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ESG Newsletter published on April 3, 2023

CFA Institute ESG Standards Address Investment Product Disclosure Practices


  • The CFA Institute issued the first global voluntary standards for disclosing how an investment product considers ESG issues.
  • The institute’s standards are intended to address a broad range of ESG practices and approaches.
  • Breckinridge is developing its disclosures in compliance with the standards.

The CFA Institute issued the first global voluntary standards for disclosing how an investment product considers environmental, social and governance (ESG) issues in November 2021. The CFA institute is a global association of investment professionals that promotes ethical, operational, and educational standards, and offers the well-recognized Chartered Financial Analyst (CFA) professional designation.

The institute’s Global ESG Disclosure Standards for Investment Products are intended to address a broad range of ESG practices and approaches including research integration, screening, impact, thematic, best-in-class, proxy voting, and engagement. The Standards are intended as ethical principles for the fair representation and full disclosure of an investment product’s ESG approaches.

The institute reports that the standards are intended to help investors consultants and distributors to better understand, evaluate, and compare ESG approaches, and to complement and streamline manager search, product selection, due diligence, governance reporting, and record-keeping processes. For investment managers, the standards may facilitate sales and distribution of investment products, save time and effort responding to requests for proposals and due diligence questionnaires, reduce legal and compliance risk, and enhance a manager’s brand. Breckinridge is developing its disclosures in compliance with the standards, with support from the CFA institute, with the goal of finalizing them in 2023.

Global standards like the Global ESG Disclosure Standards for Investment Products play an important role, alongside regulation, in shaping industry practices. The standards have been designed to accommodate the full range of investment vehicles, asset classes, and ESG approaches. For example, the standards seek to address “greenwashing” as well as the difficulties that investors may face when trying to understand, evaluate, and compare investment products that incorporate one or more ESG approaches.

The Standards have been, and will continue to be, developed, maintained, and promoted through a collaboration of volunteer subject matter experts and CFA Institute through a process informed by public consultation. The Standards are jointly approved by CFA Institute and its ESG Technical Committee. (Ed. Note: Rob Fernandez serves as a member of the institute’s ESG Technical Committee.)

In order to state that ESG disclosures for a particular investment product comply with the standards, investment managers must: 1) Document policies and procedures for establishing and maintaining compliance with the requirements of the standards, 2) Prepare ESG Disclosure Statements for each product that is to be considered, 3) Notify the institute by submitting a form on the institute’s website after completing the first ESG Disclosure Statement and annually thereafter, and 4) Make its ESG Disclosure Statements available to investors.

To assist investment managers in development of their own disclosures according to the standards, the institute has released additional materials including independent assurance procedures, a handbook that explains the provisions of the Standards, and an optional template to standardize the format of investment product ESG disclosures.



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