Nordic Certified ESG* Analysts #4 – Danske Bank still in Pole Position in front of a strengthening Nordea, Ålandsbanken in a strong third position and Norway still lagging!

Lacking real ESG analyst competence is an important problem the finance industry is facing in an environment being harder regulated and where expectations from the asset owners (clients) and other stakeholders are increasing fast. The potential cost, through regulatory and reputational risk, and other negative stakeholder related impacts from 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 too much of this out there today).

A problem is that a lot of practitioners with ESG education are doing other things than portfolio management. To be able to fully integrate ESG risks in investment decisions, that is now mandatory in the EU, formal training and education is required. It does with other words not help to have an ESG trained person in sales, reporting, compliance or other.

To address this, 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 and hence the most relevant for assessing individual knowledge of ESG relevant for investing.

ESG risk assessment must rely on science

This is paramount, but this does not mean that the ESG risk analyst must have a PhD in nature or social areas. ESG risk analysts can read, and it is normal to rely on science consensus. So, dismissing the value of an ESG analyst without a degree in nature or social sciences is something we do not agree to. We see it as important that the ESG analysts also understand the link to financial risk.

We will here present to you what we found among the 302 CESGAs in the Nordics registered on the EFFAS website.

Nordic Certified ESG Analysts overall

Since we did this exercise last time in March this year, not less than 28 new CESGA have appeared in the Nordics. The CESGA is gaining in popularity and the global cohorts trying to succeed the exam each quarter is increasing steadily. It is great to see ESG analyst competence spreading around the Nordics!

Certified ESG Analysts per country

Thanks to input from our readers, we have understood that in organisations teams are signed up in one country, while they may be based in different countries. We have adjusted for this now.

On a geographical level Sweden has the most CESGA (123 and 148 non-adjusted) as last time, and Finland (82 and 77 non-adjusted) is ahead relative to the population size, but this is no longer the case for Denmark (60 and 54 non-adjusted) now roughly at the same relative level as Sweden. Sweden has taken the largest leap since the last review, solidifying its top position on the Nordic list.

Norway (32 and 21 non-adjusted) is still lagging, and it is surprising to see that this is still not really picking up. The difference to Finland and Denmark is notable and to be at the level of the others, we would expect to see Norway over 60. Explanations can be the lagged implementation of the SFDR Level 1 and EU Taxonomy regulation and hence focus on the area, plus the existence of local alternative solutions (see more below). It will be interesting to see if the number of Norwegian CESGAs will accelerate. The EU regulation requires important process changes for asset managers, particularly for ESG risk integration in investment decisions and it is urgent to get this formal specific competence in place among portfolio managers and analysts.

CESGA in the Nordics per country 2023 08 - ESG analysts

Two CESGAs moved to Germany and one to the UK. We are including the Baltic countries as many Nordic banks have staff there.

Certified ESG Analysts per company

Considering this on a company level, Danske Bank CESGAs represent not less than 24% of all CESGA in the Nordics (67 of 285 in total where we could identify the company) ahead of a strong number two, Nordea (47). The increase is 8 new for Nordea, reducing the gap to Danske Bank on top of the Nordic CESGA list.

Relative to their staff size, Ålandsbanken, Nordic Credit Rating, sustainAX, Aktia and Fondita also stands out with not less than respectively 12, 10, 5, 4 and 4 CESGAs.

New on the list with a minimum of 2 CESGAs are Local Tapiola, Position Green (through hires) and Länsförsäkringar. From the last review, the new were Alfred Berg, Akademiker Pension, NEFCO, EY and Nordanö. They are all part of a group that seem to have understood the importance of bringing up the ESG analyst competence. A key differentiator here is whether the ESG focus is on reporting or investment process. We at sustainAX recommend focusing first on increasing the competence and practice in the investment processes and let the reporting follow naturally.

Nordic CESGA moves

15 CESGAs moved to another company within the Nordic universe since the March 2023 review. And we see moves from the financial sector to the corporate sector, to IR functions or ESG reporting activities. The corporate sector is in deep need to attract talents due to the increased focus on ESG and coming EU reporting regulation.

In the following table, we have all Nordic companies with 2 or more CESGAs, we have the full list available of course.

The total numbers do not match the country numbers as we did not manage to map all persons to a company. Change of company by a CESGA will impact the company’s total number.

We did not reach out to the CFA Institute to get data on the Nordic holders of the «Certificate in ESG Investing» (only multiple-choice examination, no individual case solution required) this time either, as they did not answer to our request for information the two last times. If anybody out there can provide us with this information on a Nordic level, we would be happy to complete this overview.

In this research we are ignoring the programs not targeting specifically ESG research and/or that we consider too expensive compared to the ~1200€ cost of the CESGA.

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 to Danske Bank, that has really taken the challenge to increase ESG competence seriously and is still leading for the total number. Nordea is a good number two on the list and together the two banks are in their own league. Notables are both Ålandsbanken, third position, and Nordic Credit Rating that have a large part of their relevant employees certified. For our Norwegian fellows, we would strongly recommend picking up the challenge for certification now. In Norway, there is a course organised by NHH (Norges Handelshøyskole) and Forening for Finansfag that EFFAS consider having equivalent content, but there is no exam. The candidates can sign up for free to the CESGA exam though, something we recommend doing.

To close the competence gap on ESG research and ESG risk integration, asset managers need formally educated 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; specific for investment decisions, recognised and international to ensure common understanding and preferably leading to a certification.

Of course, a CESGA is the starting point, only by practicing ESG research, ESG risk integration and related, the knowledge and skills will strengthen and become powerful. At sustainAX, we consider that at least 100 single ESG research jobs must be done before becoming a Senior ESG analyst.

We can help you with the ESG research processes and 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 in our discussions.

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?

*Environmental, Social and Governance factors