Land-system change (Option B) has been breached due to deforestation, agriculture expansion, and urbanization, which have led to:
Loss of biodiversity.
Disruption of ecosystems and carbon sequestration processes.
Option A (Ocean acidification) is a major concern but is approaching, not yet fully breaching, planetary boundaries.
Option C (Stratospheric ozone depletion) has improved due to international regulations like the Montreal Protocol.
References:
Stockholm Resilience Centre: Planetary Boundaries Report (2023)
IPCC Special Report on Climate and Biodiversity
UNEP Ozone Layer Recovery Updates

Engagement (Option B) is the active process of fund managers interacting with investee companies to:
Encourage ESG improvements.
Address material risks impacting long-term value.
Option A (Monitoring) is passive observation, not action.
Option C (Corporate sustainability) applies to company policies, not investor actions.
References:
PRI Active Ownership 2.0 Report
UK Stewardship Code
OECD Investor Engagement Best Practices

Human rights are most likely categorized as an external social factor.
Human rights (A): Human rights issues pertain to the broader societal impacts and obligations of companies towards external stakeholders, including communities and individuals affected by the company's operations. These are external social factors because they involve the company's interaction with the society at large.
Product liability (B): Product liability is typically considered an external factor but is more related to legal and regulatory compliance rather than social factors.
Working conditions (C): Working conditions are internal social factors as they pertain to the company's treatment of its employees and the internal work environment.
Reference:
CFA ESG Investing Principles
MSCI ESG Ratings Methodology (June 2022)

Firms with agovernance heritageprioritizeengagement at the board levelbefore escalating issues to senior management. This approach aligns withbest practices in corporate governance, where oversight and decision- making originate at theboard levelrather than operational management.
Firms with asocial heritage (A)focus on labor rights and diversity, while those with anenvironmental heritage (C)prioritize sustainability and climate-related engagements.
References:
* CFA Institute Corporate Governance Framework
* UK Stewardship Code 2020
* OECD Guidelines on Corporate Governance
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Regarding ESG issues, asset owners set the tone for the investment value chain. Asset owners, such as pension funds, endowments, and insurance companies, have significant influence over the incorporation of ESG factors in investment strategies due to their large capital allocations and long-term investment horizons.
* Investment Mandates: Asset owners often set ESG-related mandates and guidelines for asset managers, influencing how ESG factors are integrated into investment decisions. Their requirements shape the strategies and practices of the entire investment value chain.
* Demand for ESG Integration: By prioritizing ESG considerations, asset owners drive demand for
* sustainable investment products and services. This, in turn, encourages asset managers and investment consultants to develop and offer ESG-integrated solutions.
* Leadership Role: Asset owners play a leadership role in promoting sustainable investing practices.
Their commitment to ESG issues can lead to broader adoption and standardization of ESG integration across the investment industry.
References:
* MSCI ESG Ratings Methodology (2022) - Highlights the critical role of asset owners in setting ESG priorities and influencing the investment value chain.
* ESG-Ratings-Methodology-Exec-Summary (2022) - Discusses the impact of asset owners' ESG mandates on the practices of asset managers and the broader investment ecosystem