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Latest CFA ESG Exam Curriculum Updates

By: Kaplan Schweser
December 6, 2022
Latest CFA ESG Exam Curriculum Updates

The curriculum for the Certificate in ESG Investing Exam offered by CFA Institute has been updated for 2023. These changes will take place for those enrolling in the course on or after December 1, 2022.  The new exam will be available on February 1, 2023.  The exam will not be available in January 2023.

TABLE OF CONTENTS

2023 Certificate in ESG Investing Curriculum 

All candidates should know what’s contained in the latest curriculum for the Certificate in ESG Investing exam. If you are new to the program, this is a good opportunity to get an overview of each topic area and its weights so you can start your ESG exam prep off on the right track. 

If you are retaking the exam, you’ll want to pay special attention to what has changed, especially if any of that content was difficult for you last time. 

  • Overall, there were some major updates to the topic of environmental factors.
  • Each topic area received new self-practice questions, updated data, and new charts.

 

 

2023 Certificate in ESG Investing Exam Topics and Weights

Curriculum Topic

Topic Weight

Learning Outcomes

Question Allocation

Overview of ESG Investing and Market

8-15%

11

8–15

Environmental Factors

8-15%

8

8–15

Social Factors

8-15%

6

8–15

Governance Factors

8-15%

6

8–15

Engagement and Stewardship

5-10%

6

5–10

ESG Analysis, Valuation, and Integration

20-30%

21

20–30

ESG Integrated Portfolio Construction and Management

10-20%

10

10–20

Investment Mandates, Portfolio Analytics, and Client Reporting

5-10%65–10


2023 Certificate in ESG Investing Curriculum Updates

Below are summaries of what candidates are expected to know for each topic area and what has been updated in the latest version of the ESG curriculum.

Overview of ESG Investing

The overview of ESG investing and market topic tests candidates' understanding of responsible investing and ESG factors within sustainable investing. 

In this topic area, candidates will have 10 new self-practice questions to use as well as

  • Additional definitional content on "Thematic investing" and "Impact investing" to match content in the CFA Program
  • Additional content on "the evolution of materiality: from static to dynamic" and added examples of "double materiality
  • Results of an NYU study on the link between ESG and financial performance
  • New content on Glasgow Financial Alliance for Net Zero (GFANZ)
  • New content on International Business Council ESG Disclosure Framework, International Sustainability Standards Board (ISSB), and Corporate Sustainability Reporting Directive (CSRD)
  • A new introduction to the CFA Institute Global ESG Disclosure Standards for Investment Products

A mini-case on Unilever and references to top 100 sustainable global companies was removed from the syllabus. 

The ESG Market

The ESG market topic tests candidates’ understanding of the ESG market in terms of

  • Relevance
  • Size
  • Scope
  • Key drivers
  • Challenges
  • Risks and opportunities

In this topic area candidates will have 10 new self-practice questions to use as well as

  • New references to the COVID-19 pandemic and the increased geopolitical tensions leading to the war in Ukraine as examples of the interdependence between societies, economies, and financial markets
  • An additional Case Study on the ABP (Dutch) Pension Plan
  • New content on various regulations and disclosures such as:
    • Global- Task Force on Climate-related Financial Disclosures (TCFD),
    • Europe--EU Taxonomy Regulation, and Sustainable Finance Disclosure Regulation (SFDR),
    • China- guidelines for a green financial system, green asset taxonomy, and PBoC 2021-2025 strategy, and
    • North America-- 2022 SEC proposal

The concept of “Long-termism & ESG” moved from Chapter 2 to Chapter 1.

Environmental Factors

The environmental factors topic tests candidates' understanding of

  • Environmental factors
  • Systemic relationships
  • Material impacts
  • Megatrends
  • Approaches to environmental analysis at the country, sector, and company levels.

In this topic area, candidates will have 10 new self-practice questions to use as well as

  • Updated content added from the 2021 Intergovernmental Panel on Climate Change (IPCC) report
  • Additional content on biofuels, and pro-forestation
  • Updated the fact that now 6 of the 9 planetary boundaries have been breached (as opposed to 4 boundaries) with the addition of freshwater (green water boundary); and novel entities (including plastic pollution)
  • New content on the "green recovery" in the aftermath of Covid19
  • Added content from the Summary for Policy Makers for the 2022 IPCC Report on Impact, Vulnerability and Adaptation--showing a strong connection between biodiversity, ecosystems, development and climate change
  • New content on Fisheries Management
  • An additional Case study on 'Scope 3 in the spotlight'
  • New section on the UN Framework Convention on Climate Change (1992) as background to the Kyoto Protocol and the Paris Agreement
  • A new section on the Glasgow Climate Pact (2021) which captures key outcomes of the COP26 Conference in Glasgow in 2021
  • A new section on SDFR categorization of ESG integration (Article 6, 8, and 9) plus a discussion on the proposed Corporate Sustainability Reporting Directive (CSRD) (which would replace and strengthen the existing EU requirements around non-financial reporting)
  • Additional content on “Network for Greening the Financial System” (NGFS) and “Carbon Taxation”
  • A new section on "Carbon Offsets"
  • New content on the ‘ESG upside’ for large, listed companies
  • A new case study on "the carbon risk premium"
  • New content introducing the “Partnership for Carbon Accounting Financials” (PCAF)
  • A new figure showing the falling costs and growing adoption of various clean energy technologies
  • A new section on Hydrogen: "hope or hype."
  • Additional content on efforts in the UK, USA, China, India, Japan, and Australia with a few key points:
    • UK Government unveiled ‘Greening Finance: A Roadmap to Sustain-able Investment’
    • USA: 1) Federal Reserve has launched a Financial Stability Climate Committee and a Supervision Climate Committee and 2) SEC proposals
    • China published its roadmap to net zero carbon by 2060
    • Japan: multiple policy workstreams, including a new clean energy strategy, the development of a ‘Sustainability Standards Board of and the introduction of climate ‘stress-testing’ in the banking sector

