A lot of ink (including my own) has been spilled covering the ESG labor market, and it’s definitely hot.
One of the most important drivers of ESG job growth is the abundance of emerging standards and measurement frameworks for reporting, disclosure, performance, and more. Described by TSC.ai in its new ESG Playbook as an “increasingly connected and data-intensive ESG ecosystem”, the authors counted over 2,000 reporting frameworks, requirements, methodologies and protocols that include over 1,424 indicators of potential ESG performance. Check out their visual below:
My own research and conversations revealed a few additional factors driving demand for talent in this space: the shift from self-reporting to mandatory reporting; an increase in the amount of information companies must disclose; and a need for data (much like a company’s financial statements) that is solid, verifiable, guaranteed and standardized.
As a recruiter, I’ve noticed a surge in demands from hiring managers in the financial services industry – including asset management, insurance, private equity and others – who demand that new hires have the experience and skills to compile, decipher, analyze and disclose information to meet the requirements of a range of different stakeholders (with lots of acronyms). This includes the Sustainability Accounting Standards Board (SASB), Task Force on Climate-Related Financial Disclosures (TCFD), Task Force on Nature-Related Financial Disclosures (TNFD), Glasgow Financial Alliance for Net Zero ( GFANZ) and The Corporate Sustainability Reporting Directive (CSRD).
CDP conducted analysis on my behalf revealing a striking increase in the number of CDP capital market signatories from approximately 530 in 2019 to 680 in 2022.
At the same time, the number of financial institutions supporting the TCFD has more than tripled, from 287 in 2018 to 1,069 in 2021.
So what does all of this mean for people looking for ESG jobs and those who hire for them in the financial sector? To put it into perspective, I asked several leaders representing different angles of ESG the following question:
Given all the changes in the ESG reporting landscape, what skills and/or job titles will exist in your space in 2025 that you don’t have now?
Here’s what they told me, organized by ESG perspective each individual represents:
New roles in ESG and climate alignment will emerge as companies expand their reach: “In the coming years, there will be increasing demands for the establishment of appropriate governance frameworks, relevant expertise in data management and operational integration, and a coordinated management team. ESG-focused. Scope 3 ESG” when companies extend their reach within supply chains or “responsible for climate alignment” to direct efforts towards future net zero commitments. Some positions will evolve as ESG is integrated into business functions such as accounting, compliance, legal and investors. What will remain are the “translators and conductors” – experts who can connect these different verticals and working together to drive change as reporting requirements increase.”
— Lissette Jorgensen, COO, Goldman Sachs Sustainable Finance Group
Alternative Asset Management
Formation of “adaptive teams” built to learn and grow“I have always built adaptive teams with skills and expertise that evolve with the profession. At Apollo, we have built a strong talent pool encompassing reporting, engagement, communication, strategy, climate, impact, human capital, ESG data/tech, citizenship, diversity, equity and inclusion, research and law It is difficult to predict the exact titles that will be required, but I will continue to assess resource requirements based on the growing and new regulatory reporting environment in Europe, the United States and globally.
— Dave Stangis, Partner and Chief Sustainability Officer, Apollo Global Management
Movement of ESG jobs into operations and value creation roles: “One of the changes I expect to see is a change in the position of ESG talent in the org chart. Traditionally, we’ve seen ESG sit near [investor relations]focusing on the reports [limited partners] and collection of portfolio-wide data for the ESG Data Convergence Initiative and other frameworks. I expect the next wave of ESG jobs to be closer to the portfolio operations team and focus on value creation and operational improvements in the company’s ESG performance.”
— Ryan Werffeli, COO, Malk Partners
An effort to improve trust in all sectors: “Future leaders in 2025 will need to produce solutions that can be architected and implemented across industries – enterprises, nonprofits and governments. Thus, the skills of quantitative impact investment analysts, portfolio managers impact managers and impact managers should include (1) designing analytically rigorous multi-sector solutions, (2) mapping results and accounting for impacts across all 17 global countries [United Nations Sustainable Development Goals](3) collaborative entrepreneurship and teamwork, and (4) being a member of the “nice people network”.
— R. Paul Herman, CEO and Founder, HIP Investor
Reports and data
Depth and breadth of disclosure requirements“Sustainability disclosure increasingly needs more skills due to more complex disclosure requirements. Asset managers need to add resources to support ESG reporting. Large companies have teams reporting-focused Journalists should have a thorough understanding of the standards of leadership reporting skills include a keen analytical mind coupled with insight and a determination to set strategy.
— Elaine Cohen, Managing Director, Beyond Business Ltd.
Upskilling of deal teams: “By 2025, we are going to see significant changes in ESG skills and job titles within private equity. While today we are seeing an increase in the number of ESG director positions, years from now, as ESG becomes a fundamental part of the investment process, there will be less need for an ESG advisor at the center of the private equity firm. a direct partner or portfolio manager to oversee ESG principles and how to apply them.we expect ESG skills and capabilities to become essential for every role within the company, from analyst to director. managing partner.”
– Amy Silverstein, Partner and Head of ESG, e2p
Demand for expertise at the intersection of sustainability and business: “As insurance companies continue to integrate sustainability and climate education into their business models, we will increasingly see roles that require both sustainability and business acumen. Climate scientists who can translate changing climate data into risks for internal and customer education, as well as specialists who understand biodiversity risks, will also be highly sought after.”
— Rakhi Kumar, SVP, Sustainability Solutions and Business Integration, Liberty Mutual Insurance
Specialists and experts who can prepare for mandatory disclosures: “Given global regulatory developments, more companies will be required to disclose ESG data. Quantifiable data, such as carbon emissions, is already gaining breadth and depth. Verification or assurance of such data is also increasingly expected. Specializations are already emerging in climate science and data collection and management, as well as carbon and natural, social and human capital accounting. This will only increase as that more and more financial institutions control the companies in their portfolios.
— Mike Wallace, Senior Vice President, Strategic Market Engagement, Persefoni
Three predictions for ESG jobs in the financial services sector
So what does all of this mean when it comes to ESG talent trends in the financial industry? I predict three trends:
- Continued growth: Despite the economic downturn on many fronts, job volumes will continue to grow in line with the hockey stick growth standards used to assess ESG progress.
- ESG roles will move closer to the CFO: As ESG information becomes more standardized, it is also increasingly integrated with financial information and risk information that resides in the CFO’s office. I predict that more CSOs will report to the CFO, as their work in the future will require more alignment.
- “E” specialists will have the steepest growth curves: The urgency of climate change is undeniable, and for many companies, net zero by 2050 (or even 2030) is on the horizon. Work was due to start yesterday. In addition, younger generations particularly aware of global warming will seek work in companies that take the subject seriously, which will increase the demand for these jobs.
On September 14, I’m leading a discussion at Private Equity International’s Responsible Investing Forum in San Francisco, specifically on how to win the war on talent. We’ll dive deeper into these trends and talk about what hiring managers can do to attract and retain ESG professionals. Join us or contact us to share your perspective on the explosion of ESG jobs in the financial sector.