The financial services industry finds itself at the forefront of a global shift towards a more sustainable, low-carbon and net zero economy. As we transition to a greener future, financial services organisations find themselves in a leading role, steering the way forward for the wider economy. However, this transition is not without its challenges, especially when it comes to recruiting the right talent to drive this transformation.
Niche expertise in ESG and Sustainability
One of the primary recruitment challenges for the financial sector is the need for a niche skill set, together with expertise in Environmental, Social and Governance (ESG) and sustainability. Whilst the traditional financial roles have been well defined for many years, positions related to ESG investing, sustainability strategy, and climate risk assessment are relatively new, and their definition is still rather fluid.
In order to navigate this, financial organisations need to robustly identify and attract candidates who not only have expertise across ESG principles but also understand how to integrate these principles and wider sustainability requirements into financial decision making overall. This requirement means looking for candidates with a background in sustainability and ESG reporting, impact investing, and a comprehensive understanding of the emerging ESG regulations and standards.
Regulatory complexity and compliance expertise
The evolving regulatory landscape surrounding ESG and sustainability is complex. Financial services firms must navigate this labyrinth of regulations that require them to report on their sustainability and ESG efforts, align with climate targets, and meet various disclosure standards. At the time of writing The Sustainability Accounting Standards Board (SASB) lays out ESG reporting guidelines through 77 distinct industry-specific metrics! Compliance expertise is, therefore, in high demand.
Recruiting candidates who can keep the business compliant with these regulations is a challenge. It requires individuals who can interpret changing laws and standards, create internal compliance protocols, and ensure that the firm's practices meet all the requirements expected of it.
Risk management skills
To effectively manage climate-related risks, financial organisations need individuals with advanced risk management skills. Assessing and mitigating risks related to changing weather patterns, carbon pricing, and transition risks is a complex task that demands a unique skill set.
Recruiting professionals who can assess these risks accurately, model their financial impact, and develop strategies to mitigate them is vital. These risk management experts should be well-versed in climate risk disclosure frameworks like the Task Force on Climate-related Financial Disclosures (TCFD). Have a read of one of our blogs Why hire climate risk professionals for more on this.
Data and technology competence
Sustainable finance relies heavily on data and technology and the emergence of Artificial Intelligence (AI) into reporting and data gathering. Accurate and reliable ESG data is crucial for making informed investment decisions, but obtaining and analysing this data can be challenging due to a lack of standardised reporting and discrepancies in data sources. Businesses need individuals who can navigate this complexity, develop sophisticated data analytics capabilities, and leverage technology to extract meaningful insights from the vast array of ESG data.
Client engagement and education
Client engagement in sustainable finance is evolving rapidly. Many clients are seeking sustainable investment options and looking for financial advisors who can guide them through the transition. This has created a need for recruitment in client engagement, education roles and ESG stewardship roles.
Financial institutions are searching for professionals who can effectively communicate the benefits of sustainable investments, help clients align their portfolios with their values, and educate them on the intricacies of ESG investing.
A unique set of recruitment challenges
Finding talent with niche ESG expertise, regulatory and compliance knowledge, risk management skills, data and technology competence, and the ability to engage and educate clients in the sustainable finance landscape can be a tough task. However, overcoming these challenges is essential for businesses to successfully lead the way towards a more sustainable and responsible future.
Recruitment strategies that focus on these key areas will be pivotal in ensuring the financial services sector's success in the critical role they play in the whole economy transition to a greener future. With such a high demand for these skill sets and therefore a skills shortage impacting the sector, financial institutions need to consider taking a different approach to recruiting in sustainable finance. Mentoring, networking and enabling young professionals to learn from experienced leaders in the field is a must, but more importantly organisations need to look for candidates with transferable skills and experience to help solve the problem.
It’s possible that candidates with a background in sustainability or corporate social responsibility may be able to bring valuable insights and a transferable skill set to sustainable finance roles. Candidates with experience in finance or investment management may be able to quickly learn the nuances of ESG analysis and apply their existing skills to this field. The same goes for data analysts who have a passion for sustainability and ESG and are looking to transition into the sector, they offer the chance to hire a candidate with a strong core background in data analytics who is driven to develop their sustainability and ESG knowledge.
By considering candidates with transferable skills and experience, organisations have a real opportunity to build the expertise they need to succeed in the changing landscape of sustainable finance.
Allen & York
At Allen & York, we have been connecting purpose-led organisations with purposeful people for the last 30 years. We’ve built a vast network of talent managed by dedicated professionals and are passionate about creating great places to work globally.
For a confidential chat with Spencer, who specialises in placing ESG and Sustainability roles within financial services and professional services firms, please call 01202 888986 or email scooney@allen-york.com