My observations after taking CFA ESG and GARP SCR (2024)

Journey through ESG: A Tale of Two Exams - CFA ESG and GARP SCR

As sustainable and responsible investing gains momentum, professionals in the financial industry are increasingly seeking specialized knowledge in Environmental, Social, and Governance (ESG) investing. Two well-known certifications that cater to this growing demand are the Global Association of Risk Professionals Sustainability and Climate Risk (GARP SCR) certificate and the Chartered Financial Analyst (CFA) certificate with an ESG focus.

GARP SCR by FRM vs. ESG Certificate by CFA Institute

In the past 12 months I’ve taken both exams - the CFA Certificate in ESG Investing and the GARP Sustainability and Climate Risk Certificate.

In this blog post, we will explore the differences between these two certifications and help you understand which one may be the right fit for you in the realm of ESG investing, and whether those two are complementary.

I’m not going to focus on the general differences of the two exams – I think this 300H blog post does an excellent job at outlining the basic differences (or rather, similarities) of the two exams. They are similar in price, study hours needed, exam frequency, format and exam requirements (important highlight: No CFA or FRM charters required for either exam – This means its open to anybody willing to learn more about these subjects).

My Personal Findings

I enjoyed studying for both exams. To my big surprise, the content is quite different although they touch on similar concepts like sustainability and climate change in the context of financial markets. The reason why I found those two exams complementary mainly comes down to the different lenses through which the topics are looked at:

  • CFA ESG mainly took the perspective from an ‘Investment Analyst’
  • GARP SCR on the other hand focused more on the ‘Risk Management’ side of things

Comparison to the CFA charter, CAIA charter, and CFA ESG

So, these different viewpoints gave the two exams an entirely different angle. My previous studies included the CFA charter, CAIA charter and CFA ESG – all focused on analyzing (different) investments, so I found it refreshing to look at investments from a risk-perspective when studying for the GARP SCR.

If we focus a bit more on the content itself, again, I expected to see a large amount of overlap. That wasn’t the fact – the CFA ESG gave me foundational knowledge of Environmental (‘E’ of ESG) risks, but that was one chapter out of 9. You’ll learn much more about Sustainable Finance as a broad category with the myriad of terms that fall on that spectrum. Topics in the CFA ESG include the history and current landscape of Sustainable Finance; all three factors separately E, S, and G; Engagement and Stewardship; how to integrate ESG in a portfolio; how to analyze companies based on their ESG metrics, among other topics.

Contrast that with GARP SCR’s primary focus on Climate risks – so the ‘E’ in ESG. The curriculum actually starts on a more scientific note and explains the current state of the Environment and the most likely trajectories of Global Warming, its implications, and why it is necessary to reverse the trend by introducing cooling mechanisms. You’ll learn about the various GHG, and how strongly those impact the climate. The curriculum then goes on to dive deeper into Climate risks – both physical and transition risks – for companies, for countries, for portfolios and so on.

Just on that basis, if you have the willpower and interest in the topic, I think you’d enjoy doing both. I am happy that both the CFA Institute and GARP don’t require interested candidates to obtain the CFA charter or the FRM charter in order to take CFA ESG or GARP SCR. Also the fact that both exams don’t focus too much on financial literacy or investment analysis skills. As such, the number of mathematical questions are very limited, if that was a concern.

My Study Process

In terms of my study process, it was quite similar for both exams:

  • Read the entire curriculum (roughly 500 pages for CFA ESG, roughly 200 pages for GARP SCR)
  • Use a question bank to memorize the content (both exams deal with similar sounding concepts, and a lot of questions are definitional, so you need to find a way to memorize the terms)
  • Refine knowledge by reading and re-reading Summary Notes provided by prep providers
  • Do the mock exams, both those provided by CFA and GARP, as well as those provided by prep providers

My Brainie colleagues had developed a GARP SCR question bank with more than 500 questions, Summary Notes and two mock exams while I was studying for the exam. I was able to use the draft versions for my own preparation and passed at first attempt. The official Brainie GARP SCR training packages should be launched within weeks. I used the Brainie program also for the CFA ESG preparation.

CFA ESG Pass Rates and GARP SCR Pass Rates

At the exam date, the two exams again feel very similar. The difference lies in the number of questions (CFA ESG 100, GARP SCR 80), in the number of cases/vignettes (CFA ESG has multiple cases, GARP SCR usually has one case with 4 questions), and the exam result date (for CFA ESG, you’ll see it on the exam screen after submitting your exam, for GARP SCR you’ll receive an email after roughly 4 weeks).

CFA ESG: The pass mark ranges from 60%-70%, with an average pass rate of 81%.

