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The Case for a Rigorous ESG Certification

Emily Lambert, Marion Rockwood

While the broader financial analyst community has its Chartered Financial Analyst (CFA) certification process, the ESG community has nothing comparable and would benefit from the implementation of a process similar to the CFA Program. The ESG certification process would credit individuals possessing a body of knowledge about responsible investment and be earned by having individuals pass one or more examinations with meaningful subject matter and that were sufficiently challenging to have a limited passrate. The certification process suggested must be well respected for being serious and rigorous, in order todemonstrate commitment to the field and value to employers.

To mainstream financial professionals, such an ESG certification process would attest that ESG analysis has a demonstrable role in the larger field of financial analysis. Within the ESG field itself, earning the designation would be a mark of personal breadth and depth of knowledge about the need for and uses of ESG analysis.

Other ESG-related organizations have had similar ideas, although the execution has fallen short of creating a universally recognized program. Since none of these programs have emerged as the standout, we see room for another that builds on their strengths, but adds rigor, increases scope, and emerges as the industry standard. The current offerings fail to teach the underlying skills necessary for all parts of ESG analysis, including how to file a shareholder proposal and how to incorporate ESG risks into financial evaluation models. Instead, they are informational and provide only a superficial overview of the field. They teach to those aware of the ESG field, but not to those who are active participants. Our envisioned ESG certification targets those who see ESG investing as a powerful tool for social change.

The exam we propose will most likely be aimed at new employees in the SRI space, individuals looking to join the field, or people changing jobs into the SRI field. This exam should give individuals the chance to demonstrate interest and commitment, and maybe act in lieu of experience. To provide a foundation forself-study, the curriculum should be text-based, including practice problems, real world examples, and a glossary, as opposed to methods such as video and online content, which imply opinion rather than fact.

This new designation would provide for the ESG industry what the CFA Program does for financial analysts. The CFA designation is the gold standard in financial analysis, so we would use it as a template both for the exam’s structure and content. The ESG designation will ideally become the singular certification in the field, replacing the diluted and dispersed certifications that currently exist. We envisionthat a global network of ESG organizations would adopt this program, giving it even broader recognition.