Insight Sharing from the 1st CESGA Congress by EFFAS in Madrid

[Certified ESG Analyst Insights Sharing] Delton KF Lau, CESGA

Thanks to the coordination provided by the Friends of the Earth (HK). It is my honor to be a CESGA holder in Hong Kong to join the 1st CESGA Congress on 4 April 2024 at the ACCIONA Campus in Madrid, capital of Spain. The congress was organized by EFFAS – The European Federation of Financial Analysts Societies, in collaboration with the Spanish Institute of Financial Analysts.

The CESGA (Certified ESG Analyst) Congress is an international and influential event in the sustainable finance space, highlighting the growing importance of ESG (Environmental, Social, and Governance) integration in the financial sector. EFFAS, the leading association of financial analyst societies in Europe, played a crucial role in organizing this congress to promote sustainable finance education and best practices.

This event brought together over 100 national and international leaders from the financial sector and the ESG world. During the event, it provided a tremendous opportunity for me to discuss with global ESG professionals regarding the latest developments and trends in sustainable finance worldwide, as well as to examine new regulatory frameworks, innovative sustainable investment strategies, and emerging challenges and opportunities in the ESG sector.

The congress featured six insightful sessions, each addressing various aspects of the sustainable finance transformation:

Session 1 – The Great Reallocation” – focused on the shift of capital investments towards institutions and projects that emit minimal greenhouse gases (GHG). This reallocation is a crucial step in transitioning to a low-carbon economy and mitigating the impacts of climate change. According to a recent report by the International Energy Agency (IEA), global investment in renewable energy exceeded fossil fuel investments in 2023, reflecting this significant reallocation of capital. The session highlighted the importance of redirecting financial flows to support the development and deployment of clean energy technologies, as well as the need for robust policy frameworks and incentives to accelerate this transition. Speakers also emphasized the role of financial institutions, such as banks and asset managers, in driving this reallocation by incorporating ESG considerations into their investment decisions and engaging with companies to encourage the adoption of sustainable practices.

Session 2 – Landscape of Sustainable Investment in Europe” highlighted the transformational factors shaping the sustainable investment landscape in Europe, such as new regulations, growing environmental awareness, technological advances, and complex socio-economic and political dynamics. A steady growth in sustainable investing assets across Europe in recent years had been recorded. The session emphasized the importance of collaboration among stakeholders, including policymakers, investors, and corporations, to create an enabling environment for sustainable investment and to address the challenges and opportunities associated with the transition to a more sustainable economy. The role of the European Union’s Sustainable Finance Action Plan in promoting sustainable investment and the potential impact of the EU Taxonomy, a classification system for environmentally sustainable economic activities, on the investment landscape has briefly been discussed.

Session 3 – “New Corporate Disclosure Regulation, a Landmark in Sustainable Finance?” discussed how the recent implementation of the EU’s Corporate Sustainability Reporting Directive (CSRD) is transforming the sustainable finance landscape. The CSRD mandates more extensive sustainability reporting for large companies, providing capital markets and stakeholders with reliable sustainability-related information. The session explored the implications of the CSRD for companies, investors, and other stakeholders, as well as the potential challenges and opportunities associated with its implementation. Participants also discussed the role of the CSRD in promoting transparency, accountability, and comparability in sustainability reporting, and its potential to drive the integration of ESG considerations into investment decision-making. The session also highlighted the importance of harmonizing sustainability reporting standards globally to ensure consistency and comparability of ESG data across jurisdictions.

As a professional in investment and fund management, I found sessions 4 and 5 particularly engaging. “Session 4 – Innovation across Asset Class Trends in ESG Valuation and Research: Fixed Income” and “Session 5 – Trends in ESG Valuation and Research: Equity” – highlighted the symbiotic relationship between equity and fixed-income investors and companies with strong ESG credentials. Research from the CFA Institute and the Principles for Responsible Investment (PRI) has shown the growing importance of ESG data integration in investment decisions across asset classes. The sessions explored the latest trends and best practices in ESG valuation and research, as well as the challenges and opportunities associated with integrating ESG considerations into fixed income and equity investment strategies. Participants also discussed the role of ESG data and analytics in informing investment decisions and driving the transition to a more sustainable economy.

