Financial institutions still don’t have expertise to handle net zero transition, according UNEP FI-backed report.
A new qualification has been launched by the UK arm of CFA Institute, a global association for investment professionals, to help analysts and portfolio managers better understand and manage the climate-related risks and opportunities in their portfolios.
The Certificate in Climate and Investing (CCI) aims to give UK-based investment professionals a clear understanding of how to account for climate change when conducting research, managing funds, developing products and complying with climate-related regulations, thus helping to better manage the transition to net zero greenhouse gas (GHG) emissions.
As a Level 4 qualification, the CCI syllabus covers climate science, policy, regulation and tools specific to measuring climate-related impacts across a broad range of asset classes in both public and private markets.
“Investment will have a vital role to play in the transition to net zero, and there has never been a more important time for investment professionals to understand climate risks and how to integrate climate considerations into a portfolio,” said Will Goodhart, CEO of CFA Society of the UK (CFA UK), a member society of the CFA Institute.
“This programme provides the practical skills and knowledge that people in our sector need to be able to play their part and meet their clients’ demands,” he said.
The 12-month programme launch follows increasing demand from asset owners and managers for resources and qualifications that will help them develop the relevant skills for managing the net zero transition.
The qualification was subject to a pilot phase involving candidates across 60 different firms, including asset managers, asset owners, consultants and banks.
Last year, the CFA Institute introduced its global Certificate in ESG Investing, which covers broader topics such as engagement and stewardship, ESG analysis, and valuation and integration. Since its inception in the UK two years prior, the qualification has amassed over 11,500 global registrations across the UK, US, Switzerland, France, Hong Kong and Singapore.
The UN-convened Principles for Responsible Investment (PRI) Academy, also offers responsible investment training for investment professionals with varying levels of expertise and seniority.
Insufficient knowledge across financial institutions
Financial institutions must “dramatically improve” their capabilities in climate-related assessments if they are to meet their net zero targets, according to a separate new report by the Cambridge Institute for Sustainability Leadership (CISL), which is part of the School of Technology at the UK’s University of Cambridge.
“Client-facing teams in financial institutions do not yet have sufficient knowledge and tools to adequately help their clients navigate the transition to net zero,” the report said. “While awareness in the finance community is increasing, technical expertise varies across teams, organisations and geographies and is not yet sufficient for the challenge ahead.”
The report was created as part of the United Nations Environment Programme Finance Initiative’s (UNEP FI) Task force on Climate-related Financial Disclosures (TCFD) programme, building on CISL’s prior Sustainability Leadership’s Banking Environment Initiative, which was published in May 2021.
The new five-phase guidance aims to inform the engagements of asset managers and other financial institutions with large corporate clients about their transition plans and associated financing needs, in line with the TCFD recommendations. It includes case studies of client engagement strategies led by financial institutions and sector-specific mapping of resources to help locate relevant information.