My Experience with CFA's Certificate in ESG Investing
What is it about and is it worth it?
Dear readers, so you have been following Quantifying ESG for a while and hopefully you have learnt a thing or two here about ESG investing.
Now let’s say you want to dive deeper and go through a formal certification program, what are the options available for you out there?
Having been through the CFA certificate in ESG investing, I would say that it is one of the better options because: [1] its breadth of coverage in the topic and [2] the CFA brand name in the financial industry.
In this post, I will share an overview my experience with the CFA certificate in ESG investing.
Let’s begin!
What is it about
As the name suggests, this is a certificate for ESG investing. Expect to learn topics such as approaches to responsible investment (from screening to impact investing) and how to analyze ESG factors.
A full list of learning outcomes is here (from the CFA website):
Context for different approaches to responsible investment and specifically, consideration of environmental, social and governance (ESG) factors.
Underlying issues that constitute factors within each of the environmental, social and governance areas.
Broader sustainability context and global initiatives.
The ESG market: relevance, size, scope, key drivers and challenges, and risks and opportunities.
Environmental factors, systemic relationships, material impacts, megatrends and approaches to environmental analysis at country, sector and company levels.
Social factors, systemic relationships, material impacts and approaches to social analysis at country, sector and company levels.
Governance factors, key characteristics, main models and material impacts.
Engagement and stewardship.
ESG analysis, valuation and integration.
Ability to analyze how ESG factors may affect industry and company performance, and security valuation across a range of asset classes.
ESG integrated portfolio construction and management.
Application of various of approaches to ESG analysis and integration across a range of asset classes.
Investment mandates, portfolio analytics and client reporting.
How much time would you need
Having been through the CFA program, I am happy to say you do not need 300 hours to get this certificate.
The CFA website recommends about 100+ hours of studying time for the exam, but from my own experience I think you can do with less — if you plan to do 2 hours of intensive studying on weekdays, 3 weeks of preparation (around 30 hours) should be sufficient.
I did this in July 2021 so the syllabus might have evolved, but I still think you would be able to cover all the nine chapters within 2-3 weeks.
Is it worth it?
The price tag for this certificate is US$865.
If you work in the financial industry, I strongly recommend getting your employers to sponsor this as this is probably not something you would want to fund out-of-pocket — unless you are super passionate about ESG investing.
If you need a letter for that, here is a template to get you started:
I would like to request your sponsorship for my studies in the CFA Institute’s Certificate in ESG Investing. I strongly believe that the benefits of this certification far outweigh the cost to the company.
ESG (Environmental, Social, and Governance) investing has become increasingly important in today's business landscape. By obtaining this certificate, I will gain a deep understanding of sustainable investing practices, responsible corporate governance, and environmental and social impact assessment. This knowledge will enable me to make informed decisions that align with our company's values and contribute to our long-term success.
Additionally, the skills and knowledge I will acquire through this certification will directly benefit our organization. I will be able to analyze and evaluate companies based on their ESG performance, identifying potential risks and opportunities. This will enable us to make more informed investment decisions, mitigate risks, and maximize returns for our clients.
Your boss may say no to that, which you may then follow up by asking if ESG investing is an area of growth for the company. If not, and you are passionate about ESG investing, then maybe it is a sign that you should find a company elsewhere that does ESG investing.
Either way, asking gives you more information and you have nothing to lose.
If you are based in Hong Kong, you can also take advantage of the Pilot Green and Sustainable Finance Capacity Building Support Scheme, which allows eligible applicants to apply for a 80% subsidy upon completion of the certficate.
My experience
As mentioned above, I completed this certificate in 2021, when it was launched under CFA Society UK iinstead of the CFA institute.
Looking at the new syllabus, I would say the bulk of the program still looks familiar (of course with updates since 2021).
If you are going to pursue this certificate, get ready for some memorization. I used Anki to help with this, so that was helpful in preparing for the exam. Examples:
Q: Which body sets out the green bond principles?
A: ICMA - Internatonal Capital Markets AssociationQ: Supply chain emits X times GHG compared to direct operations. X =?
A: 4
One slightly annoying part of studying for this is that you have to choose the correct answer to certain questions even if you don’t believe it to be true.
For instance, when asked about the correlation of ESG with stock performance, even though there are numerous papers with conflicting conclusions, the “official” answer is that the correlation is mildly positive.
That being said, I still think this is a worthwhile certificate to get if you are interested to pursue a path in ESG investing and especially if your employer can sponsor this.
It is not a golden ticket to getting an ESG investing job, but it is definitely one of the more structured programs to get an overview of the key topics in this field.
The CFA institute has also recently launched a cohort-based program — the Climate Risk, Valuation, and Investing Certificate — which I am thinking of enroling in.
And yes, this post is #notsponsored, and I am only speaking from my experience of studying for this certificate. So, let me know in the comments if you have any other programs to recommend!