No doubt, ESG data is the backbone of any regulatory industry. Establishing a pillar of standardized corporate reporting alongside financial reporting on an equal footing would provide quality sustainability-related information to capital markets and other stakeholders, helping to avoid greenwashing and to foster the creation of a single harmonized and reliable data platform, which would be an important goal. Another important point is how investment firms are responding to significant investments in ESG capabilities, team building, and improving performance in areas such as net zero targets, sustainability governance, and positive impact strategies, which would be another determining factor.

The final session, Session 6 – The Future of the ESG Analyst” analyzed the evolving role of ESG professionals in the rapidly changing landscape of sustainable finance. The session explored the key skills and competencies required for ESG analysts to effectively navigate the complex and dynamic world of sustainable investing, as well as the emerging trends and challenges shaping the future of the profession. Participants also discussed the importance of continuous learning and professional development for ESG analysts, as well as the need for collaboration and knowledge-sharing among professionals in the field to drive the integration of ESG considerations into investment decision-making and to promote the transition to a more sustainable economy. The session emphasized the growing demand for ESG professionals with a diverse skill set, including expertise in data analysis, sustainability reporting, and stakeholder engagement. Speakers also highlighted the potential for ESG analysts to play a critical role in driving the transition to a more sustainable economy by providing valuable insights and recommendations to investors and companies.

To conclude, the global shift towards sustainability and the growing demand for ESG professionals underscore the need for verified information and standardized data. Reliable data is crucial for building green and sustainable portfolios. Looking ahead, the focus on ESG practices will continue to expand beyond climate change, with increasing attention on biodiversity and social empowerment. The empowerment of investors, asset managers, and ESG analysts with accurate information will be a key driver in the transformation towards a greener and more sustainable future.

Why do we need sustainability assurance for climate tech?

Mostafa Monira Firdouse, Green Finance Advisor, FoE (HK)

Climate tech, the renewed love of my life! The last hope that I believe can bring positive turn to climate change. Wish, I would be able to witness this. If not that’s also fine, as long as I know that governances are in-place with clear line-of-sights and long-term plans to provide financial viability to assure sustainability. BUT HOW?

Those of you who missed my previous article on Capital Mobilization, here is a recap.

Clean technologies have the potential to reduce up to 90% of human-made emissions by 2050. However, only 10% of their potential is being fully used.

According to McKinsey climate tech report, twelve categories of climate technologies hold the promise of large-scale emissions reduction. Though their maturity varies: for example, renewable energies such as solar and wind energy are increasingly being deployed and, in some regions, are already cost competitive with fossil fuels, whereas carbon removal technologies and alternative proteins are in an early development stage.

So, the question is, why are these technologies not taking off, and why is scalability an issue? Is that because of the financing gap, lack of incentive, or lack of trust/assurance?

It is imminent that we need policy-driven long-term green financing and fast-moving transition finance with private and public participation. However, to move the needle, the missing puzzle piece is the right incentive mechanism, and that should be the development of an honest carbon market. Rather than providing direct financial incentives, we should look into establishing a carbon market with proper benchmarking and sustainability assurance.

More than ever, financial institutions and project sponsors are under pressure for lack of transparency and risk management concerning social and environmental responsibility. Due to the lack of trust in data source, the carbon market could never take off and, or, viable. Which severely costing emerging markets and the main cause of environmental and social degradation. Like financial accounting audits, it is essential to mandate environmental and social audits:

  • To ensure credibility and environmental integrity of carbon credits through third-party verification that carbon offset projects are genuinely reducing or removing emissions as claimed.
  • To increase transparency and traceability preventing double counting or fraudulent claims.
  • To build trust and confidence among buyers and sellers.
  • To attract investment towards credible climate projects and eventually contribute to the society.
  • To align with emerging regulations and standards.

Principles of Sustainability Assurance:

Materiality: Assurance focuses on material aspects that significantly impact the organization’s sustainability performance and are relevant to stakeholders.

Completeness: Assurance ensures all relevant information is included and nothing material is omitted.

Credibility: Assurance provides credibility to the reported information, enhancing the trust of stakeholders.

Compliance: Assurance processes may be designed to ensure compliance with relevant laws, regulations, and industry standards related to sustainability reporting.

Voluntary Reporting Initiatives: Organizations may voluntarily undergo assurance, even if not required by law, to demonstrate their commitment to transparency and accountability.

Feedback Loop: Sustainability assurance should be part of a continuous improvement process, with feedback mechanisms to enhance data quality and reporting over time.

