26 May, 2022 / Comment

What it’s like to take the CFA Certificate in ESG Investing

By Katerina Kosmopoulou, partner, J. Stern & Co; board member, CFA Society UK

J. Stern & Co partner shares her 'fun and informative' experience studying and sitting the exam

What it’s like to take the CFA Certificate in ESG Investing

The last time I took a professional qualification was two decades ago, when I passed my CFA Level 3 exam. But as an avid reader, and someone who sees learning as a never-ending journey, I found the process of taking the CFA Certificate in ESG Investing both informative and fun.

Formal training was a key part of my firm’s approach to ESG research, which is why I looked towards the Certificate in ESG Investing. The Certificate, originally developed by the CFA Society UK in 2019, and now administered and awarded by the CFA Institute, covers not only the various technical facets of ESG but also importantly highlights different approaches to the practical application of ESG principles within investing.

The Certificate, and its learning materials, have been developed by leading practitioners for practitioners, and have been recognised by the UN-backed Principles for Responsible Investment; an investor initiative with more than 4,000 signatories, it is the world’s leading proponent of responsible investment.

See also: – CFA Institute rolls out global ESG certificate

The material included in the official training manual covers nine chapters, going into detail about environmental, social and governance factors, and assessing their materiality; explaining the purpose of engagement and how it is achieved in practice; describing different approaches to integrating ESG analysis into a firm’s investment process; explaining how ESG factors may affect industry and company performance, and therefore, a security’s valuation across a range of asset classes. It also highlights different approaches to integrating ESG into the portfolio management process, details different screening approaches, and explains how the risk-return profile of a portfolio is impacted by ESG-integrated investing. Finally, it looks at the mandate construction process and the role it plays in the effective delivery of ESG investing.

I took the exam in September 2020 – the Covid-19 lockdowns providing a golden opportunity for me to study for the exam. The recommended study time is 130 hours, although as someone who has worked extensively in this area, I was able to cover the material in around 80, spread over several weekends.

The exam itself consists of 100 questions in total, split between different question types, including standard multiple-choice questions, and item set questions which consist of a vignette and four-six associated multiple-choice questions.

Though much of the material was familiar, it was still extremely helpful to go through the concepts in a structured way and reinforce my knowledge base. And some areas like mandate construction provided an insight into aspects of ESG that I’d had less exposure to previously.

In many respects, the curriculum’s breadth and depth is the strength of the Certificate. It is what makes it suitable for anyone working in the industry, whether in the front or back office, or adjacent roles like sales and distribution, product development, compliance, and risk.

So yes, I would absolutely recommend it! It is highly informative, deeply embedded in the actual practical application of ESG principles in investing, and in this fast-evolving field, it is an equally useful toolkit for established practitioners and newcomers alike.

A part of the Mark Allen Group.