Sustainable Investing Certificate Sustainable-Investing CFA Institute Study Notes

Historically, ESG integration began inactive-listed equity strategiesbecause equities offeredgreater flexibilityfor asset managers to engage with companies directly through shareholder voting and engagement. Active equities also allowed for moredirect influenceon corporate ESG practices compared to fixed income or infrastructure investments, which typically have fewer levers for direct engagement.

Single-tier boards combineexecutives and non-executives in a single board structure, a typical arrangement inthe UK and other Anglo-American governance models. In contrast,Germanyuses atwo-tier systemwith separate supervisory and management boards, while China often follows more hybrid approaches depending on corporate form and sector.

Active ownershipinvolves using tools likeproxy votinganddirect engagementto influence companies’ ESG practices. CFA materials note that aclear agenda—focused on specific, measurable objectives—guides these proxy voting strategies, ensuring alignment with long-term sustainability outcomes. Active ownership is not primarily about disinvestment (B) or exclusionary screening (A), which are separate ESG strategies.

Audited company reports areprimary data sourced directlybecause the information isoriginated and verified by the company itself. CFA materials classify this asdirect primary data, as it’s generated by the reporting company and reviewed by external auditors for assurance.