Certified Environmental Social and Governance Analyst (CESGA) EFFAS Practice Test 2025 - Free CESGA Practice Questions and Study Guide

The correct answer is capital structure, as it does not fall under the traditional categories of Environmental, Social, and Governance factors. ESG factors are primarily focused on how companies operate in relation to environmental sustainability, social equity, and governance practices.

Environmental impact assesses how a company contributes to climate change, pollution, and resource depletion. Social responsibility examines a company's effects on stakeholders, including labor practices, community engagement, and product safety. Governance practices evaluate the leadership structures, board diversity, executive pay, and corporate policies that govern a company’s operations.

In contrast, capital structure pertains to the way a company finances its operations, typically through a combination of debt and equity. While capital structure can influence a company's risk profile and overall financial health, it is not classified as an ESG factor because it does not directly concern the company's environmental policies, social commitments, or governance practices.