“Thorough due diligence is critical to separate greenwashing from truly sustainable investing”

Naomi Friend, Client Director, EQ Investors talks to Responsible Investor about how she got into ESG and her career to date.

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Tell us a bit about your current role and the company you work at?

I’m a client director at EQ Investors (EQ). EQ is a financial advisory and asset management firm with a focus on responsible investment, a founding member of the UK B Corp movement and a strong believer in the potential for business to be a force for good. Our aim is to make it easier for our clients to align their mission and values with their investments. Our strategies are multi-manager and multi-asset, investing in the best sustainable and impact managers. My role is very varied and includes evolving our approach to responsible investing on a firm-wide basis to developing strategies to broaden our client base in the institutional market, particularly with foundations, family offices and corporates.  

What does a typical working week look like for you? 

There is no such thing as a typical working week which is exactly how I like it.  

What do you do on a daily basis?

No one day is the same. I spend a lot of time having meetings with potential clients (mainly private individuals, family offices and foundations) and their intermediaries to find out what issues they are facing and to see if we can help them to invest more responsibly and sustainably. I also meet service providers that can support us to make our responsible investment strategies available to a wider audience. Recently this has involved speaking to workplace pension providers as we are keen to make it easier for employees to invest their pensions more responsibly by offering a version of our “Positive Impact” strategies to scheme members. I’m also involved in developing our approach to responsible investment on a firm-wide level; this ranges from leading our relationship with the PRI to evolving our approach to ESG investment and engagement, and impact investing.

Have you always worked in RI/ESG? Tell us about your career path.

  • How long have you worked in RI?

I’ve worked in asset management as a portfolio manager and investment consultant for over 20 years. My role has always been client facing and has involved some element of responsible investing since 2000. One of my family office clients had a very strong interest in the environment and we allocated a proportion of the portfolio to Impax and SAM (now Robeco SAM) funds when the opportunity set of sustainable funds was much more limited than it is now.  

  • What was your background?

I joined the asset management industry after graduating from university with a degree in English Studies. Before becoming a client director, I was a portfolio manager and investment consultant, involved in asset allocation, portfolio construction, investment research, relationship management and business development. 

  • Were there any particular steps you took to move into RI?

Responsible investing has almost always been a small part of my role, but in 2017 I decided I wanted to dedicate more of my time to sustainable and impact investing, so I set up my own consultancy business. While I was working on a project for a private impact fund, I met the team at EQ and was very impressed with their passion, integrity and expertise in “positive impact” multi-manager investing. EQ shares my vision of investing for positive environmental and social impact, and practices what it preaches as a founding member of the UK B Corp movement. I decided to join EQ as a client director in 2019.

  • What qualifications do you have?

CFA Charter holder – CFA Institute 

CFA UK – Investment Management Certificate 

BA Hons English Studies

  • Was there anything that attracted you to RI?

I felt that asset owners (and their investment managers) had a responsibility to use the power of their capital to create systemic change by funding businesses and institutions that value the environment and society and are not purely motivated by profit maximisation at the cost of all else.

  • What do you like most about RI?

It is encouraging that momentum is now building and asset owners (from retail investors to large institutions) are questioning the impacts of their investments. 

  • What do you like least about RI?

What I like least – unfortunately, the change is not as broadly based or as effective as it needs to be. I want all asset owners to be more demanding of their investment managers as this will enable the industry to learn quicker and evolve faster.

  • What single thing or person has had the most positive impact on your career, and why? 

The growing movement of individuals that believe in business (and investment) as a force for good. This has enabled me to spend the last 3 years of my career pursuing my mission to widen participation in investing for good.

What differences do you see, if any, between Sustainable finance/investments and conventional? 

The distinctions are becoming increasingly fuzzy as mainstream firms are embracing sustainable/responsible investing as a business development opportunity. Most investment firms are now paid up members of the PRI and will claim to be fully integrating ESG into their investment management processes. If you ask the right questions, you’ll soon find that there is a big difference between firms that are paying lip-service to the sustainability trend and those that invest and engage with positive intention. Thorough due diligence is critical to separate greenwashing from truly sustainable investing – this means completing full look-through analysis on a manager’s underlying holdings and understanding the sustainable investment rationale and ESG engagement strategy for each position. We need much better transparency and disclosure from the industry, and an evolution in the measurement, reporting and assurance of negative and positive impacts.  

What is your understanding of a sustainable workplace? 

