Get schooled in the ABCs of ESG

Get schooled in the ABCs of ESG
The resources available to advisers who have an interest in the subject have grown, including certificate programs from the CFA Institute and the National Association of Plan Advisors.
MAY 02, 2022

As interest in ESG has grown, so too has the amount of resources available to advisers who have an interest in the subject.

Since the CFA Institute launched its Certificate in ESG Investing course in 2019, more than 17,000 advisers have registered for it globally.

The program started in the U.S. just over a year ago, and about 200 advisers sign up for it every month, according to the organization.

“Advisers have to listen to their customers, and their customers are interested in ESG,” said Carole Crawford, managing director for the Americas region at the CFA Institute.

“In Europe it’s almost table stakes, whereas in the U.S. it’s a growth market — demand is growing,” Crawford said.

The nine-chapter course includes about 130 hours of studying time as well as a two-hour, 100-question exam. Surveys of advisers who have participated showed that 86% said it was beneficial to their careers, Crawford said.

“We’re seeing a lot of interest around data and ESG analysis and how to integrate ESG factors into a portfolio or investment decisions,” she said.

Another group, the National Association of Plan Advisors, last year added its own certificate program for 401(k) professionals. That course includes three modules and a 25-question test that requires a score of 70% or higher to pass.

The program is supported by nearly a dozen asset management firms, including BlackRock, Calvert, Dimensional and Natixis.

“Advisers are in the process of adopting ESG. We anticipate a large demand as information and ideas around this topic become available to the general public,” Kassandra Hendrix, chief marketing officer for LeafHouse Financial, one of the educational sponsors of NAPA’s program, said in an email. “In the past, there has been a misconception that an investor would give up returns by utilizing an ESG fund.”

Another firm that backs NAPA’s program, AllianceBernstein, has also developed a six-week course with Columbia University’s Earth Institute, the Climate Change and Investment Academy.

That course “draws on the expertise of climate scholars and investment professionals to integrate scientific and academic analysis of how climate change can affect investment risks and opportunities,” the company says.

Another approach is “boot camp” training, which Nuveen started offering in 2020. Last year, 235 people attended virtual sessions the company held, roughly double the attendance in the prior year, said Megan Fielding, senior director of responsible investing at the firm.

The events cover the basics of ESG, including terminology, financial materiality and risk-adjusted performance of ESG funds widely.

Advisers can get continuing education credit for the sessions, and Nuveen has also made a 20- to 30-minute version for clients, Fielding said.

Part of the initiative is to encourage advisers not to avoid the topic and help them realize they don’t need to be experts in ESG and can partner with specialists, she said.

“Clients will go to somebody who can speak to them about these topics. If their main adviser isn’t bringing it up, they will go to somebody else,” Fielding said.

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