What Does an ESG Analyst Do? A Detailed Career Overview

Ever wondered how businesses navigate the complex world of sustainability and ethics? Enter the ESG Analyst—a key player in helping companies make smart, responsible decisions that go beyond just profits. If you’re a recent grad or someone considering a career shift, understanding what an ESG Analyst does is crucial.

In this guide, we’ll break down the day-to-day tasks, the essential skills, and the growing importance of ESG Analysts in today’s business landscape. Ready to dive in?

Understanding ESG Analysis
Key Responsibilities of an ESG Analyst
The ESG Analysis Process
Skills Required for an ESG Analyst
Common Challenges Faced by ESG Analysts
Impact of ESG Analysts on Businesses
FAQs

1. Understanding ESG Analysis

This image depicts three distinct panels representing different aspects of environmental and sustainable development. The left panel showcases wind turbines in a lush, green agricultural landscape, symbolizing renewable energy and sustainable farming. The center panel combines elements of both renewable energy and traditional power generation, with wind turbines and a nuclear power plant situated by a serene river surrounded by vibrant vegetation. The right panel illustrates an urban environment with modern skyscrapers and business professionals engaged in meetings, likely indicating corporate responsibility and sustainable urban development. Below these panels, there is a group of people engaged in discussions and meetings, reflecting collaboration and decision-making in sustainability and ESG (Environmental, Social, and Governance) practices.

Let’s start with the basics: What exactly is ESG Analysis? It’s all about evaluating a company’s performance across three critical areas—Environmental, Social, and Governance. In simpler terms, it’s about how a company impacts the planet, treats people, and manages its operations.

Environmental: This focuses on how a company’s activities affect the environment. Are they reducing their carbon footprint? How do they manage waste and resources?
Social: Here, we’re looking at a company’s relationships with its employees, customers, suppliers, and the communities it operates in. It’s about fairness, diversity, and community engagement.
Governance: Governance is all about how the company is run—things like board structure, executive compensation, and shareholder rights.

As an ESG Analyst, you’re not just checking boxes—you’re assessing the long-term impact of a company’s actions and helping guide smarter, more responsible decisions.

2. Key Responsibilities of an ESG Analyst

The image shows a modern office environment with professionals working at desks. In the foreground, a man in a suit is analyzing data on a large monitor displaying graphs and charts, with documents spread out on his desk. In the background, other colleagues are engaged in discussions and working on computers, highlighting a collaborative, data-driven work atmosphere, typical of ESG analysts or financial professionals.

So, what does an ESG Analyst actually do? The role is a mix of research, data analysis, and strategic communication. Let’s break it down:

Data Collection and Analysis

First up, ESG Analysts gather data on various factors—from carbon emissions to labour practices. They dig into company reports, industry databases, and other sources to build a clear picture of how a company is performing.

ESG Reporting

After analysing the data, it’s time to create reports. These documents summarize a company’s ESG performance and are used by investors, stakeholders, and internal teams to make decisions. The reports need to be clear, accurate, and packed with insights.

Risk and Opportunity Identification

A big part of the job is spotting potential risks and opportunities. For example, how might climate change impact a company’s operations? Or, how could a new governance policy boost investor confidence? Your job is to help companies navigate these challenges and seize new opportunities.

Benchmarking and Comparison

ESG Analysts often compare a company’s performance against its peers. This benchmarking process helps companies understand where they stand in their industry and highlights areas for improvement.

Stakeholder Communication

Finally, effective communication is key. ESG Analysts present their findings to a variety of stakeholders—from executives to investors—translating complex data into actionable insights. This might involve presentations, meetings, or written reports.

3. The ESG Analysis Process

The image shows a professional working on a laptop displaying a digital image of Earth, surrounded by data visualizations and charts. The setting is a modern, well-lit office with other documents and graphs spread out on the desk. This scene symbolizes global analysis and data-driven decision-making, often associated with roles in ESG (Environmental, Social, and Governance) analysis.

Wondering how ESG analysis actually works? It’s a structured process that involves several key steps:

Step 1: Defining ESG Criteria

First, you’ll define what ESG factors are most relevant to the company. These criteria will vary depending on the industry, but they usually include things like environmental impact, social responsibility, and governance practices.

