The trouble with ESG jobs in finance
That there are too many question marks.
A new paper released by think tank New Financial, in collaboration with Luxembourg for Finance, has found that ESG penetration in finance is severely hamstrung by the lack of “availability and consistency of data.”
Whilst some aspects of finance, such as the issuance of green bonds or specialized investment funds, are clearly labelled and somewhat transparent, there are entirely murky pools flooded with investor money and minimal scrutiny. Private equity is one of the worst, New Financial believes.
“There is no comprehensive data available on how much private equity activity can be considered ‘ESG’,” the paper says. “Private equity funds are by nature not subject to the same regulations and disclosure requirements their public counterparts are.” What New Financial calls the “shrinking” of public markets, especially in Europe, has had a direct impact of pushing money from transparent public investment to private equity's obscure “safe haven”.
If you’re in private equity and stressing about your industry’s impact on the environment, fear not. In New Financial’s estimation, everyone is doing dreadfully in terms of transparency.
Even asset management, which is admitted to be “one of the most ESG-committed sectors,” suffers from “surprising data limitations,” apparently. Only investment funds, which admittedly have trillions of dollars under management, have “clear or up-to-date data” on ESG by New Financial’s estimation.
New Financial says even banking’s data on ESG is “non-existent in the public domain.” Insurance has “very limited information.” In equity markets, “it is difficult to measure accurately ESG-related activity.” ESG data in the derivatives market “remains either non-existent or very limited.”
Not much hope then for ESG in private equity. But nothing new. Maybe some more ESG internships are in order?
Have a confidential story, tip, or comment you’d like to share? Contact: Zeno.Toulon@efinancialcareers.com in the first instance.
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