Edward Crain talks about what it takes to build a career in ESG and lots more!

Can you elaborate on the meaning of each letter in the #ESG acronym and its practical implications for companies?

Of course, I can! It is an excellent question to start with, considering the online discussions where many people have opinions about ESG without necessarily having a clear idea about it. Please see our CEO's view on this discussion,?Morningstar CEO on ESG politics and future sustainability (esgclarity.com) . Within the context of investing, the acronym "ESG" is used by investors to refer to environmental, social, and governance (ESG) factors that are likely to impact a company's ability to create value over the long term. It is essential to be aware that ESG issues, which manifest at a global, regional, national, industry, and company level, are often interlinked. For example, a climate-related issue like the recent floodings in Australia and Pakistan, while categorised as an 'E' issue, can significantly impact the health and wellbeing of humans, an 'S' issue.?ESG issues can have a material impact on the performance of a company. So, when it comes to practical implications, companies need to include ESG considerations in their strategy to manage risks better and to retain or attract investors. Current and upcoming regulations are increasingly mandating companies to be aware of the environmental and social impacts of their activities, and be able to report on them.

?How do you view the role of a company's ESG performance in its reputation and competitiveness?

?Regarding reputation, an ESG strategy can help build trust with customers, consumers, business partners, government regulators, advocacy organizations, and other stakeholders who can help accelerate sustainable growth. Due to climate change, there is an increased interest and a sense of urgency to support companies transitioning to have a (more) positive impact on the environment and societies.?In today's world, investors expect companies to manage their ESG risks and report transparently, including their ESG-focused policies, practices, programs, and governance structures, to show investors they understand how ESG issues affect their future. Not satisfying your investors could result in missing out on capital flow, making it harder for the companies to compete and survive in a competitive market. Companies dedicated to climate change and having a positive impact will probably find attracting new capital and customers easier, thereby increasing their competitiveness.?To summarize, for companies that want to last, having an ESG strategy is becoming necessary to stay competitive while upholding their reputation.

?As the research head for Impact Pillar, can you demystify the difference between ESG risk and impact??

?ESG risk and impact are related; however, they differ in their perspective and serve different types of investors. The ESG Risk-focused investor focuses on the 'risk' of the impact of the environment or society on the value of companies which is more about managing risks. It basically concerns regulatory requirements and compliance risks, in addition to ‘risk mitigation’ endeavours, which target risk management or remedial measures. On the other side, the ESG Impact-focused investor focuses on the impact of their investments on the environment or society, which is more about how a company's operations affect the world. The latter aligns with the growing consensus that businesses shouldn't just exist to be 'profit-generating machines.' These approaches are complementary and constitute the ‘double materiality’ principle which requires businesses to be mindful of the impact they generate and how environmental and social issues impact them.

?Could you discuss the growing importance of a company's ESG performance in attracting and retaining millennials and Gen Zers, considering their increased focus on environmental and social issues?

?For my generation (generation X, 1965-1980), a career was all about climbing up the ladder, often within the same company, with a "work hard, play harder" type of attitude that offered opportunities for all who were willing to work hard (without complaining ??). The way that I viewed it: in your 20s, you learn and invest in yourself; in your 30's, you earn; and in your 40's, you choose. Looking back, I might have been too blind to the world around me and too self-centric, not really bothered by how the company I worked for impacted the world. In those days, providing opportunities to learn, advance yourself and make a long-term career within the same company was a way to attract and retain talent.

?For the millennials and Gen Zers, who are highly aware of social, economic, and environmental issues worldwide with high levels of activism for social justice, racism, and gender issues, offering such a work environment will not suffice. They will look for companies aligned with their values and committed to fighting climate change. Companies need to perform well on ESG-related factors to avoid losing out on talent, while, as a matter of fact, companies who are known to do well on ESG-related factors are attracting more talent.?

?It is an exciting era to enter the job market, where there will be a lot of opportunities to do well, make a positive impact, and support companies in their effort to make the world a slightly better place. Interacting with many millennials and Gen Zers who just joined Morningstar Sustainalytics to join our mission of making the global economy more just and sustainable gives me much hope for the future! I'm also learning a lot from my teenage kids on #DEI (using the correct pronouns), and impact (can I limit my business travels worldwide and reduce my carbon footprint). It is surprising (and heart-warming at the same time) that my generation and the generations before me can learn so much from the new generations, which will hopefully help change the world for good, and be better stewards than most of us were.

?Can you provide more details on the basic requirements and criteria for individuals that are pursuing ESG careers?

?The essential requirement is to have a curious mindset and a broad interest in ESG. It also helps if you are passionate about sustainability and, in the broader aspect, social justice. Within Morningstar Sustainalytics, we are looking for graduates and post-graduates in business, finance, environment, and/or social science, who are fluent in English, are critical thinkers with attention to detail, and have problem-solving skills. Sounds interesting? We are still looking for people, so I urge talents to apply to one of our vacancies at Morningstar Sustainalytics. I hope to see and welcome you to our company!

?What are your thoughts on the current supply and demand for qualified and skilled talent in this field?

?We do have a promising pipeline of talent. However, there is always room for people who feel passionate about our mission and want to join us in our journey of making the economy more just, and sustainable. We are mainly looking for talents demonstrating good team players characteristics like humility, hunger for learning, and emotional intelligence, and are willing to pursue a long-term career within Morningstar. Morningstar is a great employer and will provide multiple opportunities to support your growth in the direction you wish for your career. As I have learned, working for, and with, an inspiring group of people helps leapfrog your personal development and career, and even shape who you are and help you find your passion.

?What steps could potential candidates and employers take to develop talent in this area?

?Regarding ESG, there is a lot of great material and training available on the market and online. There are lots of opportunities to educate yourself or your staff. Also, it is crucial for companies to have a DEI strategy that promotes diversity and inclusion, not just for millennials and GenZ-ers but for all generations. For potential candidates, it is also good to know your fundamental values, what values you are seeking to find, and promote while working in a company, and, more importantly, how your ideal contribution to a company is defined and pictured. Now and then, everyone will benefit from some personal soul-searching. If your ideals, dreams, and what a company can provide you with are aligned, it will be like a marriage made in heaven, and you can find and leverage your individual superpowers. Cheers to all new talents, and I wish you luck in your journey to find your superpowers!