Step 2: Data Collection

Next, it’s time to gather data. This might come from company sustainability reports, third-party databases, news articles, or even interviews with company officials. The goal is to collect accurate, up-to-date information.

Step 3: Data Analysis

Once you have the data, it’s time to analyse it. This involves both quantitative analysis (like calculating emissions) and qualitative assessments (like evaluating governance policies).

Step 4: Report Preparation

After the analysis, you’ll prepare detailed reports. These reports usually include an ESG score or rating, key findings, risks and opportunities, and recommendations for improvement.

Step 5: Communication and Action

Finally, you’ll communicate your findings to stakeholders and work with them to develop strategies for addressing any issues. This could involve setting new targets, implementing policies, or adjusting investment strategies.

4. Skills Required for an ESG Analyst

To succeed as an ESG Analyst, you’ll need a mix of technical know-how and soft skills. Here’s what you’ll need:

Analytical Skills: You’ll need to be comfortable working with large data sets and spotting trends. Strong analytical skills are crucial for interpreting complex information.
Industry Knowledge: Understanding the industry you’re analysing is key. Each industry has its own unique ESG challenges, so you’ll need to stay informed about the latest developments.
Communication Skills: You’ll need to explain your findings clearly and persuasively, whether you’re writing reports or presenting to executives.
Critical Thinking: You’ll need to think critically about the broader implications of a company’s ESG performance, considering both immediate impacts and long-term consequences.
Attention to Detail: The details matter in ESG analysis. Small errors can lead to big misunderstandings, so you’ll need to be meticulous in your work.

5. Common Challenges Faced by ESG Analysts

The image depicts a lone figure standing on a stormy shoreline, looking toward a dramatic sky with swirling clouds and a large vortex. On one side, massive ocean waves crash against the shore, while on the other, the remnants of industrial structures are faintly visible. The scene conveys a sense of confronting environmental challenges, symbolizing the daunting task of addressing climate change and environmental issues, often associated with the work of ESG professionals.

Like any job, being an ESG Analyst comes with its challenges. Here are a few you might encounter:

Data Limitations: ESG data isn’t always standardized or easy to find. You might have to work with incomplete or inconsistent information, which can make analysis tricky.
Evolving Standards: ESG is a fast-moving field, with standards and best practices constantly changing. Staying updated on the latest developments is crucial.
Balancing Objectivity and Subjectivity: ESG analysis often involves a mix of hard data and subjective judgments. Striking the right balance can be challenging.

6. Impact of ESG Analysts on Businesses

The image shows a vibrant cityscape at sunrise, with skyscrapers bathed in golden light. In the foreground, a glowing upward arrow transitions into sprouting green plants, symbolizing growth and sustainability. This imagery suggests the intersection of urban development and environmental stewardship, highlighting themes of sustainable growth and the positive impact of ESG initiatives in urban settings.

The work of ESG Analysts has a significant impact on how businesses operate and are perceived:

Improved Risk Management: By identifying and mitigating ESG-related risks, ESG Analysts help companies avoid potential pitfalls that could harm their reputation or financial performance.
Enhanced Investor Confidence: Investors increasingly look to ESG performance as a key indicator of a company’s long-term viability. ESG Analysts provide the insights needed to build investor confidence and attract capital.
Sustainability and Growth: ESG Analysts play a crucial role in helping companies adopt more sustainable practices, which can lead to long-term growth and success.

7. FAQs

Q1: Is the role of an ESG Analyst only relevant for large companies?

No, ESG analysis is important for companies of all sizes. While large companies may have more resources to dedicate to ESG initiatives, small and medium-sized enterprises (SMEs) are also increasingly recognizing the importance of ESG factors in driving business success.

Q2: How does ESG analysis differ from traditional financial analysis?

While traditional financial analysis focuses primarily on financial metrics such as revenue and profit margins, ESG analysis incorporates non-financial factors, including environmental impact, social responsibility, and governance practices. This provides a more holistic view of a company’s long-term sustainability.

Final Thoughts on the ESG Analyst Role

So, what’s the takeaway? The role of an ESG Analyst is more important than ever. As businesses and investors put a stronger emphasis on sustainability, the insights provided by ESG Analysts are essential for guiding strategy, managing risks, and ensuring long-term success. If you’re someone who loves digging into data, cares about ethical practices, and wants to make a real impact, this could be the perfect career path for you.