About the Author: JC de Swaan is the author of Seeking Virtue in Finance: Contributing to Society in a Conflicted Industry (Cambridge University Press). He is a lecturer in the Department of Economics at Princeton University, where he is affiliated with the Bendheim Center for Finance. He is also a partner in Cornwall Capital, a New York-based investment fund.
Careers in finance remain in high demand among students. Goldman Sachs received 100,000 applications for its 2,900 global internships in 2021, despite heavy publicity complaints recent hires on long and unpredictable hours and the growing appeal of tech jobs.
Yet a recurring concern among my students considering a career in finance is that they will become cogs in a great machine, finely tuned to maximize short-term profits by extracting value from others. How should they manage potential conflicts between their humanistic values and the day-to-day demands of high-stakes finance?
The bar has been raised on what an alignment of values means for students. I can see from my own undergraduate students that their interest in understanding their potential impact on society has deepened since the financial crisis of 2007-2008. For years, essays for one of my courses on ethics in finance have reflected the deep emotional impact of the ensuing recession, often punctuated by the loss of a job by a parent.
In recent years, environmental concerns have permeated these trials. The current generation of students has grown up steeped in environmental concerns; many of them perceive climate change as being induced by human activity.
Activism is more part of the identity of young people than of previous generations. Even business school students, often described as viscerally results-oriented, flock to courses that help them understand their potential impact on the world. The New York Times reported that 600 Harvard Business School students enrolled in social impact electives last year, up from 251 in 2012.
The pandemic may have accelerated a shift in priorities toward greater social awareness in their lives. In a recent investigation of Gen Z by EY, 39% said they would prioritize making a difference in the world, compared to 33% in the same survey before the pandemic. Not only are members of this generation increasingly saying they prefer to live their values at work, but they seem ready to act. In a 2021 Deloitte Global Study investigation of Gen Z, nearly half said they have made choices in the past two years about the type of work they are willing to do and the organizations they are willing to work for based on their personal ethics.
But young graduates are not wild idealists. They are quick to test assumptions and reject hypocrisy. They are very resourceful digital natives, nimble at obtaining information from organized online sources. They blame baby boomers for the world left to them and are unlikely to blindly trust what they hear from their company’s senior executives.
The world of finance reacts. His pro-social revolution is gaining momentum. Assets integrating environmental, social and governance factors into investment decisions have exploded. This trend has aroused great interest among the younger generation. Yet skepticism remains: In a CFA investigation out of 15,000 students, only 8% of undergraduates believe portfolio management can make a positive social and environmental contribution.
What can recent graduates do once they begin their finance analyst or associate programs to uphold their values and contribute to society?
Some will have chosen to choose their place in the industry to minimize any mismatch between their values and their professional activities. In my opinion, most of finance serves society, but not all of it. Working at Vanguard, the pioneering index fund manager, or at a community bank lending to small businesses is unlikely to keep anyone from wondering if they are helping their clients and contributing to society.
Wherever they land, the most effective starting point for upholding personal values will not be to fuss and challenge on day one, but to learn and master the core skills of their position. . When recent graduates suggest new initiatives within their company or raise values-based concerns, nothing will give them more credibility than internal reputation.
They should feel emboldened by the fact that they live in a time of special receptivity to their opinions. Millennials and Generation X have been credited with exploding demand for ESG financial products. Young employees of traditional financial institutions have been instrumental in orienting their businesses towards these products.
The relative inexperience of young graduates with their work and their company gives them a unique advantage over their more experienced colleagues: they have the right to ask tough questions and to seek transparency. An inquisitive mind will often be valued by managers as a sign of thriving leadership, particularly if backed by a strong core skill set, while questions can push those managers to think more deeply about the impact social aspects of their company’s activities.
In the investment world, this can mean keeping their company honest on ESG issues at a time when many are engaging in greenwashing. Holding their leaders accountable for their company’s adherence to its publicly-adopted standards can be one of the most valuable services young finance professionals can render to serve their clients and society.
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