In the finance world, the CFA Institute is one of the most recognised and respected institutions around. Their professional certifications are coveted, and obtaining the certification is a badge of honour in the industry.

With the emergence of ESG and how it’s closely tied to finance and investing, the CFA Institute began creating a new programme. By 2019, the ESG certificate from CFA, the ESG Investing Certification, had been launched. It received some initial attention, and between the COVID pandemic, government regulations in ESG, and other global issues, the ESG programme has been steadily growing in popularity.

Even though the CFA is administering this programme, there are some major differences between both the CFA programme and their ESG certification programme. Some of the biggest distinctions are:

• Course load
• Enrollment criteria
• Time dedicated to the programme

Here’s a breakdown of each one.

Course Load

You see the major distinction between the programmes immediately upon seeing the course load. Starting with the CFA programme, a student will have to meet the enrollment criteria that the syllabus lays out and then pass each exam. 

Both programmes are similar in that there are no official seminars and the tests are multiple-choice. You’re given reading material, which you are to study on your own time until you have a good foundation on the topic. For the CFA programme, it’s various investment topics like ethical and professional standards, economics, derivatives, fixed income, financial statement analysis, and other related topics. For the ESG programme, it’s simply ESG and the general topics it touches on.

Where the programmes split is the fact that the CFA offering has multiple levels and tests multiple aspects of a participant. Level 2 tests your comprehensiveness like Level 1, but gives you scenarios. Level 3 shifts from the quantitative and calculation-based challenges of Level 2 to qualitative aspects.

Another way to look at this is that the focus of each programme is widely different. The CFA exam covers a wide range of topics. The ESG programme focuses on ESG investing. But despite the narrowed focus, the ESG programme is still tough and echoes the high standards the CFA Institutes set in their tests.

Featured Article: 6 Ways To Close The Sustainability Skills Gap

CFA Enrollment Criteria

The enrollment criteria are equally distinct. In order to begin the CFA programme, a participant needs to meet all five of these criteria:

• Meet one of the following: have a bachelor's degree or equivalent, be an undergraduate student who will have their degree in less than 23 months before the chosen exam window, or have at least 4,000 hours of professional experience over the past three years.
• Have an international travel passport.
• Be able to take the exam in English.
• Meet the Professional Conduct Admission criteria.
• Live in a participating country in which the CFA operates.

For the ESG certificate, a participant doesn’t even have to be enrolled in this programme. Instead, the CFA Institute makes some recommendations for would-be candidates. It would be advantageous if candidates were:

• Either an investor or someone who is involved in finance, investing, or money overall.
• And also had some general knowledge of what ESG is.

In the end, anyone could theoretically get the CFA ESG certificate, but it’s still challenging.

Featured Article: The Top 3 Visible Benefits of ESG Investing

Time Devoted To The Programme

Finally, as has probably been obvious, the amount of study time each programme takes is very different. Furthermore, the time it takes to know whether you pass or fail is different too. To begin, the overall time it takes each programme is about four years for CFA and between two and six months for ESG.

Breaking it down, generally, each level of the CFA programme takes about 300 hours on average for level 1, over 400 hours for level 2, and about 340 hours for level 3. Between the study times and waiting 60 to 90 days for the results, it can take a while. Combine that with the tests being challenging, and it’s to be expected that participants will fail a few times before proceeding to the next level.

In the case of the ESG programme, the CFA Institute recommends participants spend at least 130 hours and not take the exam in the first month of the programme, opting for the second month or a bit later.

Featured Article: Top ESG Courses in London: Shaping the Future of Sustainable Investing

Big Differences, Same High Standards

In the end, even if the CFA Institute administers both of these programmes, there are some distinct differences between them. There are some similarities in that the tests are multiple-choice and the teaching style is the same, but that’s where the similarities end.

What matters is taking the time to check the courses, see which ESG factors are covered, and deciding how either course can deliver positive impact. Climate change isn't waiting for us, so that positive change needs to happen now. Investment professionals looking to add knowledge, or relative newcomers seeking to break into sustainable investing to either build a portfolio or assess ESG considerations that might impact a business, should all be considering how to reorient priorities (as well as personal values) around sustainability to both offset risks and build performance in existing assets. 

Featured Article: Steps For Earning An ESG Certificate

Takeaway

The CFA exam is a rigorous and challenging programme for any investment professional and requires a huge amount of time to prepare and pass. Even though the ESG programme isn’t as robust, it still commands attention and respect. It still opens up doors and creates new opportunities, especially as the investing world shifts to ESG and more ethical investing overall.

Need more information on ESG education? Bookmark our ESG Certifications & Courses to keep track of daily updated offerings globally, both in-person and online via universities, business schools, and more.