Nordic Certified ESG Analysts – Danske Bank in Pole Position and Norway missing the race?
Lacking ESG competence is an important problem the asset management industry is facing in an environment being harder regulated and where expectations from the asset owners (clients) are increasing fast. The potential cost, through regulatory and reputational risk, of not being able to deal with this correctly, can be quite high.
There are many high level ESG relevant courses you can pick up, and they will take ESG beginners to a more informed level. But we also need formal ESG analyst education in asset management and capital markets, we need professionals that can produce full ESG research reports on investee companies based on a thorough ESG risk understanding, not only simplified and shallow top-down tick off box process (we see this out there today).
To address this, financial professionals like portfolio managers and investment analysts, need to add ESG to their formal educational base, preferably with certification from an international recognised organisation.
At sustainAX we have had a closer look at where in the Nordics and in what companies we find Certified ESG Analysts (EFFAS). It is the only education of ESG analysts for finance professionals we have found so far requiring a case to be satisfactory solved during the examination to gain the certification.
We were surprised by two things in what we found among the 160 CESGAs in the Nordics:
Certified ESG Analysts per country
On a geographical level Sweden have the most CESGA (68), but Denmark and Finland area ahead relative to the population size. What is surprising though, is Norway with a mere 7 CESGAs. To be at the level of the others, we would expect to see around 40. One explanation can be the lagged implementation of the SFDR Level 1 and EU Taxonomy regulation expected this spring, as Norway is not an EU member. Thus, the focus on this has been lower? This regulation requires important process changes for asset managers, particularly for ESG risk integration and it is urgent to get this formal competence in place among portfolio managers and analysts.
Certified ESG Analysts per company
Considering this on a company level, Danske Bank CESGAs represent not less than 36% of all CESGA in the Nordics (52 of 143 in total where we could identify the company). The only asset manager in the lagging Norway with Certified ESG Analysts is… Danske Bank again! Relative to their staff size, Ålandsbanken and Fondita also sticks out with not less than 8 and 3 CESGAs! They are both part of a group that seem to have understood the importance of bringing up the competence. A key differentiator here is whether the ESG focus is on reporting or investment process. We at sustainAX recommend focusing first on the investment processes and let the reporting follow naturally. In the following table we have all Nordic companies with 2 or more CESGAs, we have the full list available.
We reached out to the CFA Institute to get some data on the Nordic holders of the «Certificate in ESG Investing» (only multiple-choice examination, no case), but they did not want to share this information with us. If anybody out there can provide us with this information, we would be happy to complete this overview.
Here is an interesting article describing the CESGA (also comparing it to the CFA Certificate in Investing): https://300hours.com/cesga-certified-esg-analyst/
Conclusion – ESG Competence gap
Well done Danske Bank, you have really taken the challenge to increase ESG competence seriously! For my Norwegian fellows, we would strongly recommend to pick up the challenge!
To close the competence gap on ESG research and ESG risk integration, asset managers need formally Certified ESG Analysts. We recommend all portfolio managers and investment analysts that plan to work in this industry going forward to sign up and start studying. Make sure you choose an appropriate education; recognised and international to ensure common understanding and preferably leading to a certification.
We can help you with the ESG Risk Integration processes and it will be much easier if your portfolio managers and analysts have a higher level of ESG competence as they will be better positioned to understand ESG research and ESG risks.
Let us know what you have done or plan to do to increase ESG competence in your financial company! Maybe you have chosen another way?
