CFA Institute moves away from ESG terminology
Leading education provider CFA Institute has removed “ESG” from its qualification, the latest in the backlash against the term.
The organisation, which provides the prestigious Chartered Financial Analyst qualification among others, said it will rename its Certificate in ESG Investing next month.
The certificate was launched in 2021 and will be rebranded to the Sustainable Investing Certificate.
It said: “Since the certificate first launched, the concept of ESG investing has evolved and has, at times, had varied meanings in different markets. The term ‘sustainable investing’ now more accurately captures the broader, long-term impact and investing goals that the certificate aims to support.
“While we are changing the name of the certificate, the curriculum will remain the same, covering the wide variety of factors within each of the environmental, social and governance areas of ESG investing.”
The CFA Society Australia has over 3,500 investment professionals, and there are more than 200,000 CFA charterholders worldwide.
This is the latest in a series of decisions by organisations, including fund managers, to move away from the ESG term around fears of greenwashing and political backlash.
Commenting on the CFA’s decision, Tony Adams, head of sustainable investment research at Lonsec, said the research house is seeing an increasing renaming of funds and activities.
“While this is, in part, a possible response to the political connotations attached to the label ESG, it also represents a better understanding and increased focus on some of the key challenges,” he said.
He also clarified the technicalities between ESG and sustainability. ESG is viewed as a specific tool or framework for evaluating specific performance criteria, while sustainability takes a broader, holistic view.
“More and more, traditional ESG is seen as an embedded part of an asset manager’s standard investment process and a critical tool for that manager to gain a better understanding of the risks and opportunities facing a potential investment.
“Sustainability has a more outward focus and captures the impact a company, through either its operations or the goods and services it provides, has on the world around it rather than the typical more inward-facing ESG. It is important to note that asset managers who are strong at ESG are not automatically aligned with sustainability objectives.”
AUTHOR
Laura Dew
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