What Does An ESG Analyst Do & How To Become One

If you are looking for financial job vacancies, you’ll undoubtedly come across a number of roles associated with the environmental, social and governance (ESG) sector, including that of an ESG Analyst.

Not only is this becoming an increasingly popular career choice, but it is also one of the most pronounced industry trends in recent times that has the potential to impact a much wider range of careers within the financial sector.

However, you may be new to the ESG analyst job scope, the unique niche sector they fill and the associated responsibilities, with questions like:

• What are the primary duties of those working in ESG?
• Why are sustainable investments becoming industry benchmarks?
• Why work in ESG? Can this career path provide you with a rewarding experience?

These are the questions we aim to answer in this guide to ESG analysts’ job role. Read on to find out more!

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What is an ESG analyst?

ESG is an acronym for environmental, social and governance, and broadly speaking an ESG analyst is tasked with performing due diligence before providing specific financial advice. However, this is only the tip of the iceberg for the activities typically carried out by someone in this role.

ESG analysts will scrutinize various non-financial aspects of a particular investment opportunity in order to provide a more rounded conclusion to a stakeholder or a company. Some of these variables can include (but might not be limited to):

• The environmental impact of an upcoming project.
• Public opinion in relation to how a company is perceived.
• Examining the annual financial reports of any organization.
• Determining the sustainability of a potential investment venture.

ESG analysts will often be employed within private equity firms, wealth management organisations, banks, and similar bodies which provide clients with potentially lucrative investment opportunities.

In essence, the duty of an ESG research analyst involves delving into other aspects of an investment (primarily those associated with environmental, social and regulatory issues) before combining these with relevant financial data.

These analysts will then report their findings to investment specialists, senior-level stakeholders and (on occasion) to individual clients.

Therefore, a more informed decision can be made before any subsequent action is taken about the action to take regarding the investment opportunity.

What does an ESG analyst do, exactly?

So now we have a more clear picture about the role in general, you might be wondering what this means when it comes to understanding what an ESG analyst does specifically.

What actions are performed by an ESG analyst during a typical workday?

So let’s now take a look at these aspects as well as what types of skills are required in order to excel.

A day in the life: ESG analyst duties at a glance

It is first important to mention that, as with any financial role, exact duties will no doubt vary between organizations.

However, most ESG analysts will spend a significant amount of time examining data related to a possible financial venture. Of course, this information will include some of the aspects mentioned within the previous section. They may also compile findings such as:

• Past audits
• Big data source from public and private areas
• Public policy statements
• Share prices and analyses from well-known sites such as Bloomberg
• Short- and long-term growth projections

These details will then be used to determine if the risk margins associated with a certain venture are in line with the ESG guidelines set out by the company (or the investor). 

An analyst may also use these findings to better understand what steps can be taken in order to mitigate the potential risks that may be present.

What skillsets does an ESG analyst need?

ESG analysts will normally work within team settings and they will need to build strong relationships with their fellow employees. This is important to be able to prepare a balanced analysis of an investment that includes ESG factors, as well as factors such as risk and opportunity from a purely financial viewpoint.

In addition to providing timely reports for new opportunities, they may also be required to monitor past investments from an ESG perspective in order to ensure that the primary fundamentals have not changed. On a similar note, an ESG analyst may need to review existing investments to make sure that they are compatible with changing ESG strategies of the client.

We can now see that one of the most important skills which an analyst must possess is the ability to multitask within what is potentially a very fluid work environment.

This means that a good ESG analyst will be able to look at an investment from multiple points of view, and be able to adapt quickly to changing events in the wider environment. There are additional traits which the best will often bring to the table, which include: 

• The ability to collaborate with investment teams.
• Strong communication skills.
• A knowledge of any relevant regulations (such as GDPR guidelines).
• A willingness to remain fully transparent with the findings.
• Excellent quantitative skills.
• A general understanding of asset management and the financial markets.
• A solid approach to ethics.

To put it another way, an ESG analyst will need to be able to paint a “financial picture” with broad strokes as well as with minute touch-ups. 

