Source: greenbiz.com<\/p>\n\n\n\n
The shares of PG&E, California’s utility, lost nearly half their value in January after the company filed for bankruptcy protection because of its role in California wildfires. While this may have resulted in huge losses for some investors, those who carefully scrutinized environmental, social, and governance (ESG) factor \u2014 and took note of wildfire-related risk \u2014 would have seen the warning signs flashing long before then, and avoided exposure to such a high risk investment.<\/p>\n\n\n\n
Taking ESG factors into account in investment decisions has become synonymous with sustainable investing \u2014 an area experiencing rapid growth in the investment industry. Morningstar found that the number of sustainable investment funds in the United States alone grew 50 percent between 2017 and 2018, to 351 funds with $161 billion under management at the end of 2018.\u00a0\u00a0<\/p>\n\n\n\n
While sustainable investing is growing in popularity, not all investors are integrating ESG considerations into their decision-making \u2014 yet. A recent ESG policy statement by the CFA Institute underscores how this needs to change.<\/p>\n\n\n\n
The Chartered Financial Analyst (CFA) credential is considered the gold standard in the field of investment analysis and management. CFAs\u00a0often\u00a0are\u00a0portfolio managers and research analysts at investment management firms.<\/p>\n\n\n\n
The CFA Institute manages this credential, held by over 150,000 investment professionals worldwide. While it stopped short of formally requiring CFA charterholders to factor in ESG, its guidance carries a lot of weight in the investment community. We wanted to highlight four takeaways:<\/p>\n\n\n\n