Posted on May 30, 2023

Strategies to attract the best ESG professionals

We recently joined the talented panel at eFinancial Careers, discussing the secrets of recruiting skilled ESG professionals and how to gain an edge in this increasingly competitive market. Click here to watch the full webinar, alternatively, you can read through the questions and panelists answers below.

In broad terms, how would you define an “ESG job” in financial services? And what different types of ESG roles are there within the sector?

David: At its broadest, an ESG job in financial services focuses on incorporating environmental, social, and governance considerations into traditional financial analysis, investing, and risk management. The challenge is, such positions vary across the ecosystem, which includes positions in investment banks, asset management firms, fintech start-ups, ratings agencies, and more.

The proliferation of ESG funds and the wider adoption of sustainable finance principles by major institutional investors fuels the demand for ESG-focused jobs. Hence, there is a growing need for skilled professionals with expertise in ESG investing and analysis, regulatory compliance, and other areas related to ESG integration in financial services.

As a result, the number of roles and their responsibilities is wide and varied. ESG analysts, often entail evaluate companies' ESG performance and risks through various frameworks and evaluating ESG disclosures. They then share insights with portfolio management teams and ensure that they align investment strategies with ESG criteria.

Responsible investment strategists develop investment strategies, considering pertinent regulatory frameworks and integrating this information to inform investment decisions. ESG data managers work to establish and maintain comprehensive ESG databases and reporting systems, often using AI and machine learning in the area.

Sustainable Finance Relationship Managers, for their part, work with clients to understand how current ESG trends and demands can influence their investment decisions. They also provide insights on the established best ESG practices that clients can adopt for their businesses.

Corporate sustainability professionals develop and implement strategies to improve ESG performance. Their work often encompasses engagements with multiple internal and external stakeholders to foster alignment and ensure ESG standards are met across various functions.

I’m sure there are more roles as well, but this should provide a broad reference.

Katherine: David’s explanation of the definitions within the market is exceptionally thorough. As he has noted, responsibilities vary between institution. The market, whilst not new, is from a public interest and recruitment development – we’ve seen more newly created ESG focused positions than ever before – and as this market continues to develop and mature, these conversations so too, will develop accordingly. David highlighted that ESG is a series of considerations for a business – it’s worth expanding on the role Impact and Impact investment plays within this broad spectrum. We’ve seen an increase for advisory and science-based roles within firms – big or small, and this adds to the variety of ESG opportunities available

Weina: David has given a very comprehensive definition of “ESG” job. To add on, I also see that the commercial banks are creating new banking products and services related to environmental and social causes. In terms of job roles, it can be research, investment, trading, customer service, product design and structure, stakeholder engagements.

From your conversations with employers, what challenges do financial institutions face when hiring into ESG roles?  

Katherine: This is an exciting time to hire within the market. There is a wealth of talent available and this presents an opportunity to be creative. Hiring managers I speak to, have a great understanding as to where candidates can originate and one area I love about this market is diversity of background, gender, ethnicity, education, thought and skillset.

To address your point about challenges, this is nuanced. The hardest roles to fill within the spectrum of ESG are often Analyst level – simply because these candidates are often in a multitude of processes.

As the market is evolving, hiring both for the gap within the business presently, and hiring the right talent to support the development of the team and the strategy going forward- this I see as the big challenge. This is my responsibility, as a recruiter, to present candidates who can fill both remits and why having conversations with hiring managers about what will work within the team – is always great.

Employers face a significant number of challenges:

1. Finding qualified candidates with the right skillset and experience.

2. Understanding the changing regulatory landscape and how it impacts ESG roles.

3. Developing a comprehensive ESG strategy that is aligned with the organization’s overall mission and goals.

4. Integrating ESG into existing risk management processes.

5. Ensuring that ESG roles are adequately resourced and supported.

6. Educating and training existing staff on ESG topics.

7. Creating a culture of sustainability and accountability within the organization.

8. Developing a clear and consistent ESG reporting framework.

They need to avoid competency washing, which means they need they need to have the knowledge to enable them to ask for the right experience and/or qualifications

Weina: During my own experience as the educator, I often spoke to people who are working in the ESG or sustainable finance fields. But they are not necessarily the HR personnel who would go to the recruitment and job fair to hire graduates. Hence, I would like to see more HR personnel can also be equipped and empowered to know the new skillsets of the ESG talents and how they can contribute to their sustainability team in the organization.

How can these challenges be overcome. For example, how are educational institutions training talent in ESG?

