Opportunity for advisers to secure “get ahead” ESG qualification

by Christian Burgin CPO, Visible Capital

Last week in this blog I suggested that the new Sustainable Finance Disclosure Regulation (SFDR), whilst it will obviously create additional work in achieving regulatory compliance, will also present opportunities for advisers to get know their customers better and provide products which meet the requirements of their investments and their consciences.

We don’t know exactly when this is all going to come into effect and exactly what regulatory framework will be used to implement it, but we do know we need to expect and plan for new obligations to meet product disclosures in relation to their Environmental, Social and Governance credentials. ESG will soon be as familiar to us as KYC - and of course knowing what our customers feel about these issues is very much a part of basic KYC care.

Because there isn’t a timeframe cast in stone for ESG governance to become a regulatory requisite there will be advisers and companies that decide to assume the ostrich position. An uncomfortable position I’ve always thought and one that risks arriving even later to the table as these adopters will doubtless have sand in their ears preventing them hearing the eventual call to action in time.

I believe that advisors who assume the more alert meerkat position - heads up, scanning the horizon, have by contrast a real opportunity to get ahead of the competition. And I’d have to agree here with Tony Blair’s much vaunted principle of “education, education, education”. Getting informed about ESG is what is going to put firms and advisors ahead of the game.

One opportunity might be the CFA UK’s Certificate in ESG Investing, a level 4 qualification which delivers the benchmark knowledge and skills required by investment professionals to integrate ESG factors into the investment process. The course covers different aspects of ESG - analysis, engagement, stewardship, portfolio analysis and client reporting and will give candidates an in depth understanding of what ESG funds are looking to achieve.

It’s an exciting environment out there as clients make new demands of their advisors with regard to their investments. Millennials and Gen Z for instance are a typically socially conscious and environmentally aware cohort and they are increasingly requiring their investment decisions to synch with their beliefs and lifestyles. And investment product developers are already responding to this burgeoning market requirement with an array of innovative new products. Some of these products focus on investing in environmentally friendly industries for example whilst others, such as products used by the Netherlands pensions industry will screen out companies that don’t fit the ethical profile such as tobacco and cluster munitions.

Interesting times indeed and a chance to get ahead - not just so that, as an advisor, you are ideally placed to fulfil regulatory responsibilities in your firm when they come into play, but it’s a also chance to improve your competitive career advantage and increase your employability. Or channel that inner meerkat!

* Christian Burgin is the co-chair of the Scottish Committee of CFA UK

Further information on the CFA UK’s ESG certificate can be found on their website https://www.cfauk.org/study/esg#gsc.tab=0