The CFA Institute is bolstering the environmental, social, governance curriculum in its Chartered Financial Analyst examinations.
“The coverage has been light, and we recently dialed it up,” said Stephen Horan, managing director, credentialing, CFA Institute, Charlottesville, Va.
“Candidates that are sitting for the exam (Dec. 3) will be studying it.”
ESG represents about 5% of the curriculum for the level one exam and 10% for the level two exam, Mr. Horan said.
The second phase of the ESG rollout will appear next year for the level three curriculum.
“It will focus on the theme of sustainability ... both from a value perspective ... sort of a very clinical assessment of whether something is worth a lot or a little, as well as a values perspective, which is sort of non-financial,” Mr. Horan said. “That values perspective encompasses analyzing a company's effect on the environment as well as human rights issues, energy efficient, things like that” to evaluate the sustainability of a company.
The governance part of ESG has “played a fairly robust role in the curriculum,” Mr. Horan said. “Good governance is obviously a key ingredient to sustainable operations.”
“Where we historically have had scant coverage is the E and S part,” Mr. Horan said. “The reason for that has been the difficulty in getting a coalescence of how to treat it. ... So we have been spending a lot of time and effort just trying to sort that out, and found the common denominators.”