Young analysts offer little hope of green utopia
Hopes that the next generation of financial analysts might take social and environmental considerations more seriously than their predecessors have been dashed by a survey.
Researchers for the World Business Council for Sustainable Development (WBCSD) and the UN’s Environment Programme Finance Initiatives (UNEP FI) had hoped to find fertile ground for the promotion of environmental, social and governance (ESG) issues among young financial professionals.
But instead they found the traditional view – that ESG is not a material concern – was widespread and few young analysts were prepared to embrace it.
“Young professionals often hold strong (although often latent) personal convictions on the need for more environmentally and socially sensitive corporate practice, and lack faith in the ability of regulators and civil society to achieve this in isolation,” reads the report.
“With less time invested in ‘business as usual’ young analysts are logical candidates to accept the broader view.”
But despite this seemingly sensible assumption, the survey found that most young analysts do not believe ESG has a similar role to play as other ‘intangibles’ like reputation, strategic vision and brand equity.
Most felt time spent identifying and acting upon ESG issues would not be supported by their superiors, would not help their career progression and would not be satisfactorily remunerated.
The long-term benefits of environmentally and socially sound business were not reflected in the short-to-medium term financial forecasts upon which action was based, they said, and they could see no financial advantage in considering them.
“Why not use government, rather than trying to cajole business to do something that runs counter to its own interests?” asked one young analyst from a US investment bank.
Considering ways to counter their disappointing findings, the researchers suggested proponents of ESG should not try to use moral arguments, but should instead put forward credible, tangible examples of how ethical action has been good for business.
Interestingly, several more senior financial luminaries were far more supportive of the aims of the surveyors.
Thomas Albrecht, director of research at Credit Suisse Asset Management said: “The consideration of material social and environmental issues should be part of every financial analyst’s work.”
By Sam Bond