The CFA have recently introduced a level 4 qualification in ESG investing, supported by the UN PRI. Aimed at investment professionals, this qualification seeks to help practioners analyse and integrate ESG factors into their day to day job; anything from sales and distribution to product development across a variety of different asset classes. Existing IMC holders can also top up with the ESG qualification to lead onto the Diploma in Investment Management (ESG). But how will such a new qualification be received?
For many pension trustees the view holds that ESG investing limits diversification and underperformance, resulting in a low rate of adoption. Where it is adopted, this is can be viewed by some as a ‘box ticking’ exercise. However, several institutions have already highlighted the benefits of incorporating ESG not only to improve returns but manage risk more effectively (Columbia Threadneedle 2019).
As per the Latham and Watkins article on August 2nd “The 2018 and 2019 Regulations introduce a suite of new disclosure requirements to defined benefit and defined contribution schemes, aiming to further integrate ESG factors and disclosure into standard pension reporting requirements.”
As a result of ESG creeping up the agenda, Square Mile Investment Consulting and Research have developed an ESG integration assessment for business funds.: https://www.moneymarketing.co.uk/square-mile-new-initiatives-esg-investing/
The firm will provide ratings between zero (no incorporation) and 3 (ESG an integral part) across approximately 350 funds.
With such an interest, it will be fascinating to see if the rate of adoption for the new CFA certificate is high and the motive behind it. Does the course offer a real insight into how professionals can invest, or is it another box ticking exercise to show consideration for ESG?
The CFA have several articles highlighting the issues behind ESG investing as it doesn’t conform to traditional financial metrics; however, ways of managing this are becoming more prevalent. This article highlights further the issue of challenges in applying ESG methods across different asset classes. This is clearly something the CFA ESG qualification seeks to address. But how successful will this be?
At level 4, the CFA is at the same level as the IMC. It will be interesting to see who and how many people take on the qualification, whether firms will sponsor it and what impact it has on career opportunities. Will this become the standard qualification that firms look for in ESG? Or will this be viewed as a “green” version of the IMC, often self-funded by individuals but, in our experience, rarely requested by hiring firms?
As Plenum runs searches for firms looking to hire ESG capability, we are watching this with anticipation.
To discuss the market in more detail and see how Plenum’s network in the space can be of use please contact:
George Mingo or TC Jefferson.
george.mingo@theplenumgroup.com 07944733330
tcjefferson@theplenumgroup.com 07581466620