PRO-SCR

Final check — GARP SCR — Sustainability & Climate Risk (Exam-Prep)

Answer the 45 questions. You need 80% or more to pass. You can retry as many times as you like.

Question 1What is the primary cause of the observed long-term warming of the Earth's surface?A natural increase in solar output since 1950Variations in the Earth's orbit over a few decadesIncreased greenhouse gas concentrations from human activityVolcanic eruptions releasing sulphate aerosols

Question 2A 'carbon budget' refers to:The amount of carbon a single forest can store each yearThe annual government spending on climate policyThe cumulative CO₂ that can be emitted while staying below a temperature targetThe price of one tonne of CO₂ in an emissions trading system

Question 3Which statement best distinguishes weather from climate?Climate is the long-term statistical pattern; weather is short-term conditionsWeather is global; climate is localClimate changes daily; weather is fixed for decadesThey are interchangeable terms

Question 4Methane has a higher global warming potential than CO₂ over a 100-year horizon mainly because it:Persists in the atmosphere for thousands of yearsTraps more heat per tonne despite being shorter-lived in the atmosphereIs emitted in far larger quantities than CO₂Has no warming effect at all

Question 5Scope 2 greenhouse-gas emissions are defined as:Emissions from a company's investment portfolio onlyDirect emissions from owned or controlled sourcesAll value-chain emissions, upstream and downstreamIndirect emissions from purchased electricity, steam, heating or cooling

Question 6The 'planetary boundaries' framework describes:National borders for carbon tradingA safe operating space across nine Earth-system processesThe maximum number of countries in the UNFCCCLimits on how far companies can be from the equator

Question 7In ESG, the 'G' most directly refers to:Governance — board oversight, ethics and accountabilityGreenhouse gasesGross domestic productGreen bonds

Question 8A 'stranded asset' in the climate-transition context is:A green bond that has maturedA renewable plant located in a remote areaAn asset that loses value before the end of its expected economic lifeAn asset fully insured against floods

Question 9The Paris Agreement's central temperature goal is to:Reverse warming to pre-industrial levels by 2025Limit warming to exactly 3°C by 2030Hold warming well below 2°C and pursue efforts toward 1.5°CCap CO₂ concentration at 600 ppm

Question 10Nationally Determined Contributions (NDCs) are:A type of green bond issued by central banksMandatory carbon taxes set by the UNFCCCCorporate net-zero targets verified by the SBTiEach country's self-set climate pledges under the Paris Agreement

Question 11Under an emissions trading system (cap-and-trade):Both price and quantity are fixed by regulatorsThe price is fixed and quantity is unlimitedThe quantity of emissions is capped and the market sets the priceEmissions are banned outright

Question 12The EU's Carbon Border Adjustment Mechanism (CBAM) is designed mainly to:Prevent carbon leakage by pricing the emissions embodied in importsSubsidise fossil-fuel exportsReplace the EU Emissions Trading SystemSet a global carbon tax for all countries

Question 13Which is an example of a TRANSITION risk rather than a physical risk?A flood damaging a factoryA new carbon price reducing the value of a coal portfolioA heatwave reducing crop yieldsSea-level rise eroding coastal property

Question 14Acute physical climate risks are best described as:Reputational damage from greenwashingGradual shifts such as rising average temperaturesChanges in carbon-pricing policyEvent-driven hazards such as floods, storms and wildfires

Question 15A green bond is distinguished from a sustainability-linked bond because it:Can only be issued by governmentsAdjusts its coupon based on ESG performance targetsPays no interest at allRing-fences proceeds for specified environmental projects

Question 16The coupon or margin on a sustainability-linked loan typically:Funds only renewable-energy projectsIs always fixed regardless of performanceVaries depending on whether the borrower meets predefined ESG targetsIs set by the IPCC

Question 17Climate-related liability (legal) risk most directly refers to:Litigation and claims against firms or directors over climate impacts or disclosuresPhysical damage to insured propertyThe cost of buying carbon allowancesForeign-exchange losses on green bonds

Question 18How does climate risk most commonly enter a bank's risk taxonomy?As an entirely separate, unrelated risk categoryAs a driver that amplifies existing credit, market, operational and other risksOnly through reputational riskIt does not affect banks

Question 19Weighted Average Carbon Intensity (WACI) is primarily used to:Calculate a carbon tax rateSet the coupon on a green bondForecast next year's weatherMeasure a portfolio's exposure to carbon-intensive holdings

Question 20The NGFS is best described as:A stock exchange for carbon creditsA network of central banks and supervisors that publishes reference climate scenariosAn accounting standard for green bondsA United Nations climate treaty

Question 21In the NGFS framework, an 'orderly' transition scenario assumes that:No climate action is taken at allClimate policy is introduced early and ramps up predictablyPolicy is delayed and then abruptPhysical risks dominate and transition risks are zero

