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Sustainable finance certainly is one of the hottest trends in the asset management industry – and it is here to stay. But what is it really like to work in this field as a career starter? What can asset managers do to live up to the promise of having a positive and sustainable impact? There sure is a lot of noise around sustainable finance. However, from personal experience, I can tell that some asset managers really do strive for sustainable returns and future-proofing companies. Looking through that noise is where it gets exciting.
During the last year of my Bachelor in Business Administration at FS, I worked as a part-time junior analyst at CHOM CAPITAL, a Frankfurt-based asset management boutique specialised in European equities. As its company claim “Performance driven by sustainamentals®” suggests, CHOM’s investment approach combines both dimensions of company valuation: sustainability analysis (SUSTAINability) and fundamental business model considerations (fundAMENTALS). Being part of the portfolio management team hence meant working on both fundamental valuation and on sustainability-related tasks centred around the three components of ESG (Environmental, Social, Governance). I found this view on both dimensions to be particularly valuable as such holistic insights are extremely rare at larger corporations. Also, being exposed to ESG matters daily, translated into a steep learning curve in this emerging field, which I found very rewarding. My learning process was further accelerated by CHOM’s flat hierarchy and a relatively small team, allowing for both close ties to senior management and considerable responsibility from day one.
As ESG from an investor perspective is a very broad topic, it is difficult to give an all-inclusive list. While some of the ESG-related tasks require the collection, preparation and presentation of sustainability data, such as carbon intensity, water consumption or diversity within board and management, others are of more qualitative nature. I personally believe that this qualitative aspect of ESG-investing is often overlooked but can be extremely powerful in combination with an active investing approach.Using sustainability reports or direct interaction with the Investor Relations departments, one important aspect is to understand the sustainability goals of companies and their consideration in executive incentive schemes. In case any weaknesses can be identified, CHOM’s ambition of being a good steward requires an immediate response that should make management well-aware of the need for ESG-improvements e.g., through executive dialogue or smart voting strategies at Shareholder Meetings. For selected portfolio companies, CHOM is even conducting “ESG-trainings” that help the respective company to understand how financial market participants – like investors and rating agencies – perceive its sustainability profile. Furthermore, CHOM identifies and highlights improvement opportunities, e.g., in the governance and communication of ESG-related matters, that are beneficial for all investors.
Working part-time whilst studying at FS can be challenging at times, yet I found it very valuable to get practical insights, apply my academic knowledge in real-world scenarios and grow into new responsibilities. Thanks to the entrepreneurial mindset at CHOM, I enjoyed great flexibility in combining studies and work, while still working independently on entire projects, e.g., on the implementation of an ESG considerate smart voting strategy. Moreover, the wide range of exposure to different players in the industry (corporates, rating agencies, proxy voters, investors, custodians) as well as the holistic insights into the inner workings of a firm (portfolio management, sales, compliance, legal) can be helpful in defining one’s future professional path. Personally, seeing many different companies across a diverse set of sectors enabled me to develop an understanding of the key value drivers and risks for different business models. I feel like this came very handy in the beginning of my master’s degree and proved helpful for case studies and in job applications.
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