CFA ESG Changes of Version 4 to v2024
The CFA ESG Certificate's Version 5, or the 2024 Edition, comes with an important registration caveat: candidates will be tested based on the version they register for.
2024 CFA ESG Certificate Curriculum Update
Adapting to the Pulse of Sustainable Investment
Introduction
Since its inception in 2019, the CFA ESG Certificate has established itself as a pivotal benchmark for professionals navigating the complex waters of sustainable investing. With each annual release, the CFA Institute ensures the ESG curriculum remains reflective of the market's pulse, incorporating additional content and key revisions. As a CFA Institute Prep Provider, Brainie is at the forefront of these updates, ensuring candidates receive nothing short of excellence in preparation materials. This article unfolds the changes introduced in the 2024 version of the CFA ESG Certificate, providing a compass for candidates and potential candidates alike.
CFA ESG New Version: Timeline, Registration, and Exam Due Date
The CFA ESG Certificate's Version 5 or now called v2024, comes with an important registration caveat: candidates will be tested based on the version they register for. This pivot in approach promises an improved candidate experience, aligning the exam with the curriculum studied. Registration within the 2023 calendar year anchors a candidate to Version 4 or the 2023 Edition, with six months from the date of registration to take the exam. Similarly, a 2024 registration corresponds with Version 5, following the same six-month rule to sit for the exam.
Study Materials: Version 2024 vs. Old Version 2023
To ensure a seamless transition and study process, the CFA Institute provides candidates with materials specific to their registered version. This initiative underlines the Institute's commitment to a streamlined and focused study experience.
Curriculum Changes: Version 2024 (v4) vs. Version3 (v2023)
While the structure of the 2024 curriculum echoes its predecessor, it boasts notable content enhancements and essential amendments. The most significant revisions occur in Chapters 2, 7, and 9. The omission of the "History of ESG Investing" from Chapter 2 acknowledges the need for current, actionable insights over retrospective content. Chapter 7 experiences a substantial reshuffle, replacing four sections with three new, more relevant sections. Chapter 9 introduces an imperative discussion on "Greenwashing and its Consequences," reflecting the industry's heightened scrutiny over authenticity in ESG claims.
| v2023 | v2024 | Brainie Comments | |
| Chapter 1 - Introduction to ESG Investing | What Is ESG Investing? | What Is ESG Investing? | Minor outstanding corrections but the same content. |
| Types of Responsible Investment | Types of Responsible Investment | ||
| Macro-Level Debate on ESG Integration | Macro-Level Debate on ESG Incorporation | ||
| Financial Materiality of ESG Integration | Financial Materiality of ESG Integration | ||
| Challenges in Integrating ESG Factors | Challenges in Integrating ESG Factors | ||
| ESG Factors’ Influence on Financial Performance | ESG Factors’ Influence on Financial Performance | ||
| Putting ESG Investing into Practice | Putting ESG Investing into Practice | ||
| Key Initiatives | Key Initiatives | ||
| Chapter 2 - The ESG Market | History of ESG Investing | REMOVED | |
| ESG Investing in Numbers | ESG Investing in Numbers | ||
| Market Drivers / Challenges in ESG Integration | Market Drivers / Challenges in ESG Integration | ||
| Asset Owners | Asset Owners | ||
| Asset Managers, Fund Promoters, and Financial Services | Asset Managers, Fund Promoters, and Financial Services | addition of PRI | |
| Policymakers, Regulators, Investees, Governments, Civil Society, and Academia | Policymakers, Regulators, Investees, Governments, Civil Society, and Academia | ||
| Chapter 3 - Environmental Factors | Key Environmental Issues | Key Environmental Issues—Climate Change | |
| Systemic Relationships between Business Activities and Environmental Issues | Systemic Relationships between Business Activities and Environmental Issues | ||
| Key “Megatrends” and Drivers Influencing Environmental Change in Terms of Potential Impact on Companies and Their Environmental Practices | Key “Megatrends” and Drivers Influencing Environmental Change in Terms of Potential Impact on Companies and Their Environmental Practices | ||
| Assessment of Materiality of Environmental Issues | Assessment of Materiality of Environmental Issues | ||
| Approaches to Account for Material Environmental Analysis and Risk | Approaches to Account for Material Environmental Analysis and Risk | ||
