On November 1, 2021, CFA Institute issued its Global Environmental, Social and Governance (ESG) Disclosure Standards for Investment Products (Standards). The Standards are the first voluntary global standards designed to report on how an investment product considers ESG issues in its objectives, investment process and stewardship activities.

The Standards are intended to help investors, consultants, advisors and distributors better understand, compare and evaluate investment products. They are designed to accommodate the full range of investment vehicles, asset classes and ESG approaches offered in markets globally. The Standards were developed in part as a means to mitigate greenwashing and preserve the integrity of the information being shared about ESG investment products.

The Standards are premised on providing investors with information that is complete, reliable, consistent, clear, and accessible. CFA Institute outlined ten required, and one recommended, fundamentals of compliance. For example, investment managers must update ESG disclosures when changes are made to the requirements or interpretive guidance of the Standards, when the investment manager makes changes to information affecting the ESG disclosures, or when a significant error is found in ESG disclosures after being made available to investors. Finally, CFA Institute suggests defining terms such as “ESG integration”, “screening”, “thematic”, and “impact investments”.

CFA Institute will issue a handbook on or before May 1, 2022 explaining the provisions of the Standards as well as an optional template creating a standardized ESG disclosures format for ease of comparison. Before the end of 2022, CFA Institute will require investment managers preparing disclosures in accordance with the Standards to notify CFA Institute of their use.

November 30, 2021