In this year’s summer series on PA Future, we have asked junior members of ESG/sustainability teams to answer our questions on career paths, red flags and personal passions, to showcase the ‘Next Generation‘ of talent coming through.
Candidates needed to be a member of a fund management, ESG/sustainability or stewardship/engagement team with less than five years’ experience.
Here, Boya Wang, ESG analyst at Morningstar, discusses his experience at the United Nations (UN) before joining the investment world, why scepticism around ESG is growing at this point in the election cycle, and where he will be focusing his expertise.
How did you start your career and what led you to focus on ESG/sustainability? Is this a personal passion?
My interest in ESG investment commenced from my academic research career in Oxford Said Business School at the University of Oxford, where I took the role as the quantitative lead of the ownership project. My colleagues and I investigated how different types of corporate owners and/or investors could impact corporate ESG and financial performance. However, it was during my role as a regional economist for the UN, focusing on the least developed countries in Southeast Asian economies, that I gained more in-depth understanding of the environmental and societal implications of ESG investing.
You joined the industry around five years ago, when appetite and launches in this area of investment soared. What was that like to experience as a relatively new starter to the industry?
The rapid development of product thematic focuses and stock selection methodologies was overwhelming, not to mention the fast evolving regulatory landscape. In addition to tackling scepticism on greenwashing, delivering returns while addressing practical environmental and societal issues remains the key to maintain investors and public confidence for ESG investing.
And what has it been like for you over the past few years where appetite has waned, and we have experienced the anti-ESG backlash in some areas?
There has long been scepticism of ESG investing and the past three years have been particularly hard. On the one hand, we’ve seen increased public scrutiny and regulatory oversight unveil many deficiencies in information disclosure, product labelling, and ESG metrics construction. On the other hand, macroeconomic headwinds, including rising funding costs, soaring emery prices and oversupply, erode ESG return performance. But these up and downs suggest ESG investing is not immune from the downturns in economic cycles or the competitive pressure as seen in any other investment products. In the long term, however, these headwinds benefit the further development and refinement of ESG products.
As for anti-ESG backlash, the reasons are multifold. Some may arise from scepticism towards growing interventionist role played by regulators; some may be based on vested interests in constituent regions and sectors, which become particular prominent towards the end of an election cycle.
What has been a career highlight for you?
I have always enjoyed partaking in webinars and presenting at conferences – addressing enquiries from clients and other audience is rewarding and satisfying. They also give me invaluable opportunities to gain more in-depth insights into real investment practices from portfolio managers.
What is a red flag you in terms of greenwashing? Are you happy to hold companies or individuals accountable for greenwashing?
Tackling greenwashing is learning process for different parties of the market including companies, portfolio managers and regulators. It is a joint effort. I believe regulatory convergence and improved transparency in measurement methodologies will greatly facilitate oversight.
Fast forward to five years from now – where would you like to be in terms of career aspirations? And how do you think the industry will have evolved by then?
Product development, in particular labelling, risk diversification, and stock selection, are likely become sophisticated, which are testing the investment skills and team capacities of portfolio managers. I would like to develop and demonstrate expertise in transition-themed ESG funds as they offer not only a wider range of investment opportunities and better risk diversification, but also more realistic trajectories for addressing many of these acute environmental and social issues.
