Corporate Social Responsibility (IVOR nr. 77) 2010/12.2.2.6:12.2.2.6 Educational groundwork throughout the value chain of the financial market

Corporate Social Responsibility (IVOR nr. 77) 2010/12.2.2.6

12.2.2.6 Educational groundwork throughout the value chain of the financial market

Documentgegevens:

Mr. T.E. Lambooy, datum 17-11-2010

Datum: 17-11-2010
Auteur: Mr. T.E. Lambooy
JCDI: JCDI:ADS371876:1
Vakgebied(en): Ondernemingsrecht (V)

Most asset managers have a sustainability department that fulfils several or all of the following tasks: in-house background research on ESG factors, advising other departments, raising awareness, company-wide policy development, engagement with business partners, and the management of specific ESG funds. The sustainability departments generally also manage the asset manager's relationships with ESG Agencies. Within these departments, valuable expertise and knowledge is being built up. One of the ESG Agencies interviewed has noticed that clients ask more specific and thorough questions. Another agency has seen its number of clients increase over the course of the current financial crisis. At the same time, however, during the interviews several ESG specialists within asset management companies mentioned that they are facing an 'uphill struggle' within their companies to raise awareness on BES dimensions in company and sector assessments.

The actual mainstream investment decisions are the full responsibility of the fund managers, who are advised by their research analysts. As the analysts have little time available for a 'per-company assessment', this does not allow them to assess ESG matters extensively. More importantly, the career path within asset management organisations drives professionals towards generalisation, instead of specialisation.1 Good analysts are soon promoted to more general fund-management positions. Hence, little expertise is built up amongst the analysts and fund managers, which in turn makes it difficult to assess less straightforward ESG information.

NGOs could play an important role in raising general awareness and understanding within the financial world. To increase resonance with the receivers, several financial sector interviewees mentioned the importance of using the vocabulary of the financial world, e.g. by using terms like 'risk management' and 'sustainability'. A more direct way of increasing capacity within asset management companies to deal with the theme of BES would be to develop specialised courses that could contribute educational credits and professional credibility to asset managers.2

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World Economic Forum & AccountAbility (2005).

This could possibly be achieved by an expansion of the syllabus of the Chartered Financial Analysts (CFA) Institute - the global, professional association that administers the CFA curriculum and examination programme. Corporate governance has already been included in the syllabus. See: www.cfainstitute.org/index.htm, accessed on 15 March 2010.