The CFA Society of the UK (CFA UK) hopes its new qualification —  a Certificate in Impact Investing — to help close the knowledge gap and lead to a better understanding of impact investing, which has the potential to fundamentally reshape the investment industry. 

The not-for-profit industry body’s new program will focus on key aspects of impact investing including investment strategies and implementation and impact measurement and management. CFA UK says this is a first-of-its-kind qualification aimed at investment professionals seeking an introduction to impact investing. 

The new certificate follows an impact investing pilot program last year, and also follows on from two certificates launched by CFA UK and CFA Institute —  the Certificate in Climate and Investing launched last March and the Certificate in ESG investing in March 2021.

The certificate, which has been developed by an expert panel, can be obtained via a self-study course covering a range of topics, including impact investment philosophy, strategy and implementation; asset classes and products in private and public markets; and impact selection, measurement, management, monitoring and reporting.

CFA UK said the course structure ensures all candidates develop a clear understanding of the shape and size of the market, and gain the skills needed to implement impact strategies, including how to develop theories of change and measurement frameworks. 

Jamie Innes, investment manager for UK-based impact wealth manager Tribe Impact Capital, who contributed to the development of the syllabus, said people’s understanding of impact investing had come a long way over the last decade, but that there was still work to be done.

“Given the rapid rise of impact investing as a theme in public markets, there’s a lack of standardisation and agreement regarding how to generate long-term impact,” he said. 

Closing the knowledge gap

A study by the UK’s independent financial regulatory body — the Financial Conduct Authority — found that 4 in 5  consumers want their money to ‘do some good’ alongside providing a financial return, while only 20% of investors were aware of sustainable investment options. This points to a significant knowledge gap. 

“The certificate is a fantastic addition to the marketplace that will hopefully help to close this gap and lead to a greater understanding of impact investing. A qualification of this nature helps the sector mature and enables greater accountability and transparency between money managers and clients,” said Innes.

Another issue is the failure to make the distinction between impact investing, which seeks to create real world positive outcomes for people, places and the planet, and ESG, which largely focuses on risk factors and performance. 

A need for impact education

In Australia, a Colonial First survey last year, found that less than a third of the 1,400 Australians surveyed were aware of ESG investing and sustainable investing, and under 6% understood it . Half didn’t understand the term “net-zero” and even fewer (38%) understood the meaning of “greenwashing”. 

This suggests, as is the case in the UK, that Australians too could do with enhanced education in this space.   

As clients increasingly demand for positive impact alongside financial return increases, investment professionals must respond accordingly and understand the space, its application and the ways it can be delivered.

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