ESG issues matter to clients and CFA UK’s members are responding to those pressures.
The global Environmental, Social and Governance survey run last year by CFA Institute demonstrated this clearly. 73% of CFA Institute’s global membership take ESG issues into account in investment analysis or decision-making. That number rises to 81% when you look at the EMEA region alone. And, while respondents in all regions report that ESG integration is primarily intended to help manage investment risks, a majority of respondents in the EMEA region (52%) quote client demand as the next most important driver.
Those same EMEA respondents quote the lack of appropriate quantitative information (59%) and the lack of assurance around data (49%) as the two most important factors that limit their organisation’s ability to use ESG information in investment decision-making.
CFA UK’s recent response to the FRC’s consultation on the revisions to the Corporate Governance Code and its initial consultation on the future direction of the UK Stewardship Code were made with this backdrop in mind. The response (which was managed by the society’s Professionalism Committee with the support of our new adviser, Andy Burton, and with contributions made by members with expertise in this area) strongly supported the development of more transparent reporting and the more consistent application of reporting frameworks. We recommended that companies should either comply and report against the UN Sustainable Development Goals, or should select an alternative framework and explain why they have done so.
Within our response to the FRC’s stewardship code, we argued against the introduction of a new principle within the code to address ESG issues. Our strong sense is that consideration of ESG issues should be implicit within the Stewardship Codes existing seven principles. ESG should be integrated into stewardship, not a separate component or a box to be ticked.
CFA UK’s responses – whether to the FRC, the FSA or other regulatory or policy-making bodies in the UK – depend on volunteer management and input from members and from our colleagues at CFA Institute. If you’d like to play a part in this process, please visit our volunteering page to learn how you can get involved.
Read FRC response