Question 22A 'hot house world' NGFS scenario is characterised by:A balanced, low-risk outcomeVery high transition risk and negligible physical riskAchievement of net zero before 2030High physical risk because little or no transition action is taken

Question 23Climate scenario analysis is used instead of point forecasts mainly because:Regulators forbid making any forecastsThe future is deeply uncertain and non-linear over long horizonsScenarios are always more accurate than modelsThere is no historical climate data

Question 24Integrated Assessment Models (IAMs) are used to:Link emissions, economics and policy to translate pathways into impactsPrice individual green bondsAudit corporate financial statementsReplace the TCFD framework

Question 25A key data challenge in climate-risk measurement is that:There is too much precise asset-level hazard dataScope 3 and value-chain emissions are often estimated rather than measuredCarbon prices are perfectly predictableAll firms report identical, comparable metrics

Question 26The four pillars of the TCFD recommendations are Governance, Strategy, Risk Management and:Insurance and ReinsuranceMarketing and SalesLiquidity and CapitalMetrics and Targets

Question 27Under the TCFD, scenario analysis is most explicitly required within which pillar?GovernanceStrategyMetrics and TargetsRisk Management

Question 28IFRS S2, issued by the ISSB, is the standard that specifically addresses:Climate-related disclosures, incorporating the TCFD pillarsGeneral-purpose financial statements onlyCarbon-credit trading rulesBank capital requirements

Question 29The key difference between ISSB and EU CSRD reporting is that CSRD applies:Materiality only to physical risksSingle materiality focused only on enterprise valueNo materiality concept at allDouble materiality — both financial and impact materiality

Question 30Embedding climate risk into the standard risk-management cycle means:Identifying, assessing, controlling, monitoring and reporting climate risksCreating a separate department that ignores other risksDisclosing emissions only once per decadeOutsourcing all risk to reinsurers

Question 31In the 'three lines of defence' model, independent oversight of risk is provided mainly by:The first line (business units taking the risk)The second line (risk management and compliance functions)External auditors onlyThe marketing department

Question 32For insurers, the most direct effect of more frequent and severe catastrophes is:Lower demand for any insuranceHigher claims and loss ratios on property and casualty booksA guaranteed rise in investment returnsNo impact, because losses are always reinsured fully

Question 33A widening 'protection gap' in insurance refers to:The gap between green and brown bond yieldsExcess insurance capacity in the marketA growing share of losses that are uninsured or uninsurableA shortfall in carbon allowances

Question 34Catastrophe bonds are an example of:A government carbon taxA use-of-proceeds green bondA risk-transfer instrument moving catastrophe risk to capital marketsA net-zero portfolio benchmark

Question 35A credible corporate net-zero target should, above all:Prioritise deep absolute emission cuts before relying on offsetsRely mainly on purchasing offsets each yearExclude Scope 3 emissions in all casesSet a single 2050 goal with no interim milestones

Question 36The 'mitigation hierarchy' for credible climate action is:Buy credits and make no operational changesOffset first, then reduce if convenientAvoid, reduce, then offset only residual emissionsDisclose, then ignore

Question 37The Science Based Targets initiative (SBTi) primarily:Validates corporate emission-reduction targets against climate-science pathwaysIssues green bonds on behalf of companiesOperates the EU Emissions Trading SystemSets central-bank interest rates

Question 38'Financed emissions' for an investor refer to:Emissions from electricity it purchasesDirect emissions from its own officesScope 3 emissions attributable to its loans and investmentsEmissions avoided by green projects only

Question 39The PCAF standard is used to:Audit physical climate modelsPrice catastrophe bondsSet national carbon taxesMeasure and disclose financed emissions of loans and investments

Question 40A common critique of decarbonising a portfolio simply by selling 'brown' assets is that it:Violates the Paris Agreement directlyAlways increases financed emissionsShifts emissions to another owner without cutting real-economy emissionsIs illegal in most jurisdictions

Question 41The TNFD extends the disclosure logic of the TCFD to:Nature- and biodiversity-related dependencies, impacts, risks and opportunitiesCyber-security risksCurrency-exchange risksTax-reporting obligations

Question 42A corporate 'transition plan' is best described as:A reinsurance contractA single annual emissions numberA marketing slogan about sustainabilityA time-bound, costed strategy showing how the business moves to net zero

Question 43Greenwashing is primarily a risk because it:Overstates environmental credentials, inviting reputational and regulatory penaltiesReduces a company's carbon footprintGuarantees higher investment returnsIs required by the TCFD

Question 44The concept of a 'just transition' emphasises:Sharing the social costs and benefits of decarbonisation fairlyTransitioning only the wealthiest regions firstIgnoring social impacts to move fasterReplacing all jobs with automation

Question 45The real GARP SCR exam is best characterised as:A series of laboratory experimentsAn oral interview with GARP examinersA written thesis on climate policyA multiple-choice exam, including a multi-part case study, graded pass/fail

Final check — GARP SCR — Sustainability & Climate Risk (Exam-Prep)

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