The COVID-19 pandemic has brought ESG (environmental, social and governance) issues to the forefront of everyone’s minds.
ESG matters. And investors and companies around the world are reacting fast to this current situation, pointing to a longer term demand for investment professionals with green finance and responsible investment knowledge.
CFA Institute’s ESG Certificate may be a practical and affordable answer to augment your current skillset with some sustainable finance credentials.
Here’s the ultimate guide with all the info you need!
- Overview of Certificate In ESG Investing
- CFA ESG Certificate In A Nutshell
- Pass Rates & Pass Marks
- Topic Areas & Weights
- Exam Fees & Costs
- Exam Schedule & Key Deadlines
- What Are the Requirements for Certificate In ESG Investing?
- Benefits of the Certificate in ESG Investing
- ESG Investing vs. Sustainability & Climate Risk (SCR) Certificates: Which Is Right for You?
Overview of Certificate In ESG Investing
Initially developed by CFA UK in 2019, from 1st September 2021, the Certificate in ESG Investing is owned and administered by CFA Institute to provide worldwide access to this global credential.
This certificate is designed to meet the investment sector’s increasing demand for further education, guidance and standards around ESG (environmental, social and governance).
Since its launch, the CFA ESG certificate has already registered more than 11,500 registrations globally.
Most candidates have come from the UK, where the Certificate was first offered, followed by the US, Switzerland, France, Hong Kong and Singapore with interest growing around the world.
This course goes for a broad framework approach, teaching its candidates how to analyze and integrate material ESG factors into their day-to-day investment roles. It is designed for investment professionals in all roles, from asset management to sales and distribution, as well as students seeking a career in the investment sector.
The Certificate in ESG Investing is also recognized by the UN PRI (Principles for Responsible Investment), a leading proponent of responsible investment. Although supported (but not part of) United Nations (UN), UN PRI is an independent, non-profit organization that seeks to encourage investors to use responsible investment to enhance returns and better manage business risks.
There are in-person and online proctored exams (certain locations only) managed by Prometric, CFA Institute’s global testing partner. It is best to check if in-person or remote testing options are available in your area before registering.
CFA ESG Certificate In A Nutshell
The Certificate in ESG Investing:
- is designed to equip investment professionals with a base knowledge and skillset to integrate ESG factors into the investment process. With no formal entry criteria, it is suitable for a broad range of financial services professionals (not just investment-related) who are keen to understand ESG issues;
- consists of a one-part, computer-based testing exam consisting of 100 questions in 2 hour and 20 minutes, with remote exam testing now available;
- has 2 types of questions in this exam: standard multiple-choice and item sets, i.e. there are no ‘essay’ type, constructed-response exams like CFA Level 3.
- The course starts with a broad overview of the ESG factors, before focusing on how to apply these knowledge in portfolio construction, valuation, analysis and analytics reporting.
- In terms of study hours, it is recommended that ESG exam candidates devote around 130 hours in total to complete the certification.
- CFA Institute publishes the Official Training Manual (OTM), which forms the syllabus ESG exams are based on. The syllabus is updated every year on 1st October, and covers exams taken during 1st Oct to the following 30 Sep. It is important to make sure you have the right syllabus for your exam timeframe.
The ESG exam can be taken all year round, and also remotely via online proctoring in certain locations only. You can find your nearest ESG test center here. Candidates are required to sit the exam within 12 months of the registration date.
Pass Rates & Pass Marks
Just like Investment Management Certificate, the Certificate in ESG Investing is a Level 4 qualification, which means that the level of difficulty of the qualification broadly equates to the first-year of an undergraduate degree.
According to a candidate who passed recently (who is also a CFA charterholder and an IMC certificate holder), about 25% of the ESG Investing exam questions are quantitative.
The pass mark ranges from 60%-70%, with an average pass rate of 60%-75%.
Topic Areas & Weights
The Certificate in ESG Investing consists of one exam with 100 multiple-choice and item-set questions, with an allocated time of 2 hours and 20 minutes.
The ESG syllabus has 9 chapters which covers a broad overview of the development of ESG investing, combined with technical aspects such as portfolio constructions.
The topics areas and exam weights are as below:
|ESG Investing Certificate Topic Areas||Topic Weights|
|Introduction to ESG||4% – 8%|
|The ESG Market||4% – 8%|
|Environmental Factors||6% – 12%|
|Social Factors||6% – 12%|
|Governance Factors||6% – 12%|
|Engagement & Stewardship||6% – 10%|
|ESG Analysis, Valuation & Integration||20% – 32%|
|ESG Integrated Portfolio Construction & Management||8% – 14%|
|Investment Mandates, Portfolio Analytics & Client Reporting||4% – 8%|
Exam Fees & Costs
The ESG Investing exam fee structure is nice and straightforward:
- Registration fee and online learning materials cost US$ 675
- Hard copies of the syllabus can be purchased for an extra US$ 135 + shipping.
It is a cost effective and time efficient investment to demonstrate green finance /responsible investing credentials internationally.
Exam Schedule & Key Deadlines
The Certificate in ESG Investing is currently available via Prometric in hundreds of test sites, with plans to further expand the availability of this qualification globally.
Just like Investment Management Certificate (IMC), candidates can sit for Certificate in ESG Investing throughout the year (except holidays and weekends).
That said, candidates must carefully plan the time of exam registration, bearing in mind that the ESG Investing syllabus (Official Training Manual, OTM) gets updated annually on 1st October and remains until 30th September the following year, unless otherwise necessary.
