Training, buy-in key to ESG integration

IT'S NO secret that although the environmental, social, and governance (ESG) job market has skyrocketed, investment firms and sell-side research providers have found it hard to recruit professionals with both ESG knowledge and investment experience.

ESG teams often lack professionals with investment experience and application, and investment desks largely consist of professionals with limited ESG knowledge and research skills. This lack of knowledge can cause problems, as the separation of responsibilities for ESG and investment analysis can prohibit the kind of collaborative environment in which ESG issues can be effectively integrated into the investment process.

There are several reasons for this predicament. Firms with an ESG team or ESG professionals often have used those teams or professionals to examine ESG issues independent of their fundamental impact on an investment. Historically, the focus of ESG roles has been on governance, engagement, and voting. This means investment knowledge hasn't been needed, and ESG professionals have not needed an investment qualification or background.