Stakeholder Engagement: Engaging with stakeholders in the assurance process can provide valuable insights and enhance the credibility of sustainability reporting.

Sustainability assurance is crucial in fostering transparency, accountability, and trust in an organization’s sustainability practices, contributing to long-term value creation and responsible business practices.

Article Summary for ESG Disclosure and Investors’ Attention

Green Finance Advisor of Friends of the Earth (HK)

The article “ESG Disclosure and Investors’ Attention: Evidence from Mutual Fund Prospectuses” explores the relationship between ESG disclosures in mutual fund prospectuses and their impact on fund flows. The authors focus on distinguishing between specific and generic ESG disclosures and investigate the factors that influence investors’ preferences regarding these disclosures.

To analyze the ESG disclosures, the authors use a unique approach that combines textual analysis and classification tasks. They employ a pre-trained large language model called BART-large to classify sentences in the prospectuses as ESG-related or not. They further categorize the ESG-related sentences as specific or generic. This methodology allows for a more detailed understanding of the specific ESG aspects that significantly affect investor decisions.

The study finds that mutual funds with extensive specific ESG disclosures tend to attract more investor interest. These detailed disclosures are perceived as more credible and useful for investment decisions. On the other hand, generic ESG disclosures show no significant association with fund inflows. This suggests that investors prioritize specific ESG information over overall performance when making investment decisions.

The authors also examine the relationship between ESG disclosures and future fund returns. They find that neither specific nor generic ESG disclosures have a significant impact on risk-adjusted returns. However, funds with specific ESG disclosures attract more investment, indicating that investors place importance on specific ESG factors independent of performance. The study also reveals that investors react more positively to positive historical returns when accompanied by specific ESG disclosures, indicating that detailed information in the disclosures elicits stronger market reactions.

The study considers the influence of climate change on investor focus towards ESG disclosures. During periods of heightened climate concern, there is a stronger positive correlation between specific ESG disclosures and fund flows compared to periods of low climate concern. This suggests that investors pay closer attention to specific ESG disclosures to assess and mitigate climate-related risks in fund portfolios. It is also noted that investors are more drawn to the length and ranking of specific ESG disclosures within the prospectuses, rather than their specificity.

In summary, the study highlights the significance of specific ESG disclosures in mutual fund prospectuses. These disclosures play a crucial role in attracting investor attention and have an incremental impact on fund inflows. Investors value detailed and precise information regarding ESG factors and respond more favorably to positive historical returns when accompanied by specific ESG disclosures. The research acknowledges the growing importance of climate-related concerns in shaping investors’ preferences for ESG disclosures. Overall, the study provides valuable insights into the association between ESG disclosures and investor attention in the context of mutual funds.


Shi, H., Lu, H., Lee, J. B. (2023), ESG disclosure and investors’ attention: Evidence from Mutual fund prospectuses, CFA Institute Asia-Pacific Research Exchange Publishing

May-June 2024 Events on Green Finance / 2024年5-6月綠色金融活動一覽

Check out the above calendar for the fantastic green finance events for May to Jun 2024! Interested to join and know more about the events? Click the links below for details:


7-May [1] Unveiling ESG Ratings for Banks in the Middle East & Turkiye

7-May [2] Adaptation and Resilience Impact: A measurement framework for investors

8-May [3] Scaling energy efficiency: how insurers and banks can support sustainable finance

8-May [4] Ethical Finance ASEAN 2024: Scaling up Sustainable Finance

9-May [5] Investing for nature: building investor action on biodiversity loss

15-May [6] Sustainability Insights: Focus on Housing Providers in EMEA

15-May [7] CSRD: Implementation and beyond

17-May [8] Climate Bonds CONNECT 2024 Shanghai

21-May [9] Leveraging the Principles for Responsible Banking for CSRD implementation

21-May [10] PRI Minimum Requirements for investor signatories in the 2024 reporting cycle

22-May [11] SFi Asian Family Impact Summit: How Capital Meets Purpose

24-May [12] GRESB Inside ESG: Performance-based ESG Benchmarking for Infrastructure in Asia

06-Jun [13] Enabling the Ecosystem for Resource Circularity in the MICE Industry

17-19-Jun [14] GREENFIN – The Premier Sustainable Finance And Investing

27-Jun [15] Climate Innovation Forum 2024