| added | Nature Assessment and TNFD Framework | ||
| Applying Material Environmental Factors to Financial Modeling, Ratio | Applying Material Environmental Factors to Financial Modeling, Ratio | ||
| Opportunities Relating to Climate Change and Environmental Issues | Opportunities Relating to Climate Change and Environmental Issues | ||
| Chapter 4 - Social Factors | Social and Environmental Megatrends | Social and Environmental Megatrends | |
| Key Social Issues and Business Activities | Key Social Issues and Business Activities | ||
| Internal Social Factors | Internal Social Factors | ||
| External Social Factors | External Social Factors | ||
| Identifying Material Social Factors for Investors | Identifying Material Social Factors for Investors | ||
| Application of Social Factors in Investments | Application of Social Factors in Investments | ||
| Chapter 5 - Governance Factors | Corporate Governance: Accountability and Alignment | Corporate Governance: Accountability and Alignment | |
| Formalized Corporate Governance Frameworks | Formalized Corporate Governance Frameworks | ||
| Shareholder Engagement and Alignment | Shareholder Engagement and Alignment | ||
| Characteristics of Effective Corporate Governance | Characteristics of Effective Corporate Governance | ||
| Structural Corporate Governance Differences in Major World Markets | Structural Corporate Governance Differences in Several Major World Markets | Adjust from country view to DM / EM view | |
| Corporate Governance and the Independent Audit Function | Corporate Governance and the Independent Audit Function | ||
| Corporate Governance and the Investment Decision-Making Process | Corporate Governance and the Investment Decision-Making Process | ||
| Chapter 6 - Engagement and Stewardship | Stewardship and Engagement | Stewardship and Engagement | |
| Codes and Standards | Codes and Standards | ||
| Engagement Styles | Engagement Styles | ||
| Effective Engagement: Objectives, Practicalities, Escalation, Collective | Effective Engagement: Forms, Goal Setting | ||
| Special Considerations: Proxy Voting, Asset Classes | Voting, Engagement across Different Asset Classes | slightly reshuffled the structure | |
| Chapter 7 - ESG Analysis, Valuation, and Integration | Why Investors Integrate ESG | REMOVED | chapter content reshuffled and now more focused on an asset class specific view |
| The Different Approaches to ESG Integration | The Different Approaches to ESG Integration | ||
| Typical Stages of Integrated ESG Assessment (Research and Idea Generation Stage) | ESG Integration in Listed Equities | ||
| Typical Stages of Integrated ESG Assessment (Scorecards Can Be Used to Assess ESG Risk and Opportunity, and Materiality Assessments and Risk Mapping) | |||
| ADDED | ESG Integration in Other Asset Classes: Fixed Income | ||
| ADDED | ESG Integration in Other Asset Classes: Real Estate and Private Markets | ||
| Valuation and Company Integrated Assessment Stage and the Challenge of Company Disclosure on ESG Topics | REMOVED | ||
| Investment Decision and Portfolio Construction and ESG Integration Techniques in Practice (Seven Cases) | Case Studies in ESG Integration | ||
| Discussion of Private Markets, Real Estate, and Infrastructure; Discussion of ESG in Fixed Income and Differences to Equity; and Challenges to ESG Integration | REMOVED | ||
| Range of ESG Integration Databases and Software Available | ESG Integration Databases and Software | ||
| Mutual Fund and Fund Manager ESG Assessment, Company ESG | Mutual Fund and Fund Manager ESG Assessment and Other Uses of ESG | ||
| Fixed Income, Credit Rating Agencies, and ESG Credit Scoring | REMOVED | ||
| Chapter 8 - Integrated Portfolio Construction and Management | ESG Integration: Strategic Asset Allocation Models | ESG Integration: Strategic Asset Allocation Models | |
| ESG Integration: Asset Manager Selection | ESG Integration: Asset Manager Selection | ||
| Approaches to ESG Integration: Portfolio-Level Framework | Approaches to ESG Integration: Portfolio-Level Framework | ||
| Approaches to ESG Integration: Role of Analysts, Portfolio Managers, and Internal and External Research | Approaches to ESG Integration: Role of Analysts, Portfolio Managers, and Internal and External Research | ||
| Approaches to ESG Integration: Quantitative Research Developments in ESG Investing | Approaches to ESG Integration: Quantitative Research Developments in ESG Investing | ||
| The Evolution of ESG Integration: Exclusionary Preferences and Their Application | The Evolution of ESG Integration: Exclusionary Preferences and Their Application | ||
