In 2007, fresh out of university as an economics graduate, I joined Merrill Lynch. I was full of optimism and excitement, but soon thereafter Lehman Brothers collapsed leading to consequences that still plague the financial sector.
Today, many of my peers have left mainstream finance to join “sexier” technology companies or to do something more “impactful”. We are risking, as a friend said, a “serious brain drain of the next generation in finance”. That friend recently left Goldman Sachs to launch an impact venture capital firm.
Another talented acquaintance was invited to start a social finance team within a major US investment bank. After five years he quit. Jaded by his efforts to create change from within, he concluded, “It’s an old established world with an old established culture.”
I shared this sense of malaise and started searching for greater meaning in my own career. This led me to co-found Humans in Finance, which uses social media to share stories of inspirational individuals in the sector and their efforts to better society. As part of that work, we surveyed our community and found that half of them believe finance professionals are either “unhappy” or “questionable and greedy”. An overwhelming 80 per cent said that the industry’s image needs to change.
Part of the problem is that senior managers are disconnected from younger generations within their organisations who want to have a positive impact on the world. Young people like me want finance to contribute by channelling funding into global environmental and social development. There is an obvious road map: the UN’s 17 sustainable development goals for 2030, which set an inclusive growth agenda.
Business has a major role to play in achieving the goals, which seek to end poverty and hunger, promote good governance, reduce inequality and tackle climate change. The UN estimates that achieving the goals would require between $5tn and $7tn in funding annually, but it expects a financing gap of $2.5tn in developing countries alone. The consequences of missing these goals are profound: A UBS report says there will be 44m avoidable deaths between 2019 and 2030; up to 6 per cent of the world’s population could be consigned to extreme poverty, and 850m women and girls would be at risk of violence.
With the wealth and clout that finance wields, professionals working in our field are in a prime position to catalyse the urgent investment required. Yet when our survey asked finance professionals whether their employers were committed to the development goals, two-thirds responded “no” or “unsure”.
Some argue financial institutions have begun to step up. Citi has outlined how it intends to facilitate investments in the SDGs globally. And there is a compelling business case to do so: according to EY, businesses that embrace these goals can generate shareholder value over the long term while also signalling to investors that they are effectively managing environmental, social and governance risks. In other words, businesses do not have to choose between purpose and profit. That said, there is a difference between making a public commitment to the SDGs and taking action. Younger staff members will not be fooled by lip service and want to see serious change.
So how can companies back the SDGs and improve their retention of young people? To begin with, they must develop clear strategies and new products that finance progress toward the goals, increase financial inclusion, fund clean energy and incorporate ESG criteria into risk management.
If sustainable finance becomes mainstream finance, it will provide a greater sense of purpose to an increasingly disillusioned workforce and create an industry that is truly committed to building a better future. Financial services institutions that want to stop the brain drain should sign up now.
The writer is the co-founder of the social enterprise Humans in Finance