MARKET PULSE: Despite fears of a global recession, the ESG job market is looking future-proof and hungrier than ever for talent amidst a skills shortage that sees salaries set to rise for the specialisation. And finding the right person for the job means one thing above all: flexibility.
For companies looking for in-demand ESG talent, the buzzword is “transferable skills”.
For example, investing professional Grace Zhang was recently placed by recruitment company Kaizen into a role at an ESG, responsible investment and stewardship firm Regnan, part of Pendal Group.
As a senior research and engagement analyst, Zhang has 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.
She’s an example of a professional who transitioned from equity research into an ESG-focused company after completing further education – in her case a Certificate in ESG Investing from CFA Institute.
This integration is really good for candidates who want to move into specialisation – but difficult for companies as there is likely no perfect candidate for the role.
Recruiter Simon Gvalda knows what it takes to secure high quality candidates. But moving into ESG recruitment from a background in financial services recruitment, he has found that companies are struggling to fill roles.
At Kaizen Recruitment, he is seeing first hand how a sudden increase in industry requirements and changing government legislation has led to ESG being in high demand amidst an undersupply of skilled professionals.
“Candidates are coming from engineering, science, communications, and other fields. It’s about transferability and [having] analytical minds.”
Professionals are increasingly attracted to a career in ESG because it offers future-proofing amidst an uncertain job market.
To transition into ESG roles, Gvalda says workers are upskilling their sustainability reporting skills, corporate sustainability and sustainable development knowledge and experience, and taking short courses – 63.2 per cent of them have post-graduate qualifications according to the report.
“A sudden increase in requirements for talent has caused there to be an undersupply in talent,” Mr Gvalda told The Fifth Estate on Friday. “Demand is really high, and supply hasn’t kept up.”
That’s not to say this trend is a surprise: we knew that ESG has been trending for the past few years. Google trends from the past five years show that the search term “ESG” hit peak popularity last year and after a brief dip over Christmas is expected to increase into the first few months of the year.
Numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. A score of 0 means that there was not enough data for this term. Data: Google Analytics
Employment platform releases jobs rankings – ESG comes out on top
Similarly, LinkedIn’s 2023 Jobs on the Rise report, released in January, shows sustainability roles coming in on top in Saudi Arabia (where it was ranked as the number one fastest growing role – see our snippet a couple of weeks ago on that and some comments from Urbis), Canada (where it ranked fifth) and Europe (where seven out of nine countries analysed included sustainability jobs among their fastest-growing careers).
In Australia hidden amongst the tech roles (think AI coders, cybersecurity, and various types of engineers and developers) “green” jobs came in at number nine out of 25 fastest-growing job titles over the past five years.
LinkedIn Economic Graph researchers examined millions of jobs posted on the job search platform from 2018 to mid 2022 and predict that this trend is set to define the future world of work.
Overall, the jobs search platform found that “green” jobs have grown globally by eight per cent every year over the past five years.
According to the LinkedIn report the top roles that ESG professionals have transitioned from are environmental manager, sustainability consultant, and project management.
In a recent podcast interview Sarah Ratcliffe, chief executive of the Better Buildings Partnership told The Fifth Estate that the UK too is experiencing a huge shortage of talent, driving professionals to upskill with higher education and short courses. Just two courses offered through her network attracted 600 applicants, she said.
The shortage is across all industries globally, with construction, manufacturing and professional services showing the biggest vacancies.
Over the past three to six months Gvalda says there has been a fair uptick in demand from private equity firms as impact investing becomes a big area of focus.
Greenwashing/social washing crackdown and legislative changes
Following continuing greenwashing and social washing scandals where everything from carbon credits to supply chain transparency is under the microscope – and the ACCC is cracking down – Gvalda believes there are big legislative changes on the way.
“Industry requirements have increased. There’s changes coming, with government legislation on the horizon. Organisations need to have someone in the business.”
The boom we are seeing right now, he comments, is similar to the Royal Commission into financial planning – which grew a whole industry of risk professionals in a huge way.
“ESG has an element of risk to it: environmental changes, modern slavery, human rights – these are issues we won’t solve in the next five to ten years. There will be a need [for it] into the future. To what extent and how much demand will continue? It will eventually plateau once the industry matures.”
“Organisations need to ensure they’re keeping up and not ending up on the wrong side of society. Professionals with experience in that space will be able to implement those changes and navigate [them].”
Consumers want to feel good about what they buy, just as investors need to be putting their money into the right places. ESG is a huge market.
A joint study from McKinsey and NielsenIQ released in February detailed sales growth for products that claim to be environmentally and socially responsible and found that products making ESG-related claims averaged 28 per cent cumulative growth over the past five years, compared to 20 per cent for products that did not.
So it stands to reason that companies are having to invest in professionals that can future proof the company against a potential PR nightmare down the line. Gone are the days that a company could purchase a few carbon offsets and call themselves responsible.
A broad skill set: from biodiversity to human rights
Mr Gvalda explains that since ESG is such a broad umbrella term, it is difficult to find talent that tick every box.
He provides recruitment services for a broad range of companies; from property companies to fund managers, infrastructure, superfunds, private equity, private wealth, ASX-listed corporations, and asset consultants. He works with government agencies such as the Victorian Funds Management Corporation, groups such as the Australian Council of Superannuation Investors, and investment companies like IFM investors.
ESG, or environmental social and governance, goes beyond environmental sustainability and into human rights, modern slavery, and diversity and inclusion. It encompasses all non-financial topics not typically captured by traditional financial reporting.
Companies “may be looking for skills across aspects of ESG. Within that, human rights experts, biodiversity experts, climate change or governance, research experience, data analysis, stewardship, policy details, and understanding of different asset classes.
“When you start to bring each of those elements together… it becomes much harder to find people that fill those skill sets.”
Salaries expected to increase
Despite all of this, with a global recession looming the job market is looking less candidate-driven and with stagnating wages and rising unemployment, companies are preparing by placing star talent in critical positions.
And while wages have stagnated across the board, ESG roles last year rose to a whopping $250,000 to $300,000 a year for an ESG research or investment head, and $170,000 to $230,000 for an ESG manager.
Kaizen Recruitment’s salary guide for ESG professionals is currently being updated and will be released in the coming weeks.
Mr Gvalda told The Fifth Estate that he expects the ESG roles to be somewhat protected from the economic downturn.
“I’m expecting salaries will have increased based on what we saw previously,” he says.
“It depends on how the economy fairs in the next few months, given there’s talk of recession. ESG and climate change aren’t going away anytime soon – society is starting to catch on to that.
“Change is going to happen, and it needs the right people in place to make it happen. This will bolster demand to an extent.
“Organisations are seeing [ESG] as an essential role.”
Tips for organisations and professionals
His top tips for businesses looking to recruit ESG professionals?
It all comes down to flexibility: be flexible on skills, as unless you have a large budget professionals likely will tick around three to five main skills requirements.
“Be flexible. It’s unlikely you will tick every box on a candidate – or you will pay a lot more than you would like.”
For professionals looking to catch the ESG jobs wave?
Focus on transferable skills, and look at upskilling with ESG focused higher education.
The CFA Institute offers a Certificate in ESG Investing that consists of 100+ hours of study time followed by an exam. The UN-supported PRI Academy provides responsible investment training to organisations and industry professionals.
“The biggest challenge is there’s so many areas for ESG professionals to get across,” Gvalda says.
“It is rapidly changing for the market, so you need to constantly make sure you’re informed.”