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

Which statement about "sustainable development" is correct?

1. It meets the needs of the present without jeopardizing future generations

2. It is an investment strategy incorporating ESG factors for risk management

3. It is the responsibility of enterprises for their societal impacts

4. It includes sectors like fossil fuel extraction and nuclear energy

The correct answer is: It meets the needs of the present without jeopardizing future generations

The statement that sustainable development meets the needs of the present without jeopardizing future generations is foundational to the concept itself. This principle emphasizes a balance between fulfilling current needs—such as social equity, economic growth, and environmental protection—while ensuring that future generations can also meet their needs. Sustainable development is crucial in guiding policies and practices toward long-term resilience and equity, highlighting the importance of stewardship for the planet and its resources. This principle is derived from key documents such as the Brundtland Report, which articulated this definition in 1987, setting the stage for international discussions on sustainability. By focusing on a multi-generational perspective, this approach seeks to create a harmonious relationship between human activity and the Earth's ecological systems, avoiding strategies that may provide short-term benefits at the expense of future viability. In contrast, while investment strategies that incorporate ESG factors for risk management do align with sustainability principles, they do not encompass the broader societal and environmental implications of sustainable development. Similarly, though enterprises have a responsibility towards societal impacts and certain sectors may adopt sustainable practices, the essence of sustainable development is more comprehensive and holistic, focusing on intergenerational equity.