Most BVWire—UK readers we’ve spoken with feel the industry “buzz” around scoring listed companies according to their environmental, social, and governance (ESG) factors is of minimum significance to the business valuation profession, since market and income approaches already account for the risks of bad behaviour within a private-market sector or specific target company. “It’s in the future cash flows and cost of capital,” one Big Four valuation expert said.
Nonetheless, ESG is a trend in the investing world that will increasingly be questioned in business valuation, so all UK analysts should at least be familiar with the concepts. One source is now the CFAI, which announced a new training and ESG investing certificate program in late March. The program, developed by CFA Society of the UK, offers “a new global qualification for ESG in investment management.”
Becoming certified is not for the faint of heart. The certificate is a self-study course requiring approximately 130 hours of study, culminating in a two-hour-and-20-minute computer-based exam, and it costs about £5,000. (Given the fact that CFA Institute’s own survey indicated that only 69% of their retail investor members were interested in ESG, it remains to be seen whether this investing concept has staying power.)
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