More accredited training is coming online that reflects growing investor demand for more consistent ESG analysis of companies.

Candriam, an affiliate of New York Life, has launched a new training programme to strengthen the ESG analysis of companies.

It comes as ESG is sailing into choppier waters as German and US regulators begin probing DWS for potential mis-selling, and as investors and regulators alike grapple with ESG’s messy reporting landscape.

DWS is not alone. All asset houses will be on alert as the appetite for sustainable investments soars and climate risk tops the political agenda. In the absence of industry standards governing company disclosure on ESG, the quality of analysis and what constitutes “ESG integration” has become a veritable minefield.

The Financial Conduct Authority issued a lengthy advisory note in July about improving ESG quality and clarity for everyone's benefit.

“It is essential that funds marketed with a sustainability and ESG focus describe their investment strategies clearly and any assertions made about their goals are reasonable and substantiated," the FCA warned. “We have seen numerous applications for authorisation of investment funds with an ESG or sustainability focus. A number of these have been poorly drafted and have fallen below our expectations,” it added.

The German regulator is under a new president and putting companies on watch about greenwashing. Its new head is UK-Swiss national Mark Branson, who spent seven years running the Swiss markets authority Finma.

Much of the stepped-up scrutiny of ESG funds is climate driven and pressure is coming from multiple stakeholders. Environmental lawyers from ClientEarth are among a host of groups consulting with the SEC this summer about how to strengthen US economic stability and financial systems to withstand intensified climate risk.

ClientEarth's US legal team wants the regulator to create a federal office of Environmental and Social Governance and put resources into the Office of the Whistleblower to fund a dedicated ESG whistleblower hub and reporting hotline.

The House of Representatives passed its own legislation in June introducing ESG disclosure rules that are expected to face Republican opposition in the Senate.

The challenge is quantifying the path to net zero and what are the best existing companies and solutions that stack up. Impatience is growing because ESG investments are seen as becoming more of a problem than a solution.

"Financial products can be a source of change but not if you are not focused on the right companies and the right relevant solutions," iClima CEO Gabriela Herculano said. The start-up is among a rash of data analysts springing up that are motivated to put decarbonisation on a more clear and aggressive path.

Herculano, whose background is in private equity renewable energy, says the issue continues to be about tangible metrics: "We've spoken to providers and there is no consensus in how to rate companies according to E, S and G metrics, and no consensus on how to put all of the numbers together. Funds are being put in place and billions are being raised to represent companies that have very high ESG scores. But what is the common denominator? What is the purpose? What is the impact?"

Herculano believes that impact will remain muted while decarbonisation is a cost line item for companies. "Companies are going for the low-hanging fruit to reduce their Scope 2 emissions and doing just enough to stay within the Paris Agreement and be lumped into these groups of ETF companies doing 'less harm,'" when the focus should be on emissions avoidance, she said.

A thirst for education and understanding ESG is arguably replacing the marketing rhetoric that has dominated the industry over the last couple of years.

Candriam’s new training model is the 4th ESG course in 11 modules at the academy, which serves around 8,000 members in 40 countries. The module aims to guide investors through five steps to understanding a company’s ESG risk profile. Steps include examining a company’s revenues and spending to understand its main activity and future direction; looking at how these activities align with sustainability objectives; questioning whether the company’s operational conduct presents any scope for future controversies; continuing ongoing company analysis as the best warning system; and being able to meaningfully compare ESG data across different company functions, including corporate engagement.

“Whilst financial information has been subject to mandatory disclosure in a number of markets for some time, the scope of information available to investors for ESG analysis can vary significantly from one company to another. We therefore felt it was important to leverage our own experience in responsible investment to guide investors on the key steps that are required in their own ESG analysis within investment decision making,” Candriam's head of ESG development, David Czupryna, said.