{"id":784,"date":"2018-01-06T02:59:07","date_gmt":"2018-01-05T21:29:07","guid":{"rendered":"https:\/\/ga-institute.com\/to-the-point\/?p=784"},"modified":"2018-01-28T01:42:35","modified_gmt":"2018-01-27T20:12:35","slug":"financial-analysts-corporate-esg-evaluation-the-cfa-institute-provides-guidance-for-analyst-investment-professionals","status":"publish","type":"post","link":"https:\/\/ga-institute.com\/to-the-point\/financial-analysts-corporate-esg-evaluation-the-cfa-institute-provides-guidance-for-analyst-investment-professionals\/","title":{"rendered":"FINANCIAL ANALYSTS & CORPORATE ESG EVALUATION — The CFA Institute Provides Guidance For Analyst & Investment Professionals"},"content":{"rendered":"

The CFA Institute<\/strong> mission is to<\/p>\n

\u201c\u2026lead the investment profession globally by promoting the highest standards of ethics, education and professional excellence for the ultimate benefit of society.\u201d<\/em><\/span><\/h3>\n

The Institute has a number of credentialing programs, such as the Chartered Financial Analyst (CFA)<\/strong>; this is the hiring standard for 31,000 investment firms worldwide.<\/em><\/span><\/h3>\n

\"\"“CFA<\/strong>” is an important designation for financial analysts and other professionals:\u00a0 Companies at the top ranks in hiring credentialed CFAs include:\u00a0 JPMorgan Chase; Bank of America; Merrill Lynch; UBS; RBC; HSBC; Wells Fargo; Credit Suisse; Morgan Stanley; Smith Barney; BlackRock<\/strong>; and,\u00a0Citigroup.<\/strong><\/p>\n

There are three CFA levels \u2013 Investment Tools; Asset Valuation; Portfolio Management.<\/strong><\/p>\n

Keep in mind there are 135,000-plus \u201ccharterholders\u201d worldwide; they can participate in a local chapter.<\/p>\n

The largest chapter is The CFA Society of New York<\/strong>, with 9,000 members. (this was formerly known as the New York Society of Securities Analysts<\/strong>, or \u201cNYSSA<\/strong>\u201d and was the founding organization of what over time became CFA Institute (which is based in Charlottesville, Virginia today).<\/p>\n

With this as background, you should be aware of this:<\/em><\/p>\n

\"\"CFA Institute in October 2015 published a Guide for Investment Professionals:<\/strong> \u201cEnvironmental, Social and Governance Issues in Investing<\/strong><\/em>.\u201d\u00a0 The Guide provided extensive background on the growth of ESG considerations in investment, and set out \u201csix methods for considering ESG issues.\u201d\u00a0 These are:<\/p>\n

Theme 1:\u00a0 Exclusionary Screening<\/strong><\/h2>\n

Avoiding securities of companies or countries on the basis of traditional moral values, such as alcohol, tobacco, gambling and domestic and global \u201cstandards and norms\u201d of society.\u00a0 This is the oldest of ESG approaches. FTSE4Good<\/strong> uses this approach to screen out companies for its indexes.<\/p>\n

Theme 2:\u00a0 Best-in-Class Selection<\/strong><\/h2>\n

This determines the \u201crelative position\u201d of companies to peers in their industry using ESG scoring, considering both risk and opportunity.\u00a0 This, explains CFA Institute, considers 150 or more ESG factors.\u00a0 RobecoSAM Group<\/strong> uses this approach in the selection of companies for its DJSI Indexes<\/strong>.<\/p>\n

Theme 3:\u00a0 Active Ownership<\/strong><\/h2>\n

This approach features active engagement and dialogue between investor and company on ESG issues.\u00a0 The investor exercises \u201cownership rights\u201d and voice to effect change.<\/p>\n

We see this type of engagement peak each year during the annual corporate proxy voting process.\u00a0 Where \u201cengagement\u201d is perceived to have failed to effect change, campaigns launched focused on issues by the company’s investors can put a company in the media headlines, and attract other investors to support the investment-proponents leading the charge.<\/p>\n

Theme 4:\u00a0 Thematic Investing<\/strong><\/h2>\n

Think of trends \u2013 in social, industrial, demographic, economic spheres, etc. \u2013 and the investment themes that are based on developments in each category.\u00a0 Cleantech; \u201cgreen\u201d real estate; sustainable forestry; agriculture & food; education; healthcare<\/em> \u2013 these are some thematic investment categories.<\/p>\n

\u201cAir and Water<\/strong>\u201d themed funds are an example of more recent investable products offered in the capital markets.<\/p>\n

Theme 5:\u00a0 Impact Investing<\/strong><\/h2>\n

This is an approach to investing that is designed to (1) generate a financial return and (2) have a measurable \u201cS\u201d (social) and \u201cE\u201d (environmental) benefit as well. There are four characteristics of this, the Guide explains (these are identified by Global Impact Investing Network<\/strong> – GIIN<\/strong>):<\/p>\n