The CFA Institute leadership team has released an updated ESG policy statement to address the growing global focus on such issues as they relate to investment management and corporate reporting responsibilities.
CFA Institute consistently monitors key debates and evolving issues concerning the role and application of environmental, social, and governance (ESG) information in the investment management process. More thorough consideration of ESG factors by investment professionals can improve the fundamental analysis they undertake and ultimately the investment choices they make for the benefit of their clients.
Within the wide-ranging discussions about environmental, social, and governance issues, CFA Institute is specifically focused on the quality and comparability of the ESG information provided by corporate issuers and how to integrate various ESG factors into the investment selection process, which includes investment professionals’ ethical responsibility to communicate ESG information to clients.
Top Line Views
- Consider All Material Information. CFA Institute Standards of Professional Conduct require CFA® charterholders to conduct appropriate research and investigation of all material information relevant to their investment analyses and portfolio management decisions, recommendations, or actions.
- Including Material ESG Factors. CFA Institute believes this requirement includes the integration of material ESG information/considerations, i.e., material ESG factors as an
important component of a complete and thorough financial analysis for any actively managed investment portfolio.
- We Encourage All Investment Professionals to Consider Material ESG Factors. More broadly, CFA Institute encourages all investment professionals to consider material ESG factors, where relevant, as an important part of the analytical and investment decision-making process, regardless of investment style, asset class, or investment approach.
- We Offer Extensive ESG Related Educational Content and Programming. CFA Institute is strongly focused on developing ESG-focused curricula and educational tools for our members and CFA® Program candidates, as well as for the broader investment management industry.
- We Support Improved Sustainability Reporting by Companies. ESG disclosures and data provided by corporate issuers, sometimes referred to as sustainability reporting, require further standardization and refinement to improve the quality, consistency, and comparability of material ESG factors across industry sectors.
- Integration of ESG Factors is Not a Violation or Obligation of the CFA Institute Duty of Care Standards. Integrating ESG factors into the investment analysis process is left to the professional judgment of the investment professional and as directed by the client. Such integration is consistent with a manager’s professional duty to consider all relevant material information in the investment analysis and decision-making process.
- Disclosure and Transparency Around the Use of ESG Factors. Investment products and management ser- vices claiming to be ESG focused, must include adequate and detailed disclosures explaining how ESG factors are used in the analysis and selection of investments and the ongoing management of the portfolio. This disclosure should be ongoing and dynamic as any terms or conditions related to the ESG integration evolve. CFA Institute is developing standards for such disclosures. Regarding global regulatory consultations requiring ESG disclosures from all regulated managers, CFA Institute would support comply or explain regime.