Chartered Banker Institute Qualifications Sustainable and Green Finance Syllabus

Sustainable and Green Finance syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Sustainable and Green Finance in Chartered Banker Institute Qualifications, not a summary of it.

1. 1

   The Case for Sustainable Finance

   4 topics

   • Climate change and the financial system
     • Physical, transition and liability risks
     • The role of banks in the net-zero transition
   • The UN Sustainable Development Goals and banking
   • Stakeholder capitalism and purpose-driven banking
   • The Principles for Responsible Banking
2. 2

   ESG Risk and Opportunity

   4 topics

   • Environmental, Social and Governance factors
     • Integrating ESG into credit and risk assessment
     • ESG data, ratings and limitations
   • Climate risk management
     • Scenario analysis and climate stress testing
     • TCFD-aligned disclosure
   • Greenwashing risk and the FCA anti-greenwashing rule
   • Just transition and social considerations
3. 3

   Green and Sustainable Products and Markets

   4 topics

   • Green and sustainability-linked loans
     • Use-of-proceeds versus KPI-linked structures
   • Green, social and sustainability bonds
   • Sustainable retail propositions
     • Green mortgages and retrofit finance
   • Carbon markets and offsetting
4. 4

   Regulation, Standards and Reporting

   4 topics

   • UK and international disclosure regimes
     • Sustainability Disclosure Requirements
     • ISSB and IFRS S1/S2 standards
   • Taxonomies and labelling standards
   • Measuring and reporting financed emissions
   • The Chartered Banker Institute Green Finance Certificate scope

Sustainable and Green Finance flashcards for Chartered Banker Institute Qualifications

19 of 50 cards from the Sustainable and Green Finance deck — real questions with worked answers.

1. How does climate change create financial risk, and what are the two broad categories of climate-related financial risk?

   Climate change feeds into the financial system through two transmission channels: (1) Physical risks - losses from climate and weather events (acute, e.g. floods/storms) and long-term shifts (chronic, e.g. rising sea levels, heat); and (2) Transition risks - losses arising from the adjustment to a low-carbon economy (policy/legal changes, technology shifts, market sentiment, and reputational change).

2. Define 'physical risk' and distinguish acute from chronic physical climate risk.

   Physical risk is the financial risk from the physical impacts of climate change. Acute physical risk stems from discrete, severe events such as floods, wildfires, hurricanes and storms. Chronic physical risk stems from longer-term, gradual shifts such as rising sea levels, sustained higher temperatures, drought and changing precipitation patterns.

3. Define 'transition risk' and list its main drivers.

   Transition risk is the financial risk arising from the process of adjusting to a lower-carbon economy. Its main drivers are: policy and legal change (e.g. carbon pricing, litigation), technology change (e.g. clean tech displacing incumbents), market change (shifts in supply and demand/investor sentiment), and reputational change.

4. What is a 'stranded asset' in the context of climate transition risk?

   A stranded asset is an asset that suffers an unanticipated or premature write-down, devaluation or conversion to a liability because of changes associated with the low-carbon transition - for example, fossil-fuel reserves that cannot be burned under carbon budgets, or high-emitting infrastructure rendered uneconomic by policy or technology change.

5. How many UN Sustainable Development Goals (SDGs) are there, when were they adopted, and what target year do they set?

   There are 17 Sustainable Development Goals (with 169 targets). They were adopted by all UN member states in 2015 as part of the 2030 Agenda for Sustainable Development, with a target year of 2030.

6. Why are banks considered critical to delivering the UN SDGs, and which SDG is most directly about partnerships/finance?

   Banks mobilise and allocate capital, so they can direct finance toward sustainable activities and away from harmful ones, helping close the large SDG funding gap. SDG 17 (Partnerships for the Goals) most directly concerns financing and collaboration, while goals such as SDG 7 (affordable clean energy) and SDG 13 (climate action) depend heavily on bank lending and investment.

7. What is 'stakeholder capitalism' and how does it differ from shareholder primacy?

   Stakeholder capitalism is a model in which a company creates long-term value by serving the interests of all stakeholders - customers, employees, suppliers, communities and the environment - not just shareholders. It contrasts with shareholder primacy (the Friedman doctrine), where maximising shareholder returns is the firm's sole objective.

