Consultancy role: Fixed income analyst

The Natural Capital Declaration, a joint initiative between Global Canopy Programme and the UN Environment Programme Finance Initiative (UNEPFI), is seeking a Research Analyst for a projectin partnership with the German International cooperation (GIZ) and the German Association for Environmental Management and Sustainability in Financial Institutions (VfU). The aim of the joint project is to identify and quantify corporate water risks and to develop and test a methodology and tool to incorporate water risksinto the valuation of corporate bonds. The project will develop a first-cut framework and demonstration tool to map water risk across corporate bonds and integrate indicators of exposure to water scarcity into credit risk assessments. The “Corporate Bond Water Risk Tool”will build the capacity of finance professionals to assess the materiality of water risks, quantify water metrics, and incorporate these risks directly in the credit risk analysis for corporate bond valuations, an essential lever to incorporate material environmental externalities in capital markets. The Research Analyst will work in close cooperation with an Environmental Expert to develop the tool. The position reports to the manager of the Natural Capital Declaration.

The analyst’s role will be to:
  • Conduct a review of the academic literature and expert opinion on the effect of environmental risk on credit quality or terms of credit for corporations.
  • Collaborate with the project team (GIZ, VfU, UNEP FI and GCP), the financial institution project partners and a natural resource/environmental economics expert to develop the methodology/framework and tool to assess and benchmark corporate bonds on exposure to current and forecast water constraints.
  • Report regularly to participating FIs, external experts and the project team on progress to ensure the resulting methodology is practical and implementable.
  • Identify sectors to focus on, based on areas in which current and future water availability and treatment could represent a significant business risk, and bond holdings; identify indicators and relevant datasets and financial metrics to inform the methodology development.
  • Identify mechanisms through which water-related costs are internalisedand quantify the historical and projected financial impacts on companies under changing water supply-demand factors.
  • Collect and evaluate evidence of corporate exposure to water risk and correlation with credit risk.
  • Evaluate approaches to assess corporate bond exposure to water risks atcompany and portfolio levels.
  • Develop draft methodology that builds on existing practices for embedding ESG considerations in corporate bond risk analysis and credit risk assessment models for corporate bond valuations.Provide framework for high-level risk assessment of portfolio-wide water risk and methodology for in-depth, location-specific, geospatial risk analysis. Develop approaches to integrate direct and indirect (supply chain) water risk into financial analysis, identifying limitations, assumptions, gaps and potential for future development.
  • Identify companies/corporate bonds to be included in the analysis and map data to support testing of the tool. Incorporate stakeholder feedback to develop version on which to base an Excel-based tool to test application of the proposed methodology.
  • Develop Excel-based tool using indicators to quantify and link corporate water risks to corporate credit risk assessments and bond valuations. Include options for modelling /scenario analyses based on a range of assumptions and probability factors.
  • Draft guidance to embed water risk considerations in credit risk analysis process for testing.
  • Develop processes to manage datasets and testing, as well as aggregation of results.
  • Analyse outcomes of testing and stakeholder consultation(s) and update framework and tool.
  • Participate in webinars/workshops to share lessons learned and test results.
  • Identify options to manage risk (e.g. risk-adjusted pricing) and develop investment opportunities.
  • Prepare research report.
Essential skills/experience
  • The research analyst is expected to have at least 3 years’ experience in corporate fixed income financial analysis and specific knowledge about credit analysis and valuations, as well as an interest in general ESG integration. The analyst will investigate and assess core water risks faced by key industries in the fixed income universe and evaluate performance along the key benchmarks for large fixed income issuers globally.
  • Contact with the issuers we assess, presentations of industry and company analysis to both MSCI clients and potential clients, as well as contribution to developing our ratings model are important components of ESG Research Analyst work. A qualified candidate would have experience in conducting analysis of quantitative and qualitative data and have strong facility with modelling.
  • A creative and thorough approach to risk management and due diligence to understand and integrate systematic and idiosyncratic risk.
  • Fixed income and credit analysis or trading, or
  • Strong background in research and quantitative analysis.
  • Ability to demonstrate initiative and willingness to carry out a wide variety of tasks.
Desirable experience and qualifications
  • In addition to experience in a fixed income or credit-related role, experience and expertise in the Extractive, Energy, or Food & Beverage industries would be highly regarded. However, we would also encourage those with other relevant backgrounds in fixed income, ESG, sustainability and investment to apply.
  • Knowledge of ESG analysis is desirable but not essential.
  • Advanced degree in related field (masters or PhD) or CFA is preferred but not required.
  • Accounting knowledge (IFRS and/or US GAAP)
  • Access to financial/ratings agency data.
  • Experience in working across teams within financial institutions.
  • Understanding of ratings models.
  • Excellent writing and communication skills.

The position will suit a person with fixed income expertise who is motivated to apply this knowledge to corporate environmental risk from water constraints.

Location:

Ideally to be based in Oxford, London, Geneva or Frankfurt

Remuneration

Competitive salary on the basis of a 10 month contract.

Start date

September/ASAP.

Application process

Applicants for the role should send a full CV and covering letter to the NCD Programme Manager Liesel van Ast at

Please include your salary expectations (on a monthly or daily rate, including taxes).

Applications should be submitted asap and no later than31August 2014

Due to the number of applications, we will only be able to contact those shortlisted for interviews in September.