"Everyone who wants a job now says they're an expert in ESG"
If you're looking for a new financial services job now - particularly on the buy-side - you might be tempted to add three letters to your CV/résumé: ESG. Environmental and social investing is all the rage.
"Anyone out of work for more than six months just writes ESG all over their CV," says Natalie Basiratpour, a director at recruitment firm Octavius Finance in London. "They see that it's a growing area and somewhere that's hiring, and they think that by saying they're passionate about the environment and sustainability they'll become more employable."
ESG investing is indeed incredibly hot now. Earlier this month, Goldman Sachs held an inaugural "Carbonomics Conference" where it noted that there are now $103 trillion of assets invested with funds that have signed up to the UN's principles for responsible investing, and that the top ESG performers have generated 320 bp of alpha over bottom ESG performers since 2012. In Europe, PWC is forecasting that assets in ESG funds will outnumber assets in conventional funds within five years.
This doesn't mean, however, that ESG is an easy area to get a job in.
"Some people have been working in ESG investing for 10-15 years already," says Basiratpour. "It can be a difficult area simply to walk into."
In the U.S., ESG investments are expected to receive a boost from a Biden presidency. Although it may be hard for the new president to make substantive changes without control of the Senate, incoming secretary of state John Kerry is being appointed Special Presidential Envoy for climate and has said he will “fight climate change full-time”.
Anthony Keizner, managing partner of New York-based Odyssey Search Partners, says U.S. funds and family offices without experience of ESG investing are already fighting for experienced ESG investment talent as they seek to move into the area. However, their requirements are very specific. "- You need to have actual experience of investing," says Keizner. "That's very different to working in - say - ESG at the World Bank."
In Europe, Basiratpour says there's a tendency for funds to hire people with ESG experience from not for profits and elsewhere and to sit them alongside people with existing investing talent, with the intention that ESG experts will influence the outcomes.
This can cause tensions when ESG experts question existing investment decisions (eg. the inclusion of fast fashion retailer Boohoo in ESG portfolios.) "Some of the ESG analysts look at the portfolio and say it doesn’t make sense," says Basiratpour. "Then there are battles."
The ideal situation, therefore, is when new funds are assembled using an investment team which itself has ESG experience. In New York, Keizner says around of 10% of juniors who are looking for investment jobs today only want to work for ESG funds - even if they're at lesser names. "You get young people now who will take an impact investing role at a B-level fund over a non-impact role at an A-level fund," says Keizner. "This is where the rubber really starts to hit the road."
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