13 December 2021

CFA Institute Explores Investor Views on ESG Integration

CFA Institute today announced the results of a new, global member survey on environmental, social, and governance (ESG) issues. Investors Want More Clarity Around Standards for ESG Integration.

The survey of CFA Institute members asked these professional analysts and investors about the duty of investment managers to integrate ESG factors into their investment analysis and decision-making, as well as their views on the need for formal, government-backed standards for how public companies report on ESG matters.

“Uncovering investor viewpoints is critical at a time when global regulatory policy is in a state of flux concerning the role ESG factors play in the practice of investment management,” said Margaret Franklin, CFA, President and CEO, CFA Institute. “Policymaker debates and regulatory changes are well underway on a variety of climate change and ESG topics around the world. Our members suggest these debates would be better settled between investors and their investment managers rather than regulators.”

Regarding the integration of ESG factors by investment managers, most respondents think: 

• Customers and their investment managers should decide on ESG integration, not regulators.
• Regulators should not mandate ESG integration.
• Financial materiality should be the primary focus of investment managers who do integrate ESG issues into their investment performance.
• Greenwashing should be addressed with clear and consistent rules on marketing and measuring adherence to ESG product claims.[1]

On public company reporting on ESG matters, most respondents think:

• Formal, government-backed standards for public company reporting on ESG should be established.
• Mandatory public company reporting on ESG should be delayed until after formal reporting standards are enacted.
• A baseline of globally consistent standards for ESG reporting is preferred to many regional approaches.
• Voluntary ESG reporting pursuant to private reporting frameworks is not favored.
• Auditor assurance of ESG reporting should wait until government-backed standards for ESG reporting are in place and mandatory for public companies.

Matt Orsagh, CFA, CIPM, Director of Capital Markets Policy at CFA Institute, adds: “The findings from our survey shed light on the views of investors regarding key debates in the current maelstrom of ESG policy actions and will clearly help inform the global debate as regulatory initiatives evolve.

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