Every so often a new product captures the zeitgeist of the time. The new Certificate in Climate & Investing, launched by CFA UK in April, is a perfect example.

Under pressure from clients on one side and regulators on the other, investment managers have beefed up knowledge in recent years on ESG: how environmental, social and governance issues affect investments in every industry and market around the world. The response from CFA UK was the ESG Certificate: launched in late 2019 it was an immediate success. It is now under the auspices of CFA Institute with more than a thousand new candidates each month.

The biggest single issue of ESG is climate change, part of the E. Back in the 1990s Swampy made a name for himself through environmental protests: he was an outlier then, but his views have become more mainstream as scientific studies have proven beyond any doubt the devastating impact that our species is having on the planet.

CFA UK’s new climate exam addresses many questions:

1. How do we define climate change and what are the causes and impacts on the planet?
2. What are the current and proposed climate-related rules and regulations for companies and asset managers?
3. What climate opportunities as well as risks do companies in each sector face?
4. How does climate change impact different types of investment?
5. How should investors engage with companies as part of portfolio management?

The Certificate addresses a growing thirst for more knowledge: investors are asking more questions; financial advisers need to offer objective guidance; fund managers should be able to interpret company disclosures; and, at the coal face (sorry!), each company must compile and publish reliable emissions data.

The issues are highly complex. I’ll offer two examples.

Firstly, many investors, whether university endowments or individuals saving for their future, wish to avoid investing in the worst polluters. Yet you need to be a shareholder to have a voice at the AGM. Last year, US hedge fund Engine No. 1 gained sufficient support from shareholders to get three directors appointed to the board of ExxonMobil. Since then, they have succeeded in bringing forward emissions reductions and creating commitment to enormous investments in low carbon solutions.

Secondly, who creates the emissions, and how are they measured? For instance, greenhouse gas emissions relating to the creation of a petrol car represent just 3% of the car’s lifetime emissions. Who is responsible for the pollution?

Studying towards the Certificate in Climate & Investing

As you would expect, the subject is both technical and wide-ranging. The Official Training Manual weighs in at 900 pages, though videos, question banks and guidance can help make your progress more efficient.

The studying is highly rewarding: as you progress you’ll accumulate enough knowledge to interpret company disclosures, to appreciate fund manager communications, to identify greenwashing.

As our chief executive Nicholas Blain says in his introductory video, “Passing this exam is just the start: the natural world is changing fast and through your own increased knowledge you will be in a position to be a force for good.”

Written by Nicholas Blain, Chief Executive.

For any queries, please get in touch.