Environmental, social and governance professionals must possess the ability to objectively view investment opportunities from a sustainable, moral and transparent perspective. This goes far beyond static technical analyses and other standard tools that are commonly used by the typical investment adviser. It can include looking at policies and strategies of an organization, including those that don’t relate directly to financial performance, e.g. everything from supply chain strategy to energy use and sustainability.

Will an ESG analyst enjoy a rewarding career?

Many of those who become involved within the investment sector are attracted to much more than commissions and profit margins alone. In fact, they are often drawn towards this industry due to its flexible nature. The good news is that many ESG jobs offer the best of both worlds.

Something that is crucial to mention is that the demand for ESG investing is on the rise.

In fact, analysis by a specialist recruitment company in the fourth quarter of 2021 stated that the need for qualified ESG specialists is set to reach an all-time high, with demand to fill ESG roles highest in professional services, financial services and technology sectors.

A reason for this involves the undeniable fact that companies are now under more scrutiny (in terms of sustainability, compliance and governance) than ever before. It therefore stands to reason that employing qualified ESG analysts represents a powerful option at their disposal.

Another factor within this equation involves how organizations are being perceived by investors as well as the general public. Individuals have become exceedingly interested in the role of sustainability, long-term environmental impacts and even how a firm is perceived by its employees.

While some might term this as the “softer side” of investing, the fact of the matter is that a well-rounded ESG strategy can make the difference between a successful undertaking and a failed venture. ESG analysts are here to bridge that gap.

What challenges may await an ESG analyst?

Any ESG career is not without its fair share of challenges. Perhaps the most relevant stumbling block is that the notion of ESG throughout the investment community is rather new. 

So, it still faces a certain amount of uncertainty; particularly from critics who have yet to appreciate the value of this position.

Other professional challenges involve egalitarianism. This is another way of saying that an ESG expert will need to be impartial when comparing fiscal returns with possible compliance, environmental or even ethical issues. An ESG analyst needs to look at more than just the potential for short to medium-term financial gain.

This is when a handful of core personality traits will come into play. These are different from the technical skills that we’ve already discussed. Ideal candidates should be able to demonstrate:

• An eagerness to accept new challenges.
• The ability to work under pressure.
• A talent for explaining complicated issues in a concise manner.
• A willingness to accept the fact that the ESG sector is constantly evolving.

Perhaps most importantly, ESG specialists should be passionate about the financial marketplace as well as the positive impacts they can make by providing sustainable and grounded advice. It is crucial to truly care about corporate responsibility within the modern world.

It should also be mentioned that ESG careers are considered to be quite flexible. As these skills are in high demand, there is always room for upward mobility or even the possibility to exit a current position for the so-called “greener pastures” offered by another firm. 

This is perhaps one of the main reasons why a growing number of professionals are choosing to augment their skills sets with the help of an ESG certification.

The analytical side of sustainable investing

It is a good idea to quickly address one misconception before moving on.

Some individuals are wary about transitioning into the ESG sector. They tend to believe that this role will be less analytical and more focused around the moral aspects of finance.

While this is true to a degree, it hardly represents the whole picture.

A more accurate way to think of an ESG analyst would be as a combination of a traditional wealth management specialist and a corporate responsibility expert. 

This is important, as both firms and clients alike are now looking to obtain the best of both worlds. The truth of the matter is that a great deal of analysis normally encompasses an ESG position.

From interpreting big data to performing statistical evaluations and communicating these findings with others, there are certainly more traditionally analytical aspects to the job than may initially meet the eye.

ESG analyst salary figures

What type of salary can an ESG research analyst expect to earn?

Of course, the answer to this question will be partially based around the employer, location, experience of the individual and the exact role. There are still several useful observations to be emphasized here.

In the UK, the average base pay for an ESG analyst based in London and has up to 5 years experience is £53,000 (~$71k at the time that these figures were compiled), with a range anywhere in between £35,000 – £82,000 (~$47k – 110k). Note that this may not include other perks such as benefits and commissions. Figures for more ESG experts with more than 5 years experience are significantly higher.

