For professionals across all industries, three little letters have become increasingly important: E-S-G. After years of being ‘nice-to-have’ rather than business-critical, environmental, social and governance items are now established as a critical lens through which the conduct of businesses is viewed, both internally and externally.
Look at any of the big business stories – and scandals – in the headlines and the chances are there is an ESG element, whether it’s around ethical investing, environmental impact or corporate governance failings. All of which means that there is the beginnings of a boom in ESG jobs – and financial services professionals are well-placed to make the most of the opportunity and help to advance progress in the area.
“ESG is a complex and ambiguous area for lots of people,” says Catherine Hughes, Practice Leader for ESG and Sustainability at recruitment firm Morgan McKinley. “A lot of companies are creating first-of-its-kind roles so there is a huge amount of opportunity out there.”
Here’s what you need to know.
The new HR
Until relatively recently, ESG was the preserve of professional services firms who kept track of trends and emerging legislation. “It’s like where HR was 20 or 30 years ago,” says Hughes. “It was a separate function ‘over there’, not so deeply embedded in organisations.”
She says recruitment in the sector has really picked up pace in the last 12-18 months, however, with a “huge spike” in interest from employers and candidates. The most advertised roles are around ESG reporting and jobs for ESG research analysts. These technical roles are an “absolute priority” for large companies, including financial services firms and PLCs in all sectors.
“In banking and financial services, these are very significant roles because they are relevant for customers, corporate clients, investors and other stakeholders,” says Hughes. “There is a big opportunity for people with financial reporting skills to pivot into non-financial ESG reporting.”
She describes organisations taking a “buy and build” approach to ESG staffing. “Companies are setting up their very first inhouse ESG functions, so they are bringing people from consulting roles in-house and also upskilling their own financial staff into ESG.”
Get ready for an avalanche of acronyms
ESG job postings are so littered with jargon and acronyms that a glossary would be useful. The more-established ones are the EU Taxonomy, the SDG (the UN Sustainable Development Goals), TCFD (the Taskforce on Climate–related Financial Disclosures) and PRI (the Principles for Responsible Investing).
Scan the ESG job postings, however, and you can’t miss CSRD, the EU Corporate Sustainability Reporting Directive, which came into force on January 5 this year. About 11,700 large companies in the EU are already required to report on their social and environmental risks under the existing Non-Financial Reporting Directive (NFRD); the CSRD modernises the rules and – crucially - expands the cohort of affected companies to about 50,000.
The first group of companies affected will have to apply new European Sustainability Reporting Standards (ESRS) from the 2024 financial year, using a range of ESG headings.
Grab the chance to jump ahead
The good news is that all the information about legislation and standards is publicly-available to everyone, from recent graduates to senior leadership. That creates a level playing field for people hoping to switch seats into ESG.
“There simply aren’t people who have 20 years’ experience in ESG and are obvious candidates,” says Hughes. “People who are passionate and self-taught can jump ahead.”
Financial services employees who familiarise themselves with the regulatory and legislative landscape are well-placed to “put their hand up” and pivot into ESG reporting, research or strategy. A look at advertised ESG roles shows companies looking for people with a primary qualification in finance, business or economics, with a further qualification in areas such as sustainable finance usually considered ‘desirable’ rather than essential.
More senior and specialised positions may require experience in green and social bonds, responsible investing or environmental and climate finance. Data from Morningstar shows sustainable funds accounted for 57% of the European fund market in the first quarter of 2023, up from 37% a year earlier. This exceptional growth supports demand for ESG asset manager and ESG product manager roles, as well as people with experience of ESG ratings.
Familiarity with the Sustainable Financial Disclosure Regulation (SFDR), which imposes mandatory ESG disclosure obligations on asset managers and financial markets participants – such as banks, insurance companies and investment funds - is helpful here.
Hughes cautions, however, that candidates who are solely interested in jumping into the “hot new sector” or chasing a salary will quickly be found out. “The best candidates have a sincere interest in ESG,” she says, with the emphasis on ‘sincere’.
Look beyond the job title
One quirk of ESG still being an emerging area is that job titles and ESG job descriptions are far from standardised. In fact, many ESG-related jobs don’t even have ‘ESG’ in the title. You’ll find ‘sustainability’ is regularly used to mean the same thing, particularly in the financial services and professional services worlds, where ‘sustainable finance’ is the key term.
Irish professional services firms currently have ‘sustainability manager’, ‘sustainable finance manager’ and even ‘climate risk manager’ roles advertised but the job postings are crammed with ESG references. The top ESG job in an organisation is likely to be Head of Sustainability.
“Unpack the job title and unpack the job itself,” says Hughes. “Figure out what ESG really means to the business. Is it just ticking a box or is it embedded in the organisation?”
See if the job description includes the reporting lines involved; in larger companies, it is not unusual for the ESG function lead to report into the head of strategy and also work closely with the finance department. “At companies that are serious about ESG, there are opportunities to be involved at C-suite level,” says Hughes.
A global opportunity
ESG is well on the way to being ubiquitous, a new lens that will ultimately affect virtually all companies in virtually all sectors globally. As such, a move into ESG has the potential to be a “golden ticket” into a career that could span multiple sectors and geographies, says Hughes.
With its strong financial centre, the UK is well ahead on sustainable finance and climate-related reporting, while the Nordic countries are leaders in ESG in industries such as renewable energy.
“One bank said to us: ‘find us people who have worked internationally’,” Hughes says.
Her parting tip to candidates is to stay on top of ESG developments through updates and bulletins published by the large professional services firms. There are a growing number of events in the ESG area too, which can offer opportunities for learning and networking.
“Anyone keeping up to date with the moving target that is the new legislation and regulations coming down the line will have themselves well-poised for opportunities in the financial services market - and inhouse in other sectors too,” she says.
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