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What is ESG?

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Many organisations worldwide are aiming to gain knowledge and awareness for making better investment decisions in a rapidly changing world.

Deciding to study for the CFA Institute’s Certificate in ESG Investing will provide you with the ability to respond and adapt to changing environmental, social, and governance (ESG) factors. This information can then be used to conduct effective due diligence, which ultimately generates long-term value in unpredictable circumstances.

Let’s take a closer look at what ESG is, and what it could mean for you…

What workplace would benefit from the Certificate in ESG Investing?

The ESG framework is ideal for anyone who strives to make a positive impact when making decisions in the workplace. Strengthening your knowledge in this field will be beneficial by including the environmental, social, and governance factors when determining an investment’s financial returns and overall impact. However, the Certificate in ESG Investing can benefit anyone who works, or plans to work, in areas such as operations, strategy, or management within the institutional investment field. Aside from direct investment careers, there are a variety of opportunities where the use of ESG strategies would be beneficial.

The Certificate in ESG Investing is beneficial in roles such as:

  • Sales and distribution
  • Wealth managers
  • Product developers
  • Financial advisors
  • Consultants
  • Risk managers

There are also job titles that you may find interesting that are specifically tailored towards the Certificate in ESG Investing. Examples of these roles are:

  • ESG analyst
  • ESG advisor or associate
  • Sustainability/ESG director
  • Director of sustainable finance
  • ESG sales and delivery manager
  • ESG programme manager

What does the term ‘ESG’ mean?

Environmental Factors

While businesses and society are becoming increasingly more environmentally aware, the knowledge and skills from the ESG investing framework provide that niche that many organisations are searching for. Environmental factors are considered within the ESG framework, therefore you can work to make a positive impact on the planet while making better financial projections and investment decisions.

An ESG analyst would use relevant rating reports with carbon emission trends to determine if a stock in the energy market is a good investment.

Some of the environmental factors considered in ESG investing can be:

  • Climate change
  • Deforestation
  • Pollution
  • Green energy
  • Waste management
  • Water usage

Social Factors

Social factors in the ESG framework focus on the people that are involved in an organisation. For example, employees, board members, and customers are all considered if a decision will affect, or be influenced by, these people. An ESG analyst can use employee engagement metrics and labour standards for their ESG rating analysis.

Social factors that are applied in ESG Investing include:

  • Employee gender and diversity
  • Data privacy and security
  • Community relations
  • Company sexual harassment policies
  • Worker’s rights

Governance Factors

Governance factors are the third set of key elements to consider. This helps investors determine how a company is led and managed. ESG analysts will assess what types of internal policies exist that encourage transparency and accountability. They may also try to understand how executive incentives are aligned with stakeholder expectations.

More governance factors used in ESG investing and analysis include:

  • Board composition
  • Corruption
  • Political activities
  • Executive pay
  • Lawsuits
  • Lobbying

Who is the Certificate in ESG Investing course for?

Those who have studied CFA,  CAIA Charterholders, and Certified FRMs hoping to move into a more senior position, may be interested in gaining this ESG knowledge and skills. Alternatively, you may come from an accountancy or tax background and are looking to broaden your skills.

However, if you wish to make a positive change to the planet, and you feel like your workplace would benefit from improving its understanding of ESG issues, the certification may still be a perfect first step for you.

With Kaplan, you will have access to a range of additional resources and online content to help support you with the Certificate in ESG Investing course.

Have a look at our new Certificate in ESG Investing

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