Why are companies willing to pay such amenable rates? As the team at McKinsey points out, ESG analysts can provide several benefits from a managerial point of view:

• Top-line growth can be facilitated.
• Regulatory and legal problems can be minimized.
• ESG analysts can optimize capital ventures for better long term returns.
• Embracing such a mindset may also positively impact productivity and employee happiness (the social side of ESG governance).
• Sustainable approaches tend to reduce costs over time.

Companies therefore (rightfully) believe that providing attractive salaries is the best way to attract qualified talent. So, what does it take to become an ESG analyst?

How to become an ESG analyst

There are a few considerations if you are interested in ESG analyst jobs.

These may be slightly different if you are already employed within the financial sector as opposed to if you have recently entered into the industry.

What ESG qualifications are available?

There are quite a few options here to choose from depending on your needs.

There are 3 options for those in the broader finance or asset management sector:

• CFA Institute’s Certificate in ESG Investing
• EFFAS’ Certified ESG Analyst (CESGA) program
• CFA UK’s Certificate in Climate and Investing (CCI)

CFA Institute’s Certificate in ESG Investing is available globally and requires approximately 130 hours of study. If you successfully complete the examination, you will be awarded a digital certificate as well as a badge that can be displayed. After passing, note that there are no titles you can put behind your name for this certification.

A good alternative to that is EFFAS’ Certified ESG Analyst (CESGA^®) program, which gives you the right to use the ‘CESGA’ or ‘Certified ESG Analyst’ behind your name upon passing. It is a diploma-level qualification – also available globally – that provides beginners an advanced knowledge of ESG topics in relation to investing, with great focus on practical application.

Another worthy option is CFA UK’s Certificate in Climate and Investing (CCI). It is also available globally, but unlike Certificate in ESG Investing, it has a dedicated focus on climate-specific considerations in investing, so in a sense it is more specialized in the arguably more pressing part of ESG investing.

If you’re in risk management, the Sustainability and Climate Risk Certificate (SCR) from GARP may be of interest. The SCR qualification is more specific in focus, developed to help risk management professionals understand and assess the risk of climate change to organisations. 

Finally, if you are a financial advisor looking to strengthen your client relationships by incorporating sustainable, responsible and impact (SRI) investing principles your portfolio recommendations, check out Chartered SRI Counselor (CSRIC^®) designation by College for Financial Planning and US SIF: The Forum for Sustainable and Responsible Investment.

When considering an ESG role, although not absolutely necessary, many recruiters will normally require that you have a background in ESG.

As the sector becomes more competitive, relevant professional certification will likely become increasingly common and an excellent way to demonstrate knowledge and understanding of ESG factors in relation to investing. Of course, the personal and professional attributes mentioned earlier are just as important if you hope to excel.

Assuming that you wish to take an ESG examination in the future, it make sense to become familiar with the main ESG principles and how these apply to the world of investing.

Be sure to check out our range of ESG guides and information, as this will provide you with an ample overview of what to expect, help you to decide which qualification is right for you, and help you to prepare for your journey.

When possible, interning or working in a relevant department at a company known for its transparent sense of corporate responsibility can also add another “string to the bow” when presenting your resume to a potential employer.

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I hope the above sheds a good light on what ESG analysts do, and some concrete steps to become one if you’re interested. What are your current career considerations? Share that with us in the comments!

Meanwhile, here are some related articles that may be of interest:

• 2024 Asset Management Outlook: 4 Important Trends That Affect Future Jobs
• CFA ESG Certificate: Our Easy Guide
• EFFAS’ Certified ESG Analyst (CESGA): Our Epic Guide
• Certificate in Climate and Investing (CCI): A Complete Guide
• GARP SCR Certificate: A Handy Beginner’s Guide
• Chartered SRI Counselor (CSRIC): Our Useful Guide
• IMC (Investment Management Certificate): A Beginner’s Guide