CFA Level I · CFA Level I Exam · Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits
An investment analyst reviews a company's exposure to carbon regulation, workforce safety and board independence. Which factor is best described as a governance factor within an ESG framework?
Board independence is the governance factor. Governance concerns how a company is directed and controlled, including board structure and oversight. Carbon regulation exposure is an environmental factor, and workforce safety is a social factor in the ESG framework.
- ABoard independenceCorrect
- BWorkforce safety
- CCarbon regulation exposure
Explanation
Board independence relates to how the company is directed and controlled, which is governance. Carbon regulation exposure is environmental and workforce safety is social.
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