A Good Investment: Careers in Socially Responsible Investing
After graduating with a degree in international studies in 2007, Mariah Hudnut expected to head into the nonprofit sector. As an undergrad she helped her economics professor with a project geared toward reducing HIV stigma in Latin America, and felt compelled to continue her work for the less fortunate.
But when she heard about an open position at KLD Research & Analytics, an investment research firm that helps companies integrate environmental, social, and governance factors into their investment decisions, she decided her energy would have a greater impact when channeled through the business and investing world.
Hudnut has found an unlikely career in the rapidly growing niche of socially responsible investing—or SRI—a sector geared toward infusing investment strategies with a healthy dose of ethical principles. SRI aims to generate financial returns and achieve social good by targeting companies that adhere to ethical business practices, such as sustainable agriculture, carbon emissions reductions, and maintaining workers' rights in emerging economies.
As an employee in the SRI sector, the payback can be great. "There is a more vast potential to make change in SRI than in the nonprofit world," says Hudnut. "I'm part of a growing movement to change corporate behavior, which is exciting. When you get a company like Wal-Mart to commit to sourcing organic food, you really change the market." Hudnut now researches corporate impact on the environment and human rights, and whether firms meet SRI requirements, such as helping local neglected communities and avoiding animal testing.
Students concerned about the ethical repercussions of working in business or finance can also be assured the outlook for the SRI sector is robust. SRI represents roughly 11 percent of assets under management in the U.S., rising from $639 billion in 1995 to $2.71 trillion in 2007, (a 324 percent growth rate), according to a 2007 report by the Social Investment Forum.
Three general paths offer an entryway into the SRI universe: dedicated SRI firms, SRI divisions of large corporate banks, and independent investment research firms. Firms such as Ariel Mutual Funds, Calvert Group, and Trillium Asset Management focus strictly on SRI. These firms operate like normal asset management firms, but their specialization shows a certain dedication to the good cause-it's truly at the heart of the organization's mission.
Most big banks have created SRI divisions within their investment banking arms. Goldman Sachs, HSBC, and Citigroup have all launched socially responsible funds and employ specialists to manage them, though the big banks often refer to SRI as ESG-environmental, social, and corporate governance.
Lisa Leff, vice president and portfolio manager at Trillium, says working in SRI at larger banks is a great starting point. Leff started with social investing at Citigroup, but wanted to get away from working 80-90 hour workweeks and heavy travel. Both paths offer a return on your effort. "What we can do at Trillium is significant, but what a handful of people working in Goldman or JPMorgan do can be equally significant," Leff says.
Research firms, such as KLD, often hire undergrads for research positions. A common misconception is that all entry-level jobs in SRI are for business or finance majors, but research offers positions for students with other majors. "I have coworkers with degrees in rhetoric, Latin American studies, history, and even a lawyer," says Hudnut.
Advanced degrees and certifications, such as MBAs and CFAs, are generally needed for senior positions, including financial analysts and portfolio managers at small and large firms alike. Natasha Lamb, an equity analyst at Trillium, used her MBA as a step into SRI. Initially, Lamb doubted whether an MBA would help her achieve the "higher purpose" she wanted to achieve through her work. After working a few years with a sustainable retailer at an asset management firm in California, she enrolled in Bainbridge Graduate Institute's little-known MBA program in sustainable business. "Once I graduated in 2007, SRI and CSR had become part of the public dialogue, and my knowledge was in-demand. What was risky before became really timely."
SRI specialists in larger banks often start out on the traditional investment banking path. Aloys Goichon, an SRI analyst in investment banking at HSBC, started his career at an asset management firm in Paris. After working in asset management, Goichon wanted to advance his career by specializing in SRI, felling it's "not just a plus, it's a must" for the future of investing.
After being with HSBC for 18 months, Goichon says there is not an extreme difference between himself and his non-SRI-specialized colleagues. "We have day-to-day interaction with all of our mainstream asset management colleagues. The difference lies in the fact that we will combine mainstream criteria with ESG criteria."
Thinking about applying for a job in SRI? Check out these job boards:
Just Means: www.JustMeans.com
Business For Social Responsibility: www.bsr.org
Net Impact: www.netimpact.org
Social Investment Forum: www.socialinvest.org