Fund Solutions

Slow Take-up for CFA ESG Fund Standards

Voluntary standard for funds has lukewarm reception from asset managers, as CFA Institute tackles broader ESG ambiguities. 

The CFA Institute said its work with the Principles for Responsible Investment (PRI) and Global Sustainable Investment Alliance (GSIA) on developing shared terminology around ESG investing will tackle the problem of ambiguity and inconsistency in the market.  

A working paper is set for release in the summer and the project, announced at the PRI in Person event in December, will see the three bodies align on commonly used ESG terms such as ESG integration, screening and stewardship.  

Speaking to ESG Investor, Chris Fidler, Head of Global Industry Standards, at CFA Institute, said: “We’re trying to come to greater global harmonisation on terms so that investors, managers and regulators can use them as technical terms and use them precisely.” 

The objective of the collaboration is to produce a resource that describes and explains approaches to ESG investment, clarifies and harmonises terminology associated with ESG investment approaches and explains differences and provides guidelines for the usage of such terminology.  

The resource will cover a range of commonly used terms including essential concepts, a sample definition and guidance for usage. It will be open for feedback from the market.  

The CFA Institute has upped its activity in the ESG space in recent years launching the Certificate in ESG Investing and the Global ESG Disclosure Standards for Investment Products in 2021. 

The latter has had a mixed reception from the investment market.  

A number of asset managers pushed back on the standard when it was in development, claiming it would be too burdensome and overlap with existing ESG standards and policy in the area. The CFA, in response, said its experience in developing the widely used global investment performance standard (GIPs) meant it was well placed to be a standard setter for ESG.   

Fidler said its Global ESG Disclosure Standards had attracted interest from 13 fund managers so far, with one manager, Macquarie Group, formally applying the standards. By comparison 1,800 organisation have adopted the CFA Institute’s GIPs standards and 1,000 organisations use its Asset Manager Code.  

Critical mass 

Fidler said It would take time for the Global ESG Disclosure Standards for funds to get critical mass, noting that its GIPs standard had been around for 20 years, and its Asset Manager Code at least a decade.

“We are starting to see early adopters but we haven’t yet hit that ‘S curve’ where it’s really taking off,” he said. “I can tell you from having worked with other products like this that it’s incredibly difficult and that initial period of building support can sometime take years to get there.”  

One criticism of the Standard has been that it duplicates the work of mandatory disclosure requirements such as the EU’s Sustainable Finance Disclosure Regulation (SFDR). Fidler said the regulations weren’t fully in place when the CFA Institute embarked on the standards.  

“It was a more open playing field than what it is today,” he said. “And I would argue that our efforts have actually helped influence the direction that regulators have taken around the world.” 

Fidler also said as the standards were “global” or “universal” they were free from policy objectives. 

“For example, in Europe one of the main concerns is trying to drive private capital into sustainable economic activities. That policy objective is not shared by other governments. Other regulators are much more concerned simply about disclosure.”  

Going forward, Fidler said that the CFA Institute planned to release assurance procedures for the Global ESG Standards.  

The CFA Institute will also be releasing research on ‘misleading’ disclosures in marketing material around ESG this spring. Fidler said the work would analyse instances of what could be exaggerated or unsubstantiated claims, as well as omissions.  




The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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