The following quote was removed: “Clean energy technologies generally require more minerals than fossil fuel-based counterparts. An electric car uses five times as much minerals as a conventional car and an onshore wind plant requires eight times as much minerals as a gas-fired plant of the same capacity” from the syllabus because it oversimplifies a complex issue.

Social Factors

The social factors topic tests candidates' understanding of

  • Social factors
  • System relationships
  • Material impacts and approaches to social analysis at the country, sector, and company levels

In this topic area, candidates will have 12 new self-practice questions to use as well as

  • New content on investor initiatives: equitable circulation of Covid-19 vaccinations
  • Additional content about "Double Materiality Reporting" and how the assessment of material negative impact can be used:
    • In the OECD Due Diligence Guidance for Responsible Business Conduct and
    • Additional content on “double materiality” to the legacy cases on: Amazon, Apple/Foxconn, and Thai Union

Governance Factors

The governance factors topic tests candidates' understanding of

  • Governance factors
  • Key characteristics
  • Main models and material impacts

In this topic area, candidates will have 10 new self-practice questions to use as well as

  • Expanded legacy mini-case studies with additional information/data on Enron, Tyco, HIH, Worldcom, Ahold, Parlamat, Satyam, Olympus, Volkswagen, and Wildcard. (Also, added the name of the country of each company--many candidates might not know this)
  • Additional content on board structures and governance
  • New content on the International Sustainability Standards Board (ISSB)
  • New content on "Corporate governance in the UK"
  • New content on ESG Audits (methods and examples of issues)

4 legacy mini-case studies on Polly Peck, Maxwell, and BCCI were removed from the syllabus.

Engagement and Stewardship

The engagement and stewardship topic tests candidates' understanding of the main principles and methods for establishing engagement and stewardship among institutional asset management firms.

Although no new content was added to the 2023 curriculum nor was any content removed from the 2022 curriculum, various data and charts were updated and 12 new self-practice questions were added to the curriculum. 

ESG Analysis, Valuation, and Integration

The ESG analysis, valuation, and integration topic tests candidates' knowledge of how to analyze ESG factors and apply them to develop valuations and approaches to integrate them across a range of asset classes.

Although no new content was added to the 2023 curriculum nor was any content removed from the 2022 curriculum, 10 new self-practice questions were added and various data and charts were updated. The appendix on “Sustainalytics” and “MSCI” was also added to the end of the chapter, after the questions and before the “further reading” sections.

ESG Integrated Portfolio Construction and Management

The ESG integrated portfolio construction and management topic asks candidates to understand how to construct and manage an ESG integrated portfolio and how to apply ESG screens to the main asset classes and their sub-sectors. 

In this topic area, candidates will have 10 new self-practice questions to use as well as

  • Updated information in the sovereign debt section describing US sanctions on Russia following its 2014 annexation of Crimea
  • A new summary chart on SFDR classification
  • New content on “The principle of DNSH (Do No Significant Harm)”  which was introduced in the Technical Expert Group Final Report of the EU Sustainable Finance Taxonomy
  • Additional content on the standards on ESG Investing from CFA Institute (Global ESG Disclosure Standards for Investment Products) and IOSCO
    • At COP 26, in collaboration with IOSCO, the International Financial Reporting Standards (IFRS) Foundation established a new International Sustainability Standards Board (ISSB) to develop globally adopted sustainability disclosure standards, incorporating the Value Reporting Foundation and the Climate Disclosure Standards Board within its structure.

Investment Mandates, Portfolio Analytics, and Client Reporting

The investment mandates, portfolio analytics, and client reporting topic tests candidates' understanding of why mandate construction is relevant and important to ESG investing and how ESG screens can be used to generate investment return and manage portfolio risk. 

In this topic area, candidates will have 10 new self-practice questions to use as well as

  • A new appendix on “SFDR disclosures” and “CFAI ESG Disclosure standards”

Who Makes Changes To The CFA ESG Exam Curriculum?

The CFA Institute makes changes to the curriculum for the Certificate in ESG Investing Exam. At this time, the curriculum may or may not be updated each year. 

Certificate in ESG Investing Exam Information

There are some major changes to prices, question format, requirements, and recommended duration for studying for the Certificate in ESG Investing Exam. 

CFA ESG Certificate Program Details >>

How To Prepare For Certificate in ESG Investing Exam Curriculum Changes

As you get ready for the CFA ESG Certificate exam, make the Kaplan Schweser ESG Certificate prep package—complete with ondemand videos, practice questions, and mock exams—the centerpiece of your mission to earn a passing score.

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