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ESG Investing and Analysis

ESG analysis has become an increasingly important part of the investment process. For investment professionals, a key motivation in the practice of considering environmental, social, and governance (ESG) issues as part of their financial analysis is to gain a fuller understanding of the companies in which they invest.

Interested in accelerating your career? The Certificate in ESG Investing offers you both practical application and technical knowledge in the fast-growing field of ESG investing.

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What Is ESG Investing?

ESG stands for Environmental, Social, and Governance. Investors are increasingly applying these non-financial factors as part of their analysis process to identify material risks and growth opportunities. ESG metrics are not commonly part of mandatory financial reporting, though companies are increasingly making disclosures in their annual report or in a standalone sustainability report. Numerous institutions, such as the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), and the Task Force on Climate-related Financial Disclosures (TCFD) are working to form standards and define materiality to facilitate incorporation of these factors into the investment process.

What is driving the rise of environmental, social, and governance (ESG) investing, and what does that mean for the financial industry? Explore our Guide to ESG Investing to learn more.

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Environmental

Explore climate change’s impact on investing, key tools for investment professionals, and case studies.

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Social

Discover the unique actions companies across the globe are taking to advance diversity, equity, and inclusion (DEI) in their organizations.

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Governance

See our positions on environmental, social, and governance integration.

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Key ESG Factors

There is no definitive taxonomy of ESG factors. ESG factors are often interlinked, and it can be challenging to classify an ESG issue as only an environmental, social, or governance issue, as shown in the example below.

These ESG factors can often be measured (e.g., what the employee turnover for a company is), but it can be difficult to assign them a monetary value (e.g., what the cost of employee turnover for a company is).


  • Environmental

    Conservation of the natural world

    - Climate change and carbon emissions
    - Air and water pollution
    - Biodiversity
    - Deforestation
    - Energy efficiency
    - Waste management
    - Water scarcity

  • Social

    Consideration of people & relationships

    - Customer satisfaction
    - Data protection and privacy
    - Gender and diversity
    - Employee engagement
    - Community relations
    - Human rights
    - Labor standards
  • Governance

    Standards for running a company

    - Board composition
    - Audit committee structure
    - Bribery and corruption
    - Executive compensation
    - Lobbying
    - Political contributions
    - Whistleblower schemes

How CFA Institute Can Help

CFA Institute offers a variety of resources to help you demonstrate mastery of ESG investing in practice.

Earn the Certificate in ESG Investing
The Certificate in ESG Investing offers you both practical application and technical knowledge in the fast-growing field of ESG investing.

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Review the Global ESG Disclosure Standards
CFA Institute has developed the Global ESG Disclosure Standards for Investment Products which aims to build a framework for investment managers to better communicate to their clients the nature and characteristics of ESG-centric funds and investment strategies.

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ESG Metrics

esg metrics

There is not a standardized approach to the calculation or presentation of different ESG metrics. Investors can employ a variety of analytical approaches and data sources to address ESG considerations, including weighting to client interest and potential value. Understanding the relative merits and limitations of different metrics can help to form a more complete picture of ESG risks and opportunities.

ESG versus SRI

ESG investing grew out of investment philosophies such as Socially Responsible Investing (SRI), but there are key differences. Earlier models typically use value judgments and negative screening to decide which companies to invest in. ESG investing and analysis, on the other hand, looks at finding value in companies—not just at supporting a set of values.

Why Is CFA Institute Focused on ESG?

CFA Institute consistently monitors key debates and evolving issues in the investment industry. ESG investing and analysis has become of increasing interest to investment professionals globally as governments, asset owners, and high-net worth investors consider the impact of ESG factors on their investments and local markets. We believe more thorough consideration of ESG factors by financial professionals can improve the fundamental analysis they undertake and ultimately the investment choices they make. CFA Institute is specifically focused on the quality and comparability of the ESG information provided by corporate issuers and how to integrate various ESG factors into the investment selection process.

The Sustainability Story

The Sustainability Story

Join us for conversations with thought leaders in the world of ESG integration and sustainability, where we cover a vast number of topics.

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The CFA Institute Certificate in ESG Investing uses a self-study model that can be tailored to fit your schedule. The program has one level; your exam can be scheduled within one year of registering.

Are you prepared for the rise of ESG?

ESG Investing Trends

Uncover the key ESG trends shaping the investment industry and impacting investment professionals.

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Enterprising Investor

Read up on the latest ESG news and analysis by investment professionals for investment professionals.

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Industry Insights

Learn how integrating ESG sensibilities throughout your company will set you up for success.

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Integrating Natural Capital

Review ways to integrate natural capital into the investment process.

Are You Committed to Sustainable Investing? 

Learn how prepared you are for ESG, take our investment organization rubric.

For Organizations  and for Professionals

Regional ESG Insights from CFA Institute

Discover all ESG investing resources