Here’s a quick summary of the registration and exam scheduling details:
|Exam Registration||ESG Investing exam registration is done through CFA Institute, with the certificate currently available globally.|
Upon registration, candidates will receive an email confirmation providing scheduling instructions, a unique username and password.
Note that candidates can only view exam availability after registration.
|Exam Scheduling||After registration and payment, candidates will need to wait for 2 working days before they are permitted to schedule an exam.|
Candidates can sit for exam on most working days at selected Prometric centres worldwide.
|Exam Registration Expiry||Candidates have 1 year from initial exam registration to sit for the exam.|
Otherwise, the registration will expire after 1 year with no refunds given. Re-registering will cost the same exam fee each time.
|Number of Exam Attempts||Candidates are not allowed to take the ESG exam more than 4 times in any 4 month test window.|
No further attempts are allowed once a candidate achieves a passing score.
For resits, candidates need to wait 3 working days after the exam date to re-register for the exam.
What Are the Requirements for Certificate In ESG Investing?
While a solid grounding in the investment process is strongly recommended (via formal qualification or experience), there are no formal entry criteria for candidates.
We think it is great that CFA Institute has made this course so approachable to all, because this COVID-19 pandemic experience we are all going through now is just going to bring ESG issues to the forefront in investing.
Candidates who successfully pass the ESG exam can claim a digital badge and earn the CFA Institute’s Certificate in ESG Investing.
Benefits of the Certificate in ESG Investing
Having the Certificate in ESG Investing could be a key differentiator in the financial services sector, especially if you’re job hunting during this COVID-19 pandemic.
Given the low time and money investment, it does represent good value for money given the unique and practical qualification you would attain.
By completing and earning the Certificate in ESG Investing, you can expect to:
- Expand your ESG knowledge and stay ahead in your field
- Improve your career prospects and differentiate yourself from other job candidates
- Develop the skills and competencies to fulfil both your fiduciary responsibilities and your firm’s responsible investment mandates
- Gain a prestigious qualification (and digital badge) from CFA Institute, recognized by leading firms
- Pave your way for further finance designation such as CFA, FRM, IMC or CAIA as you further specialize.
ESG Investing vs. Sustainability & Climate Risk (SCR) Certificates: Which Is Right for You?
In short, while both qualifications focus on sustainable investing, there are some slight differences in focus about them:
- Certificate in ESG Investing has a slightly broader focus on ESG factors, and how the investment industry can adapt to that change in investor preferences. It also contains covers key concepts relating to climate change (including climate mitigation, and adaptation and resilience) and a range of climate change initiatives, as well as featuring more extensive study of the opportunities arising from the circular economy, green products, and clean and technological innovation.
- On the other hand, Sustainability & Climate Risk (SCR) certificate mainly focuses on educating risk professionals on how to manage the main environmental risk (arguably just the “E” part of ESG), i.e. climate change.
Both SCR and ESG Investing Certificate are now available globally.
While both are good quality qualifications from reputable organizations, the choice depends on which certificate has more relevance to your preferred career path: investments or risk management.
|CFA UK’s Certificate in ESG Investing||GARP’s Sustainability & Climate Risk|
|Suitable for||Students who are keen on an investment career; or|
Investment professionals of all roles (asset management, sales & distribution, wealth management, product development, financial advice, consulting, risk etc), who are looking to understand and integrate ESG issues into the investment process
|Risk management professionals of all disciplines (finance, supply chain, operations, technology etc) who are keen to learn about sustainability and how to manage climate risk in their industries.|
Students interested in a risk management career.
|Pre-exam qualifications||None, although some insights in the investment process is strongly recommended (via formal qualification or experience)||None|
|Number of Exams||1||1|
|Exam Frequency||Available to book throughout the year (except weekends and holidays) for in-person exams globally.|
Also available to book for remote proctoring at home globally.
Maximum 4 attempts in 4 months
|Specific 2 week windows about 3-4 times a year.|
|Exam Format||100 multiple-choice and item set questions in 2 hours and 20 minutes|
On-site computer-based testing or online remote testing
|80 multiple-choice questions in 3 hours|
On-site computer-based testing
|Pass Rates||Between 60%-75%||Data not available yet as first SCR exams start on Sep 2020|
|Fees and Costs||US$ 675||Around US$ 525-650 depending on GARP membership status or presence of other credentials|
|Study Hours Needed||130 hours||100-130 hours|
|Post Exam Requirements||None||None, although there are 20 hours of voluntary continuous professional development (CPD) every 2 years|
Overall, the Certificate in ESG Investing seems to be a cost efficient means to signal your green finance credentials in this increasingly competitive marketplace.
If you’re in the investment sector, this ESG qualification would be useful to have a solid base level of knowledge about ESG and how to incorporate it into your day-to-day role. If you’re a student keen to start a career in investments, this certification – combined with Investment Management Certificate (IMC) – could give you a great head start with ESG credential as a valuable differentiator.
Is this CFA ESG Certificate something you’d consider taking on to enhance your resume/CV? Let us know in the comments below!
Meanwhile, you may find these related articles in our Beginner’s Guide series of interest:
- SCR (Sustainability & Climate Risk) Certificate: A Beginner’s Guide
- IMC (Investment Management Certificate): A Beginner’s Guide
- CFA Exams in 2021: A Beginner’s Guide
- CFA Investments Foundation: A Beginner’s Guide
- CAIA (Chartered Alternative Investment Analyst): A Beginner’s Guide
- FRM (Financial Risk Manager): A Beginner’s Guide