| ESG Screening within Portfolios and across Asset Classes: Fixed Income, Corporate Debt, and ESG Bonds | ESG Screening within Portfolios and across Asset Classes: Fixed Income, Corporate Debt, and ESG Bonds | ||
| ESG Screening within Portfolios and across Asset Classes: Green Securitization and Sovereign Debt | ESG Screening within Portfolios and across Asset Classes: Green Securitization and Sovereign Debt Green Securitization | ||
| ESG Screening within Portfolios and across Asset Classes: Listed and Private Equity | ESG Screening within Portfolios and across Asset Classes: Listed and Private Equity | ||
| ESG Screening within Portfolios and across Asset Classes: Real Assets — Real Estate and Infrastructure | ESG Screening within Portfolios and across Asset Classes: Real Assets— Real Estate and Infrastructure | ||
| Integrating ESG Screens within Portfolios to Manage Risk and Generate Returns | Integrating ESG Screens in Portfolios to Manage Risk and Generate Returns | ||
| Quantitative Approaches That Embed ESG Factors | Quantitative Approaches That Embed ESG Factors | ||
| Applying ESG Screenings to Individual Listed and Unlisted Companies and Collective Investment Funds | Applying ESG Screenings to Individual Listed and Unlisted Companies and Collective Investment Funds | ||
| Managing the Risk and Return Dynamics of an ESG Integrated Portfolio | Managing the Risk and Return Dynamics of an ESG-Integrated Portfolio | ||
| ESG Strategies, Objectives, Investment Considerations, and Risks: Full ESG Integration, Exclusionary Screening, and Positive Alignment | Full ESG Integration, Exclusionary Screening, and Positive Alignment | ||
| ESG Strategies, Objectives, Investment Considerations, and Risks: Thematic and Impact Investing | ESG Strategies, Objectives, Investment Considerations, and Risks: Thematic and Impact Investing | ||
| Integrating ESG in Passive Portfolios and Established Datasets | ESG Integration in Index-Based Portfolios and Established Datasets | ||
| Chapter 9 - Investment Mandates, Portfolio Analytics, and Client Reporting | Clarifying Client Needs: Defining the ESG Investment Strategy | Clarifying Client Needs: Defining the ESG Investment Strategy | |
| Fully Aligning Investment with Client ESG Beliefs | Fully Aligning Investment with Client ESG Beliefs | ||
| Developing Client-Relevant ESG-Aware Investment Mandates | Developing Client-Relevant ESG-Aware Investment Mandates | ||
| ADDED | Greenwashing and Its Consequence | ||
| Tailoring the ESG Investment Approach to Client Expectations | Tailoring the ESG Investment Approach to Client Expectations | ||
| Holding Managers to Account: Monitoring Delivery | Holding Managers to Account: Monitoring Delivery | ||
| Holding Managers to Account: Measurement and Reporting | Holding Managers to Account: Measurement and Reporting |
Exam Format: Version 2024 vs. Old Version 2023
The exam format remains steadfast, preserving its integrity and alignment with the updated content. Candidates can expect the same rigorous assessment of their ESG knowledge, fine-tuned to the latest industry standards and practices.
Price: Version 2024 vs. Old Version 2023
As the curriculum evolves, so may the associated costs. The CFA Institute communicates any pricing adjustments concomitant with the new version, ensuring transparency and planning feasibility for candidates.
Impact on Candidates and the Industry
The curriculum updates represent more than just educational revisions; they're a reflection of the industry's dynamic nature. For candidates, this means an education that's not only current but also deeply rooted in real-world applicability. The CFA Institute's updates are a testament to its understanding that the essence of ESG investing is ever-changing, demanding constant educational agility.
Conclusion
The 2024 Edition of the CFA ESG Certificate encapsulates a rich, nuanced understanding of the ESG landscape, offering a curriculum that's both robust and reflective of the market's current state. As the investment world places greater emphasis on sustainability, the CFA ESG Certificate continues to serve as a vital tool for professionals looking to enhance their expertise.
Whether you're a seasoned professional or a newcomer to ESG investing, the 2024 curriculum presents an opportunity to deepen your understanding and refine your approach to sustainable investment practices. With the backing of Brainie and the CFA Institute's updated materials, candidates are well-equipped to navigate the nuances of ESG. For those prepared to take on the challenge, the updated curriculum beckons with the promise of growth and the potential to make a meaningful impact in the world of finance.