✅Correct answer: Both A and R are true, and R is the correct explanation of A
Unit V: Financial Management
Topic: Value & Returns: Valuation of Bonds and Shares
📖 Explanation:
Sustainable or ESG (Environmental, Social, and Governance) investing focuses on investing in companies that demonstrate strong environmental and social responsibility along with good governance practices.
Assertion (A): Investors around the world are demanding socially and environmentally conscious options in equities, bonds, ETF or hedge funds.
Reason: This statement is true. There has been a significant global rise in ESG investing, where investors prefer companies and funds that follow sustainable and socially responsible practices.
Reason (R): Climate change and environment have become “defining factors in companies’ long-term prospects” and have led to significant reallocation of capital as shortages of clean water and air have become existential concerns.
Reason: This statement is also true. Environmental risks such as climate change, water scarcity, pollution, and sustainability issues directly affect a company’s long-term performance and risk profile.
Relationship between A and R:
The Reason correctly explains the Assertion because investors increasingly prefer ESG-compliant investments precisely due to growing concerns about climate change, environmental sustainability, and long-term business viability.
✅ Final Answer: Both A and R are true, and R is the correct explanation of A.