GARP SCR: The pass mark ranges from 50%-60%, with an average pass rate of 54%.

My Conclusion

So in conclusion, I would encourage you to take both exams. Sustainability as a topic in investment management and beyond is becoming important for all stakeholders. My conversations with clients has increased dramatically in quality. The level of sophistication in topics like ESG, Climate Research and the Sustainability policy landscape has increased immensely. We ought to be eternal students of markets and market drivers, and CFA ESG and GARP SCR help in that pursuit.

My observations after taking CFA ESG and GARP SCR (2024)

FAQs

What is the success rate of Garp SCR? ›

2. What is the pass rate for GARP SCR? The estimated pass rate for GARP SCR is around 70-80%.

Is the CFA certificate in ESG investing worth it? ›

If sustainable finance interests you, this certification will equip you with deep insights into ESG issues. It will also enhance your credibility in a field that increasingly prioritises these factors. It paves the way for rewarding roles that can positively impact your finance career.

How hard is the Garp SCR exam? ›

How difficult is the SCR exam? The exam format was 80 MCQs in 3 hours. Objectively, SCR has the lowest passing rate at 51% among its peers. In my opinion, the main reason is that the study materials are formed by readings or papers from various institutions, leading to rough transitions between chapters.

What is the success rate for CFA ESG? ›

The pass rate for the CFA ESG Certificate is currently 71.8%. This information is based on the most recent data available from September to November 2022. Prior to September 2022, the pass rate was reported to be 81%.

Is the SCR worth it? ›

Enhanced Knowledge and Skills: The SCR Certificate provides an in-depth understanding of climate risk and sustainability, essential for modern business strategies. Global Recognition: As a certified professional, you gain recognition worldwide, signifying your commitment to understanding and managing climate risks.

What is the passing score for SCR? ›

In order to successfully pass the exam and earn the SCR® Certificate, a minimum score of 60% is required.

What happens if you fail CFA ESG exam? ›

Candidates who fail the exam and re-register will receive the benefit of a reduced registration fee of USD 690 for each subsequent examination. If you fail the exam twice within a six month period, you will not be permitted to register again until six months after the date of your first failed appointment.

What is the difference between Garp and CFA ESG? ›

How does GARP SCR differ from CFA ESG? While GARP SCR is targeted toward risk management with a focus on climate and sustainability, CFA ESG is geared towards investment professionals and covers a broader range of ESG factors. Is an ESG certification necessary for financial professionals?

Is ESG a lucrative career? ›

It's easy to chalk this up to companies not being willing to offer great salaries but management expecting workers to work long hours and have many responsibilities. But that isn't the case. Looking at pay alone, the salaries for those delving into the ESG job market are highly lucrative.

What is the pass rate for ESG? ›

CFA Institute recommends 130 hours of study time to achieve the Certificate in ESG Investing. Experienced professionals may only need around 100 hours to study for this exam. What are pass rates like? The global average pass rate is reported to be 71% (source: CFA Institute, December 2022).

How long does it take to study for the GARP SCR exam? ›

Preparation time varies by candidate. GARP estimates an average preparation time of 100-150 hours. Are study materials included in the price of the exam registration? A full-length Practice Exam, the SCR eBook, and access to GARP Learning are included with registration.

What is the difference between GARP SCR and Cesga? ›

CFA ESG and CESGA exams focus on ESG investing from the perspective of an investment manager, fund manager, equity researcher. GARP SCR emphasises climate risk management from the perspective of a risk manager, credit analyst, auditor or regulator, such as how to measure and model climate risks and conduct scenario.

How many people have CFA ESG? ›

Since its launch, the CFA ESG certificate has already registered more than 51,000 candidates globally. 5. How many people have done the CFA ESG exam so far? In December 2023, there were around 51,000 registrations.

What is considered a good ESG score? ›

Environmental, social, and governance (ESG) scores are an essential tool for investors to assess a company's sustainability and ethical performance. These scores typically range from 0 to 100, with a score of less than 50 considered relatively poor and more than 70 considered good.

Who has best ESG score? ›

Top 100 ESG Companies
RankCompanyESG Score
1ASML Holdings N.V.73.13
2Check Point Software Technologies72.64
3Hermes International SCA71.71
4Linde71.26
39 more rows

How good is GARP certification? ›

The FRM certification is a prestigious designation awarded by the Global Association of Risk Professionals (GARP). It signifies a thorough understanding of financial risk management concepts, tools, and techniques.

Is GARP difficult? ›

If you've been a finance student or professional, the course might be a tidbit familiar. However, it is challenging but doable for newbies. Normally, the course requires more than the average study time for newbies as it takes repetitive studies to understand some concepts.

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