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CFA ESG vs. GARP SCR - Which Is Best for You?

Due to the growing need and interest in ESG, certifications in the field of ESG have become more and more in demand. CFA ESG or GARP SCR, which one is the best to choose?

The best known in this area may be the Certificate in ESG Investing (CFA ESG) from the CFA Institute. Additionally, the Global Association of Risk Professionals (GARP) has introduced its Sustainability and Climate Risk Certification (GARP SCR). In this blog post, we will shed light on the two certifications and highlight the key differences.

GARP may not be as well known to the CFA Institute, but most will be familiar with the FRM (Financial Risk Manager) program they offer. In the GARP tradition, the certification focuses on risk management, particularly global climate risk. It is therefore designed to help professionals understand the impact of climate change on businesses and how to manage that risk. Launched in 2020, the SCR course is ideal for professionals who want to expand their knowledge of climate risk management. This includes not only professionals in the finance industry, but also in other fields such as supply chain management, operations and technology. According to GARP, candidates who complete the SCR will

  1. gain the knowledge to take a leadership role in climate risk
  2. gain the skills to drive effective change
  3. be able to lead the implementation of sustainability standards in their organization.

The SCR exam consists of a single computer-based exam that takes three hours to complete and contains 80 multiple-choice questions. The test is designed to be easily understood by a wide audience and is not very quantitative. Although there is currently no official schedule for the release of exam results, SCR exam results are routinely released four weeks after the exams.

SCR topics areas and exam weights:

 

 

Sustainability & Climate Risk Certificate Topics

Topic Weights

​Foundations of Climate Change: What is Climate Change?

12.5%

Sustainability

12.5%

Climate Change Risk

12.5%

Sustainability and Climate Policy, Culture and Governance

18.75%

​Green and Sustainable Finance: Instruments and Markets

12.5%

Climate Risk Measurement and Management

18.75%

Climate Models and Scenario Analysis

12.5%

Fees and Payments

SCR

 

Member

Non-Member

Certified FRM / ERP

Early

$550

$650

$525

Standard

$650

$750

$625

 

CFA ESG

 

Exam

Re-take

Before 1 December

$675

$475

After 1 December

$795

$595

 

Pre-Requirements:

Like the CFA Institute Certificate in ESG Investing, no professional experience or prior qualifications are required to take the SCR exam.

GARP SCR vs. CFA ESG Investing Certificate

Essentially, both certificates are about sustainable investing, but in slightly different ways. The Sustainability & Climate Risk (SCR) certificate focuses primarily on teaching professionals how to manage climate change, the most important environmental risk (and perhaps the only "E" in ESG). The ESG Investing Certificate, on the other hand, focuses somewhat more broadly on ESG issues and how the financial sector can adapt to changing investor preferences. Nonetheless, a section on climate change is also included, along with a number of climate change programs. Climate change mitigation is also discussed in this section. There is actually not much overlap between these two topics. The CFA curriculum has a higher level and puts a lot of emphasis on ESG analysis and integration. The SCR, on the other hand, focuses heavily on climate risk measurement and scenario analysis. This is to be expected, as the CFA and SCR are focused on portfolio management and risk management, respectively. In areas where there is overlap - for example, climate change, ESG market, policy, and regulation - the SCR is much more detailed.

Exam

100-130 hours of preparation are recommended for both exams (130h for CFA ESG). The exams are similar in length, 140 minutes for the CFA ESG and 180 minutes for the SCR to answer 100 and 80 questions respectively. In both cases, study providers such as us, Brainie, Alma Mundus, and Fitch Learning, Kaplan Schweser offer additional questions and study materials.

Conclusion

In conclusion, both the CFA Institute Certificate in ESG Investing and GARP's Sustainability & Climate Risk (SCR) Certificate offer a good " effort-return ratio". In both cases, the effort is kept within limits and one can expect to pass the exam within 3 months. In terms of demand, there is definitely a need for qualified ESG personnel. The touch points with ESG have increased rapidly in recent years. It's not just large institutional clients like pension funds that need ESG, but also asset management firms that cater to individuals. Finally, ESG is becoming increasingly important outside the financial industry, as listed companies are required to report on their environmental, social and governance strategies.