Recently investors and institutions have become increasingly interested, and thus invested, in environmental, social, and governance (ESG) stewardship. ESG Stewardship has become an increasingly popular topic for investors looking to drive positive ESG outcomes, whilst also generating financial return. Naturally, this has led to a significant increase in demand for investment professionals with expertise in ESG / sustainable finance issues.
Stewardship investing is about working with organisations to promote better ESG practices both initially and throughout the life span of the investment. Stewardship investing promotes active ownership of organisations in an investor's portfolio, with the overall goal of promoting more sustainable business practices. To be successful as a Steward, candidates need to have a deep understanding of an organisation’s operations, business model, and ESG risk profile. A large part of this role depends on the Steward having the ability to engage with wider company management teams and boards of directors. These skills enable them to encourage the leadership and management team to adopt more sustainable business practices and provide the data necessary for reporting to investor communities.
One of the key skills in short supply within stewardship investing, and the sector in general, is proficiency in ESG analysis and reporting. This understanding of ESG Analysis and reporting aids the Steward in their ability to analyse a company's overall environmental impact, evaluating its social and wellbeing policies and practices, as well as assessing its overall governance structure. The role also demands a vast and in depth understanding of the regulatory landscape, and an ability to navigate the complex reporting frameworks such as the Global Reporting Initiative (GRI) or the Task Force on Climate-related Financial Disclosures (TCFD). Investors can then utilise this information to make a more informed decision regarding the long-term risks and opportunities associated with a particular investment.
Recruiting within ESG and stewardship in particular has become ever more important with growing ESG awareness, as investors and organisations look to align their investments and overall portfolios with their values and goals. The shortage of, and complexity of, the talent market in stewardship investing is a pressing issue for the ESG industry - navigating this to optimise a hiring process is critical in moving the agenda forward.
Without skilled, knowledgeable professionals who are able to drive engagement efforts, organisations could be less likely to implement sustainable strategies or respond to ESG concerns raised by investors. Strong stakeholder engagement and communication skills are key to effectively communicate ESG issues not only to management teams and boards of directors, but to other key stakeholders such as regulators, NGOs, and consumers.
This desire for greater understanding of ESG related metrics has led to a growing demand for professionals with expertise and understanding of ESG issues, which in turn has led to a higher demand for sustainability professionals, ESG analysts, ESG reporting consultants and ESG investment managers.
One of the biggest challenges in recruiting for ESG stewardship professionals is the relatively new and constantly evolving nature of ESG and the sustainable finance field. This progression has meant a shortage of experienced professionals with a deep understanding of ESG issues and how they relate to investment decision-making.
To address this challenge, many organisations are looking to invest in training and development programs both internally and externally, with the aim of building the next generation of ESG professional. Although this may fix the problem in the long term as these programs will provide training on topics such as sustainable investing, ESG analysis and corporate sustainability reporting, what about the here and now?
This ever-growing demand and shortage mean as a sector we need to take a different approach to recruiting in ESG stewardship. Mentoring, networking and enabling young professionals to learn from experienced leaders in the field is a must but more importantly the organisations need to look for candidates with transferable skills and experience to 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 ESG investment roles. We should also be looking at candidates with experience in finance or investment management, as these candidates may be able to quickly learn the nuances of ESG analysis and apply their existing skills to this field.
By considering candidates with transferable skills and experience, organisations have a real opportunity to build the expertise they need to succeed in the ever evolving landscape of sustainable investing.
In a competitive market, with a limited talent pool, you might need help. Allen & York’s market knowledge and understanding - combined with our network built over 30 years in Environmental & Sustainability hiring - sets us apart from others in the Green Executive Search and Recruitment space. If you’re looking to hire in ESG or Sustainability, and need some help and advice, don’t hesitate to email Spencer at scooney@allen-york.com or visit our website at: www.allen-york.com.
Allen & York – delivering Sustainable Recruitment Solutions since 1993.