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CFA Institute Seeks Advisor Input on ESG Disclosure Standards

The CFA Institute has started the next step in its process to develop ESG disclosure standards by November 2021.

The CFA Institute is seeking input from financial advisors and the greater financial services industry as it publishes proposals for environmental, social and governance (ESG) disclosure standards for investment products. 

The Institute is asking advisors to participate, since they distribute ESG products and provide recommendations on what is best for investors. The organization believes its disclosure standards will be beneficial to the client relationship.

Its first draft of the standards states that the confusion caused by the language used to describe ESG-related features has led to unproductive conversations between investors and advisors—so much so that investors often are dissatisfied with the buying process, and advisors are missing opportunities to meet their clients' needs.

On Wednesday, the Institute entered into a 60-day comment period following the release of its consultation paper on the development of its proposed ESG disclosure standards. The 33-page paper outlines how the CFA Institute will design the standards and independently examine them.

“The Standard will primarily focus on disclosure requirements for investment products with ESG-related features so that investors can more comprehensively evaluate whether or not an investment product will meet their needs,” said Chris Fidler, senior director of global industry standards at the CFA Institute.

The paper was drafted by the 15-member volunteer task force it launched in January. The group of consultants crafted the paper in a series of biweekly meetings it conducted over the past six months. 

The Institute set an Oct. 19 deadline for comments. After that it plans to release an exposure draft in May 2021, followed by another 60-day comment period. The final draft will be published in November 2021.

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