8. What is meant by 'purpose-driven banking'?

   Purpose-driven banking is an approach in which a bank defines a clear social purpose beyond profit and aligns its strategy, products, culture and capital allocation to deliver positive outcomes for customers, society and the environment, treating financial returns and societal benefit as mutually reinforcing rather than conflicting.

9. What are the Principles for Responsible Banking (PRB), who convenes them, and how many principles are there?

   The Principles for Responsible Banking are a framework launched in 2019 by the UN Environment Programme Finance Initiative (UNEP FI). There are six principles that align signatory banks' business strategy with the SDGs and the Paris Agreement.

10. List the six Principles for Responsible Banking.

    1. Alignment (with SDGs, Paris Agreement and relevant frameworks); 2. Impact & Target Setting; 3. Clients & Customers; 4. Stakeholders; 5. Governance & Culture; 6. Transparency & Accountability.

11. What does 'ESG' stand for and give examples of factors under each pillar?

    ESG stands for Environmental, Social and Governance. Environmental: climate change, emissions, resource use, pollution, biodiversity, water. Social: labour standards, health and safety, diversity, human rights, community relations, data privacy. Governance: board structure, executive pay, business ethics, transparency, anti-corruption.

12. Distinguish ESG integration, negative screening and positive (best-in-class) screening as investment approaches.

    ESG integration explicitly incorporates ESG factors into financial analysis and decisions. Negative (exclusionary) screening excludes sectors/companies that fail ESG criteria (e.g. tobacco, weapons, thermal coal). Positive/best-in-class screening selects companies with strong ESG performance relative to peers within a sector.

13. What is the difference between 'single materiality' and 'double materiality' in sustainability reporting?

    Single materiality (financial materiality) considers only how sustainability issues affect the company's financial value (outside-in). Double materiality also considers the company's impact on society and the environment (inside-out). Double materiality is the basis of the EU's reporting framework (CSRD); the ISSB standards focus on financial materiality.

14. What are the four core elements (pillars) of the TCFD recommendations for climate-related disclosure?

    The Task Force on Climate-related Financial Disclosures (TCFD) is structured around four pillars: 1. Governance; 2. Strategy; 3. Risk Management; 4. Metrics and Targets.

15. What is climate scenario analysis and why do banks use it for climate risk management?

    Climate scenario analysis explores how a bank's portfolio would perform under different plausible future pathways (e.g. orderly transition, disorderly transition, hot house world). Because climate outcomes are uncertain, non-linear and long-term, scenario analysis - rather than historical data - is used to assess resilience, identify vulnerabilities and inform strategy and capital planning.

16. What are the NGFS climate scenarios, and name the broad scenario families.

    The Network for Greening the Financial System (NGFS) publishes reference climate scenarios used by central banks and supervisors. The broad families are: Orderly (early, smooth action), Disorderly (delayed/divergent action with higher transition risk), Hot House World (limited action, high physical risk), and Too Little Too Late (delayed and fragmented action giving both high transition and physical risk).

17. Define 'greenwashing'.

    Greenwashing is the practice of making misleading, exaggerated, unsubstantiated or false claims about the environmental or sustainability credentials of a product, service, investment or organisation, so that it appears more environmentally friendly or responsible than it actually is.

18. What is the FCA anti-greenwashing rule, when did it take effect, and to whom does it apply?

    The FCA anti-greenwashing rule (part of the Sustainability Disclosure Requirements / SDR regime) came into force on 31 May 2024. It applies to all FCA-authorised firms and requires that any sustainability-related claims about products or services are fair, clear, not misleading, and consistent with the actual sustainability characteristics - claims must be correct, capable of substantiation, clear, complete and comparable.

19. Name the four investment labels available under the FCA's Sustainability Disclosure Requirements (SDR) labelling regime.

    1. Sustainability Focus; 2. Sustainability Improvers; 3. Sustainability Impact; 4. Sustainability Mixed Goals. To use a label, at least 70% of the fund's assets must meet the relevant sustainability objective/criteria.

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