CFA Institute offers certificate in ESG investing

The certificate focuses on analyzing ESG factors and integrating them into portfolios. It also provides ESG fluency for people working in functions such as sales and distribution, wealth management, product development, financial advice, consulting and risk.

Growing demand for sustainable investing has caused a professional credential in the topic to cross the Atlantic.

The CFA Institute announced this week that it would offer a Certificate in ESG Investing. The organization, which grants the chartered financial analyst designation, said the certificate represents the first global qualification in the environmental, social and governance investing process.

The certificate focuses on analyzing ESG factors and integrating them into portfolios. It also provides ESG fluency for people working in functions such as sales and distribution, wealth management, product development, financial advice, consulting and risk.

“We are seeing a real acceleration of interest in ESG investing — a major development that will shape the future of finance — while increased demand from clients and investment management firms has fueled the need for education,” CFA Institute chief executive Margaret Franklin said in a statement. “This certificate is the first of its kind to be made available globally, and will equip practitioners with foundational knowledge and competencies, enabling them to better serve the needs of their clients and contribute to building trust within the industry.”

The certificate is available in the United States, Canada, Brazil, Hong Kong, the United Kingdom, France, Netherlands, Switzerland, Finland, Denmark, Luxembourg, Spain, Ireland, Norway, Sweden and Germany.

The certificate was created by the CFA Society of the United Kingdom and debuted in September 2019. It was initially marketed in the U.K. and Europe, where it caught on with a combined 6,000 registrations. Now the CFA Institute wants to expand its reach.

“Demand has exceeded expectations in the U.K.,” said Nick Bartlett, head of practice analysis at the CFA Institute. “We’ve seen a lot of interest in other parts of the world in developing [ESG] skills and knowledge and supplying that. What we’re looking to do is enlarge the global nature of the program in the coming months.”

A CFA Institute report released in December showed 69% of retail investors and 76% of institutional investors have an interest in ESG investing. ESG assets are on a pace to hit $53 trillion by 2025. Regulators at the Securities and Exchange Commission also are demonstrating an intense focus on ESG oversight.

ADVISERS EXPRESS INTEREST

Investment advisers expressed an interest in an ESG certificate. Advisers have to make sure their skills keep pace with the ESG demand, said Charles Sachs, chief investment officer at Kaufman Rossin Wealth.

“More and more clients, particularly high-net-worth clients and families, will have a mandate related to ESG,” Sachs said. “Many advisers, while they know about this space, they don’t know the nuances of it.”

It’s one thing to help a client avoid exchange-traded funds or mutual funds with oil stocks in them. Building a whole portfolio around ESG is a bigger challenge.

“Most of us haven’t implemented something at scale,” Sachs said. “It’s important that we’re up to speed and we’re ready to go because we’ll be pulled in that direction more and more.”

Karen Wawrzaszek, principal and senior director of impact and ESG investing at SBSB Financial Advisors, said she has been exploring an ESG credential. Advisers who obtain one can stand out from their competition.

“I would obtain the credential myself actually as a differentiator from those that may unwittingly advocate for green-washed products,” Wawrzaszek said. “It’s going to be important to separate advisers who are able to actually articulate the merits of [the ESG] investment lens for investors.”

The Certificate in ESG Investing can be earned by completing a self-study course of approximately 130 hours and then passing a two-hour and 20-minute computer-based exams consisting of 100 questions. The exam can be taken at a proctored testing center or online where available.

The cost of the exam and online learning is $665. Passing the exam results in 20 continuing education credits.