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How Hard is the CFA ESG Investing Exam?

How Hard is the CFA ESG Investing Exam?
How Hard is the CFA ESG Investing Exam?

The CFA ESG Investing Certificate, inaugurated in 2019, stands as the preeminent ESG certification globally, with over 41,000 candidates by mid-2023. This guide elucidates the certification process's intricacies and offers insights into the exam's structure and preparation strategies.

CFA ESG Investing, CFA ESG Exam

What is included in this article?

  • Exam Structure

  • Chapter Allocation and Importance

  • Pass Rates and Benchmarking

  • Difficulty Level

  • Exam Cycles

  • Preparation Recommendations

  • So, How Hard is the CFA ESG Exam?

Exam Structure

The CFA ESG Exam comprises 100 multiple-choice questions, each presenting three potential answers. Candidates are allotted a duration of 2 hours and 20 minutes for completion. The exam can be scheduled at any point during the six-month registration window, with the flexibility of taking it at a test center or remotely. The content is derived from the nine chapters of the CFA ESG Investing manual, with the distribution of questions proportional to the chapters' significance in the syllabus.

Chapter Allocation and Importance

The information below delineates the allocation of questions per chapter:

  1. Introduction to ESG: 4-8 questions

  2. The ESG Market: 4-8 questions

  3. Environmental Factors: 8-15 questions

  4. Social Factors: 8-15 questions

  5. Governance Factors: 8-15 questions

  6. Engagement and Stewardship: 5-10 questions

  7. ESG Analysis, Valuation, and Integration: 20-30 questions

  8. ESG Integrated Portfolio Construction and Management: 10-20 questions

  9. Investment Mandates, Portfolio Analytics, and Client Reporting: 5-10 questions

Each chapter's questions reflect its relative weight in the examination, with areas like ESG Analysis carrying a heavier question load, indicating its importance.

Pass Rates and Benchmarking

The pass rate for the certificate hovers around 71.8% as of late 2022. While the exact pass mark remains undisclosed by the CFA Institute, estimations suggest a benchmark near 70%. It is crucial for candidates to rely on official sources rather than informal online disclosures for accurate pass rate information.

Difficulty Level

Ranked at level 4 by the CFA Institute, the ESG certificate's difficulty is akin to that of the Investment Management Certificate but is considered less challenging than the CFA Level 1. The lack of calculations and a comparatively shorter syllabus may lessen the difficulty; however, the expectation for in-depth knowledge remains stringent.

Exam Cycles

The CFA ESG exam content undergoes annual revisions, and candidates are assessed based on the specific edition for which they have registered. The forthcoming Version 5, or 2024 Edition, will include the latest content updates and amendments.

Preparation Recommendations

To tackle the breadth of material efficiently, candidates should aim for 100-130 hours of study, focusing on active learning methods.

here are several study tips to aid in preparing for the CFA ESG Certificate exam and to enhance the learning process:

  • Break down the study hours into manageable daily or weekly goals.

  • Allocate more time to chapters with a higher question allocation, as seen in the table above.

2. Understand Key Concepts:

  • Focus on truly understanding the core ESG principles instead of rote memorization.

  • Use real-world examples to see how ESG factors are applied in practice.

3. Utilize Official Study Materials:

  • Stick to the CFA's official ESG study materials to ensure alignment with the exam content.

  • Regularly review the learning objectives outlined in the CFA ESG book.

4. Practice Active Learning:

  • Engage with the material through discussion groups or study partners.

  • Teach ESG concepts to someone else; it's a powerful way to reinforce your own understanding.

  • Regularly test yourself with practice exams to build confidence and identify areas needing improvement.

  • Simulate exam conditions to improve time management and reduce anxiety on the actual test day.

6. Stay Updated on ESG Trends:

  • Since ESG is a rapidly evolving field, stay informed on the latest trends and regulatory changes.

  • Subscribe to relevant newsletters, podcasts, or webinars that discuss current ESG issues.

7. Prioritize Weak Areas:

  • Identify which chapters or concepts you are struggling with and prioritize these in your study plan.

  • Don’t hesitate to reach out to instructors or peers for clarification on difficult topics.

8. Manage Your Time Effectively:

  • Avoid cramming by starting your studies well in advance of the exam date.

  • Use a timer for study sessions to avoid burnout and keep each session focused and productive.

9. Take Care of Your Health:

  • Ensure you get sufficient sleep, eat healthily, and exercise regularly to maintain high energy levels and mental clarity.

  • Practice mindfulness or meditation to manage stress during the preparation phase.

10. Reflect on Your Progress:

  • Keep a study journal to reflect on what you’ve learned each week.

  • Adjust your study plan as needed based on your journal reflections and practice exam outcomes.

So, How Hard is the CFA ESG Exam?

In conclusion, the CFA ESG Exam is a challenging yet manageable certification for professionals. It’s structured with 100 multiple-choice questions, reflecting an in-depth examination of nine critical ESG topics. Despite a pass rate of approximately 71.8%, which suggests a moderate level of difficulty, the exam requires a significant commitment to study and understand complex ESG principles. Ranked as level 4 in difficulty by the CFA Institute, it is more accessible compared to the CFA Level 1 but maintains a rigorous standard, emphasizing the need for a thorough preparation strategy. With the right approach, incorporating active learning and consistent study habits, candidates can navigate this exam successfully. The key to demystifying the CFA ESG exam lies in focused preparation and a deep engagement with the material.


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