Is the CFA's ESG exam worth doing?

CFA UK launched its new ESG investing qualification back in May 2019, with the first cohort of students taking the exam this month.

Paris Jordan shared her experience of the exam with Citywire: 

Jordan noted that she undertook the examination to formalise her knowledge as a fund selector. She had already been running ESG portfolios at Sanlam for three years.

She said: ‘The course was obviously written by people who have spent time in the industry. They made it clear that ethical investing is not just one thing. It gave a holistic overview of everything, which would be incredibly useful for those who don’t work in this space.’

She highlighted that the exam covered various topics including negative screening, active ownership, impact investing, and thematic funds (with a focus on water and gender).

Much benefit?

Jordan said that she ‘didn’t learn a huge amount’ from the course, but that it was useful to re-confirm what she already knew.

However, she did find more granular stock selection areas to be more useful, as she is ‘not a stock picker’.

Jordan is already a CFA Charterholder, and also completed the Investment Management Certificate (IMC) before that.

She said that the ESG exam was equivalent in difficulty to the IMC, but with not many of the questions testing quantitative knowledge.

‘It went into detail on the quantitative side on correlation and causation, which was brilliant because it highlighted that it’s not just a fad and that there is actually alpha to be found in the ethical space’, she said.  

The recommended study time for the course is 130 hours, however Jordan said she studied for around 75 hours, as she already had a good knowledge base from professional experience. However, she said that the full study time would be necessary for those not already working with ESG investments.

What was missing?

Jordan said that the course was ‘a bit thin on the ground’ on portfolio construction. She also said that there could have been a greater quantitative element, and that there was a lack of case studies to bring the programme to life.

She added: ‘Because it’s a new exam, they’re still refining some of the questions. There were a couple of overly specific questions, asking to remember a very specific number or statistic that doesn’t add a huge amount of value.’

Overall, Jordan supports the qualification and is pleased to see an investment body take the first steps.