Educational institutions are increasingly offering courses and programs related to ESG, such as sustainability, corporate social responsibility, and environmental management. These courses can provide students with the knowledge and skills needed to understand and implement ESG principles in their professional lives. Additionally, many universities are partnering with organizations to provide internships and other experiential learning opportunities that allow students to gain hands-on experience in ESG-related fields. For example, CFA has partnered with some local intuitions in Hong Kong to design ESG course. Finally, many universities are also offering certificates and degrees in ESG-related topics, which can help students gain the necessary qualifications to pursue a career in this field.

In terms of the CFA, we’ve been constantly updating out content, increasing the amount of ESG material in the CFA program, I believe around 145% increase vs last year. We’ve developed the ESG certificate and some supporting engagements such as our Vista sessions and gameshow, partnered for Webinars, and we also maintain the ARX. We’ve worked with the government to gain their support as well to help subsidize the cost of the programs as well.

Weina: In our current master programme in NUS Business School, we work hard to curate the opportunities for our master students to connect with the industry to make them known to potential employers who are active in the sustainable finance space. We do so by inviting industry leaders from various financial institutions and firms to come to our classroom to share their insights with our students.

Secondly, we also allow students to showcase their work through case competition and capstone projects.

Thirdly, we are also launching more training opportunities for the existing workforce to update their knowledge and skillsets in the fast-moving sustainable finance field.

Katherine: David and Weinar work at great examples of institutions who help to develop individuals within their ESG careers. A good proportion of candidates I speak with have undertaken the CFA certificate in ESG investing, or studied at an institution such as NUS, whose focus of study is sustainable finance.

I recruit for private equity, investment, asset managers and impact funds who look for talent within this remit, but also recruit individuals who have more NGO focussed or consultancy or practical experience. The biggest pre-requisite when hiring for an ESG focused professional, is their genuine interest within the market.

Given high levels of environmental awareness among younger people, what level of interest is there among students and graduates in the ESG space? And how can educational institutions and employers take advantage of this interest? 

There is a growing level of interest among students and graduates in the ESG space. According to a survey conducted by the World Economic Forum, nearly two-thirds of millennials and Gen Zers are interested in investing in companies that prioritize environmental, social, and governance (ESG) factors. This interest is driven by the fact that younger generations are more aware of the importance of sustainability and the need to take action to protect the environment.

Educational institutions and employers can take advantage of this interest in a number of ways. Firs, is by offering courses and programs that focus on ESG topics, such as sustainability, corporate social responsibility, and ethical investing. They can also offer internships and job opportunities that focus on ESG-related topics. Additionally, employers can create initiatives that allow employees to invest in ESG-focused funds or companies. Finally, employers can provide resources and support for employees who are interested in ESG topics, such as access to research and educational materials.

They can also consider the broad nature of these issues.  Many finance institutions will need people with not just financial knowledge, but also scientific knowledge or Engineering knowledge, to truly understand the data being produced by companies.  Its hard to analyse a company and say that they have a valid NetZero plan, or a technology is valid without that kind of knowledge.  Developing more cross disciplinary students, for example training STEM students in finance, will also be key.

Katherine: The interest at the student and graduate level is huge. At present, I don’t feel that the opportunities available reflect the numbers studying or applying – this will change as David’s highlighted, ESG is the biggest investment interest for this market demographic. As regulation continues to mature and increase, this will add to the volume of opportunity available for those at the junior level.

Weina: We see a lot of interests through the application to our Master Programme in Sustainable and Green Finance. The candidates come from various countries and industry sectors. However, I feel that the recruitment from the employers are yet to pick up. Many jobs are at the VP and director’s level rather than entry or associate level that are suitable for fresh master graduates. I think as the financial industry is learning what is lacking and what must be changed in the current practices of doing banking, investment and engagement in the midst of the policy and regulation shifts, the demand will pick up going forward.  

To what extent are experienced professionals transitioning into ESG jobs from other roles in financial services or even from roles outside the financial sector? How can employers enable these transitions? 

Katherine: There is a big demand to transition into the ESG market, and educational courses are a great way to gain the right technical skill set, and access to networking opportunities that will help propel their careers. It’s worth noting that access to such educational courses precludes a huge proportion of the market, and I don’t feel enough is being done universally, to support access to individuals within this market.

ESG is a hugely inter-disciplinary area, with candidates originating from non-financial backgrounds, more-often than not and as we have highlighted before, focusing on mind-set and transferability of skillset, is of key importance when hiring.

However, Recruiters often get tole they need someone to ‘hit the ground running’ and this indicates a  lack of willingness to train individuals – which won’t help to support these sorts of transitions.

David: Experienced professionals are transitioning into ESG jobs from other roles in financial services and from roles outside the financial sector. This transition is being driven by the increasing demand for ESG-related services and the need for professionals with the necessary skills and knowledge to provide them.