A sustainable workplace is inclusive and celebrates diversity, treats all employees with respect and dignity, is aware of and supportive of the wider community and takes its environmental responsibilities seriously. A sustainable workforce is an engaged and motivated collection of individuals that share a common purpose to improve the world through its activities. 

The B Corp movement does a great job of encouraging sustainability in the workplace. One of the things that attracted me to EQ in the first place was its commitment to the B Corp community, and its vision of business (and impact investing) as a force for good.  Working with colleagues with a shared purpose is a great privilege. One focus for us as a firm is improving social mobility and workplace diversity. We are proud supporters of the Spear programme which is operated by the Resurgo charity. It provides pre-employment training for young unemployed people. The programme has been a great success, over 10% of our workforce are Spear graduates, and we would encourage other employers to join the programme.

In your view, how is the work culture changing to meet the demands and aspirations of a new generation, i.e. millennials?

I’m not a big supporter of the view that millennials are so very different to the generations that went before them. Continually emphasising “otherness” creates a generational divide that is both unhelpful and patronising. We all share a desire to be treated fairly and with respect, to feel safe and secure, and to feel autonomous in our day to day activities. We all want work that is rewarding and purposeful and aligns with our personal values. The nature of work has evolved because of technological advances and a growing understanding that diversity is something to be celebrated. The main difference between millennials and previous generations is technological – social media has given this generation a collective voice that was not available to previous generations.

I particularly like the Corporate Rebels article on “the made-up nonsense about generations at work” which sums up millennial work aspirations as “purpose, meaning, freedom, autonomy, fun, and personal development”. If asked the same question 20 years ago I would have said similar things. Who doesn’t feel the same way, regardless of generation?

How does your firm recruit into ESG/ Is your firm looking for sustainable finance graduates or any discipline?

It depends on the role, we have recruited from Imperial College’s MSc in Environmental Technology in the past. It’s important for us have a diverse team with different backgrounds and wide-ranging perspectives. 

If you knew what you know now what would you have done differently when you started your career. What advice do you wish you’d been given when you started out?

I can’t see the point in “what ifs” and have never taken a very structured approach to building my career. I’ve simply applied myself to the job in hand to the best of my ability.  My role has always involved building long-term relationships with clients (predominantly private clients, family offices and foundations) so it wouldn’t have been appropriate or desirable for me to move firms frequently. The lion’s share of my career to date has been with two firms, with ten years at each. If I had been in a different type of role, I would have tried to experience a wider range of firms/institutions with different cultures and experimented with different types of roles. I think (within reason) that a diversity of experience is very valuable, often it is the intersection of those different experiences that really differentiates us later in our careers.  

What advice would you give to someone starting out today?

  • What qualifications

It completely depends on the role, but for a client facing role in responsible investing the CFA would be a good start. For research roles backgrounds in statistics and natural/ social sciences would be useful. 

  • What experience

Investee engagement experience will become increasingly in demand as asset managers need to improve their approaches to engaging with companies on environmental, social and governance issues.  Relevant non-financial services industry experience would be very useful in this context. Expertise in impact management, measurement and reporting will also become increasingly important as the industry evolves its approach to reporting on the real world negative and positive outcomes of investments.

  • What ‘soft-skills’ are beneficial

Good communication skills – ask questions and fully listen to the answers, you’ll be surprised how rare this is and how much you will learn. Always take the time to understand a wide diversity of perspectives – there is no single truth. Integrity and enthusiasm are also great attributes.

Looking ahead, where do you see the opportunities or growth areas for career paths in RI/ESG?

There are opportunities across the industry, but I believe there will be significant growth in investee engagement. In the past asset owners and their investment managers have failed to hold businesses to account on environmental and social issues and this needs to change. The work of groups like Climate Action 100+ demonstrates that collective engagement can make a real difference. Deep expertise in environmental (particularly climate and biodiversity) and social issues will become increasingly important within financial services, so there will likely be more movement of talent between the worlds of academia, government, foundations and corporates. 

CV at a glance:

  • EQ Investors, Client Director: 2019 to date
  • Northdown Ventures, Founder & Managing Director: 2017 to date 
  • Cambridge Associates, Senior Investment Consultant, Managing Director: 2008 – 2017 
  • Rothschild Asset Management, Private Client Administrator, Investment Manager, Assistant Director: 1998 – 2007 
  • Rea Brothers Fund Managers, Fund Administrator: 1996 – 1998

To access other interviews and Sustainable Finance Careers Report follow the link: esg-data.com/careers