Finding a Career in Financial Services with ESG Investing
Above photo credit: Jason Goodman on Unsplash
There’s a conventional attitude toward work that entails leaving everything you do outside of work behind, as though nothing else exists. With this perspective, you are encouraged to fit your family, your morals, yourself, around the job.
I was raised that way. As an elementary school kid, if I had to call my mom at work she’d answer the call in a hushed tone, as though she was receiving an illicit phone call. Her office was not interested that her 10-year-old needed to be picked up from school, let alone that she had kids at all.
These jobs still exist, many of us have worked these jobs. Thankfully, there is another path, and some of us are fortunate enough to be able to take it. These days, it is my passion and interest in environment, social, and governance (ESG) investing that guide my career, not the job itself. Today, I work as Chief Sustainability Officer and co-founder at Vert Asset Management. But getting here wasn’t straightforward, or easy.
I did not study to go into finance. On a lark, I landed a college internship at a brokerage firm during the height of the dotcom boom in the late 90s. My financial services initiation, some would say ‘hazing’, was straight out of movies like Boiler Room. It was fast-paced and exciting to be near a NASDAQ trading desk. But there was an unspoken understanding that I leave my conscience at home. It was clear to me from this early exposure that investments had lost its humanity (if it had any to begin with).
In the field of finance there has long been an expectation that your background and interests should be in math and cold calculations. This is why so many engineers find their way into financial services. However, for those like myself (a history major) who are more interested in context and strategy, there is space in financial services for those roles, but they are more peripheral.
My light bulb moment occurred in 2006 when I was working in the UK at an institutional asset manager. I learned that UK city and county pension funds were required to ask socially responsible questions when searching for new asset managers. Why? Because they represented a large number of disparate beneficiaries who lived and worked in their geographical area, and they invested for the protection of all of these people’s retirement.
Back then, most investment professionals, including my bosses, rejected the notion that investments should take into account “non-financial” issues like environmental, social, and governance risks. Needless to say, things have changed. The 2020 Global Sustainable Investment Alliance (GSIA) report estimates that 35 percent of all professionally managed assets now incorporate sustainability criteria. Seven out of the ten largest pension funds in the world integrate ESG, including Japan’s Government Pension Investment Fund with assets over $1 trillion at the end of 2021.
Is ESG Investing One Way to Attract More Women into Finance?
I’ve tried several times to devise an exit out of finance to work in more creative and collaborative industries. The last time I left, I thought that in order to really roll-up my sleeves and work on corporate accountability, I needed to work in policy and research. It was while I was working at a non-profit on financial reform that I realized that there was just so much information available that investors were not including in the way they look at markets.
There is an entire ecosystem of service providers creating and disseminating non-financial information to markets now including: non-profits like CDP, ESG researchers, accountants like KMPG, PwC and E&Y. In fact, E&Y just launched E&Y Carbon to help companies with carbon accounting and corporate disclosures to the marketplace. There are standard setters working to refine what is meant by non-financial metrics with financial materiality. In 2018, Sustainability Accounting Standards Board (SASB) identified material indicators in 77 industries. They are now part of the International Sustainability Standards Board bringing integrated reporting mainstream.
ESG issues are interdisciplinary. While financial and accounting metrics have become standardized over time and through usage, ESG metrics are still evolving. Many ESG metrics are still considered ‘externalities’ because the market struggles to measure their economic value – things like clean air and well-being are hard to price. But integrating these environmental and social issues into markets is an opportunity for those from non-math fields because it takes an understanding of people and planet to value them.
Research by Professor Brad Barber, a Professor at UC Davis Business School and a member of Vert Asset Management’s Advisory Board, analyzed the absence of women in finance in 2017 by examining the percentage of women who’ve earned the Chartered Financial Analyst designation as a proxy. It was less than 20 percent. Barber concluded that more women would be in financial services if they were encouraged to study STEM subjects – science, technology, engineering, math. This would certainly help. But there are now more non-STEM roles in financial services. Investment management needs financial planners and advisors, researchers, sustainability experts, integrators, and communicators too.
There are increasingly more professional educational choices on sustainable investing to choose from than ever before. The CFA Institute now offers a Certificate in ESG Investing. The College for Financial Planning offers the Chartered SRI Counselor (CSRIC). The standard-setter SASB offers its own Fundamentals of Sustainable Accounting Certificate (FSA).
Flexible and Remote Work a Welcome Change
I found it difficult to get a job with small children at home even after reorientating my career to focus on sustainability. One friend told me bluntly that as a young mother, “you just aren’t attractive to the marketplace.” A well-known sustainability consultancy didn’t hire me because I had not worked directly with corporate sustainability reports before, despite the fact that I have a background in finance and completed two master’s degrees in environment policy and sustainability.
I took the rejection as an opportunity to start my own business consulting with financial advisors on the landscape of philanthropy and impact investing. I called it Values-Based Investing Consulting, borrowing from a concept that was used at the time within financial services to start to orientate investors to investment managers around an emerging set of non-financial criteria.
Entrepreneurship and small businesses often offer more flexible working conditions than bigger firms. But the pandemic has changed all that quite dramatically. Women can now work from home with flexible hours at all sorts of companies.
In 2016, that entrepreneurial spirit led me to co-found Vert Asset Management with my husband Sam Adams. As the Chief Sustainability Officer, I lead on engagement which is three main areas: 1) communicating with the companies we invest in about ESG topics like net-zero goals, 2) building capacity within financial services for ESG disclosures, and 3) creating good business practices as a business ourselves, a Certified B Corp.
If you are interested in the interdisciplinary topics of environmental, social, and governance and how they influence businesses, you might consider a career with ESG. If you have hard time reconciling the person you need to be for your day job versus the person you are outside of work, ESG could be a good fit. If you want to be part of the solution, instead of being part of the problem, again ESG! The traditional requirements of a finance career, i.e., a STEM background and the lack of a personal life, are falling away. There are so many opportunities today at the intersection of finance, business, and sustainability.
Article by Sarah Adams, Chief Sustainability Officer and Co-founder at Vert Asset Management. Vert was founded to bridge the gap between financial services, capital markets, and environmental advocacy.
Sarah has a multidisciplinary experience across the finance sector and environmental policy. Before Vert, Sarah started a consultancy educating financial advisors on sustainable and impact investing in the UK and US. Previously, Sarah worked in institutional finance. Additionally, she worked on social finance initiatives for advocacy NGOs in the UK.
Sarah is interested in the development of sustainability education for financial services. She sits on the USSIF Education Committee and is a teacher for the Chartered SRI Counselor (CSRIC). She earned the CFA UK Certificate in ESG Investing and the Sustainability Accounting Standards Board’s FSA Credential. Sarah has a BA in History from UCLA (US), a MSc in Environment and Sustainable Development from University College London (UK), and a MA in Environmental Law from SOAS (UK).