Employers can enable these transitions by providing training and development opportunities for experienced professionals to gain the necessary skills and knowledge. This could include offering courses on ESG topics, providing mentoring and coaching, and creating job shadowing opportunities. Additionally, employers can create career paths that allow experienced professionals to move into ESG roles. This could include creating job postings that are specifically geared towards experienced professionals, offering incentives for experienced professionals to transition into ESG roles, and providing resources to help experienced professionals transition into ESG roles.

I recently saw on linked in a senior research and engagement analyst, 10 years of experience across sustainable investing, equity research, private equity and mergers and acquisitions, and eight years of experience in business development and management. transitioned from equity research into an ESG-focused company after completing further education – in her case a Certificate in ESG Investing from CFA Institute.

Candidates are coming from engineering, science, communications, and other fields. It’s about transferability and having analytical minds. Focus on transferable skills, and look at upskilling with ESG focused higher education.

Weina: Over the years, I see that people working in the ESG related field are having more diverse background. In our own selection of the master students, we have substantial number of students who come from non-finance background such as social science, science, engineering, built environment and government sectors.

I personally see that the ESG job in finance field is an interdisciplinary role that connects various sustainability issues with financial considerations. Hence, we can either train the sustainability experts to know more about finance or we can train finance experts to know more about the technical terminologies and concepts in the sustainable development such as technology and innovations.

What I see in our Msc programme is that we are able to produce graduates as “connector” to bring the finance and sustainability to the same table of conversation and decision-making process.

What key trends will shape the future of ESG jobs? What should employers do now to make sure they are ready for these trends? 

David: There are number of key trends, including include harmonizing reporting frameworks for better continuity and conformity (think of the ISSB goals), newly proposed federal and state climate-related disclosures will pressure companies and investors to respond and adapt (SFDR, TCFD, CDP), Companies and investors will navigate the increasing risk of litigation related to sustainability (in)actions, Climate strategies will be reconsidered in the face of energy security and affordability concerns, rising costs from physical climate risks will accelerate investments in adaptation and resilience, and a growing interest in circular production aimed at minimizing waste. These trends impact how companies approach ESG and will shape future sustainable business practices.

1. Increased demand for ESG professionals: As companies become more aware of the importance of ESG, they will need to hire more professionals with expertise in this area. Employers should start looking for candidates with the right skills and experience now to ensure they are ready for this trend.

2. Greater focus on data-driven decision making: ESG professionals will need to be able to analyze and interpret data to make informed decisions. Employers should invest in data-driven tools and training to ensure their ESG professionals have the skills to make the best decisions.

3. Increased emphasis on stakeholder engagement: Companies will need to engage with stakeholders to ensure their ESG initiatives are successful. Employers should invest in stakeholder engagement strategies and training to ensure their ESG professionals are prepared.

4. Growing importance of technology: Technology will play an increasingly important role in ESG initiatives. Employers should invest in technology solutions and training to ensure their ESG professionals are up to date with the latest tools and trends.

Weina: I can see that the landscape of ESG is still developing in Asian countries. There is still a lack of standardization of data, and quality disclosure from companies and sustainable projects. On the other hand, the policy shift and regulations are moving very fast due to Paris agreement and National Determined Contribution (NDCs). Hence, the opportunities lie with the talents who can obtain quality data and make the best use of them to generate business opportunities.

The data analytical skills, critical analysis skills, and proactive learning and knowledge processing skills will put some people ahead of the labor force curve. Organizations who can obtain such talents will have a head start on their transition and net-zero pathways.

I would suggest that companies should be at watch for the emerging labor market supply for specialized young talents as well as riding on the opportunities to send their existing employees for the adult learning and training programmes provided by credible educational institutions.

Katherine: I think I could speak on a whole panel on this, Simon!

It’s important to note that this answer will vary from geography and of course institution and David and Weinar have answered some of the market technicalities. From a recruitment perspective, we are seeing investors and business leaders, embedding ESG metrics to their processes and business practices more and more. I met with an Impact Portfolio manager yesterday, who not only invests, but looks at the impact mandates for the investments too – in some firms, this is separate. We’re currently recruiting an opportunity for a firm, to hire a position with a dual ESG and IR focus – so I think this will be the trend more and more.

The landscape is changing all the time, we’ve seen a big shift to the S and the G components of ESG this year, one of the big changes within the market has been salaries – particularly at the junior level. To any hiring managers wishing to discuss this, I recently published our first ESG and Impact salary compensation report – please connect with me to discuss this in more detail.

To watch the video recording, click here.

To access open roles across ESG, click here.