Roles in asset management and banking pay much more if they are associated with the environmental, social, and corporate governance movement, also known as ESG, according to data from Revelio Labs shared with Reuters.
Skeptics of the ESG movement contend that the investment and business philosophy emphasizes political and social causes, such as decreasing carbon emissions or diversifying company leadership, in a manner that distracts from profitability. The expanding popularity of the movement in corporate circles nevertheless comes with a salary premium: finance roles with ESG in their titles pay an average of more than $110,000, exceeding the $90,000 average pay received by those in finance roles unrelated to ESG.
The analysis from Revelio Labs, which does not consider the bonuses often provided to finance professionals, examined some 28 million publicly available sources for the analysis.
“Salaries of ESG and non-ESG personnel started to diverge in 2020, in line with the spike in hiring in ESG roles due to the increasing focus on ESG and sustainable investing in the finance sector,” Loujaina Abdelwahed, an economist at Revelio Labs, said in an interview with Reuters.
There is considerable demand for financial services related to ESG: more than $35 trillion was invested in accordance with the philosophy across the world at the start of 2020, according to an analysis from Global Sustainable Investment Alliance, representing more than one-third of all professionally managed assets in the regions evaluated by the organization.
“Beyond the top line growth in sustainable investment assets, this is an industry that is in transition, with rapid developments across regions that are reshaping sustainable investment to increasingly focus on moving the industry towards best standards of practice,” the report said. “There are expectations that sustainable investment is defined not just by the strategies involved, but by the short and long-term impacts that investors are having from their sustainable investment approach.”
Prominent firms indeed increased the extent to which they publicly engaged on political issues in the wake of the social justice movement which spread across the nation three years ago. Some have adopted public commitments to increase the number of racial minorities and females who are promoted to senior management, implemented efforts to reduce carbon emissions, or contributed to activist entities which support racial justice.
Workers have now come to expect that their employers vocally support activist efforts. The most recent edition of the Edelman Trust Barometer found that 62% of respondents say companies are “doing mediocre or worse living up to their promises and commitments to address racism both within their organization as well as the population.” Some 74% of blacks answered affirmatively, as did 71% of Asians, 66% of Hispanics, and 60% of whites, while a slight majority of Republicans answered affirmatively alongside two-thirds of Democrats.
The elevated prominence of the ESG movement has not occurred without controversy. Republican state lawmakers have implemented a number of efforts to divest state funds from companies associated with the investment philosophy, while conservative consumers have shunned popular brands which cater to the ideology as they attempt to maintain their scores on ESG indices in order to retain access to investment funds.