Top ESG in finance people are leaving as fast as new hires arrive
ESG hires in finance roles have a remarkably high turnover rate, an industry report has found.
The 2023 hedge fund ESG talent tracker, published by AMObserver, found that 42.6% of ESG portfolio managers, ESG heads, traders, and investment analysts leave their role in a three year period.
The equivalent rate of turnover for analysts (quants, researchers, and data scientists) is just 12.8%.
The high rate of churn helps explain why there's also high demand for ESG portfolio managers, traders and analysts: 46% of firms said they were hiring, compared to just 8% who said they were hiring data analysts and quants.
A senior ESG researcher, speaking anonymously, said that the high rate of turnover is “unsurprising,” and that clients often said they were “unsatisfied with hires, who have too little experience." Nonetheless, he was adamant that demand for ESG “remains very strong,” and was broadening beyond the mature European market to increasingly engaged corporates and sovereigns in emerging markets.
Claude Schwab, founder and CEO of AMObserver (and author of the report), said that firm and sector turnover was expected to grow in 2023 before settling down, primarily due to “the still high rate of scrutiny and change in the ESG asset management industry.” Scrutiny has long been a problem that ESG struggled to grapple with.
The growth isn’t just as fuelled by the expansion of ESG-designated funds at existing asset managers. Movement would also be increased by the “continued movement from public markets investment firms to private markets investment firms and ESG start-ups that are doing well,” Schwab said. That’s not too different from what we’ve heard from McKinsey & Co.
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