsible investing

4. Negative screening

The correct answer is: Sustainable agriculture

The investment strategy focused specifically on promoting environmental sustainability is sustainable agriculture. This strategy encompasses practices that not only produce food and resources but do so in a way that preserves the environment, enhances biodiversity, and reduces carbon footprints. Sustainable agriculture emphasizes the responsible use of resources and minimizes negative impacts on the ecosystem, ensuring that agricultural practices can be maintained for future generations. While other strategies listed, such as socially responsible investing and negative screening, can incorporate elements of environmental sustainability into their frameworks, they do not exclusively focus on it. For instance, socially responsible investing takes a broader view that includes social and governance factors alongside environmental considerations, making it a more general approach rather than one solely centered on environmental sustainability. Negative screening involves excluding certain industries or companies from a portfolio based on their environmental or social practices but does not actively promote sustainable practices directly. In contrast, sustainable agriculture is inherently designed to foster environmental sustainability through specific techniques and practices aimed at becoming more environmentally friendly in food production and land management. Therefore, it stands out as the direct and specific approach that promotes the principles of environmental sustainability.