The competition between asset owners and managers for ESG stewardship leaders is becoming increasingly fierce, Kirsty Jenkinson, director of CalSTRS’ sustainable investment and stewardship unit, has told Responsible Investor.

Jenkinson said there is an “increasing war for stewardship talent” as asset managers are building out their stewardship teams and recognising that the skills needed to engage companies “aren’t always the automatic skills that exist in traditional financial analyst roles”.

She made the comment to RI when discussing the $306 billion Californian pension fund’s drive last year to build out its ESG team, particularly focusing on senior leaders with experience in private markets.

The remarks follow some high-profile moves from asset owners to managers in the past 18 months.

ESG veteran Anne Simpson announced last January that she was leaving her position as managing investment director for board governance and sustainability at CalPERS to join Franklin Templeton as global head of sustainability.

And last month, CalPERS lost its interim managing investment director for sustainable investing, James Andrus, also to Franklin Templeton. He is now the manager’s vice-president of sustainability global markets.

In the UK, in May 2022 David Hickey left his position as responsible investment lead at Lothian pension fund to join BlackRock as UK head of sustainability.

Neil Farrell, founder of recruiter Farrell Associates, confirmed that stewardship hiring by asset managers is the “big strategic play”.

“We have worked on more stewardship mandates than anything else in the last 18 months,” he said. “Asset managers are hiring fewer ESG research analysts, and trying to differentiate through their engagement and active ownership.” 

The increased push for stewardship staff at asset managers and the salaries that come with the roles makes it hard for asset owners to compete, said Jenkinson.

“I’m really excited that they’re reskilling and retooling their staff with stewardship skills but it makes that war for talent challenging, particularly from an asset owner perspective, as asset owner salary ranges can be lower.”

Farrell confirmed the salary differential. He is working with an asset owner which is offering £120,000 with 7-12 percent bonus for a head of ESG role and is looking for someone with 7-15 years experience. “You can get that with seven years’ experience at an asset manager,” he said.

Lester Lockyer, managing director of recruitment consultant Allen & York, also told RI managers are able to out-pay asset owners. As a result, he said: “We are seeing crossing over of talent from asset owners to asset managers.”

“ESG stewardship in whatever form of role it takes would lean on the existing talent pool for sure,” he added. “There was limited effort in this regard say five years ago and so the increase in roles is drawing in talent from the traditional roles within the asset owners.”

As Lockyer notes, this is happening while asset owners – and other businesses – are needing to grow their internal sustainability functions. “So there is a war for talent in sustainability and ESG at a level not seen before,” he said.

However, Farrell said not convinced that the shift from asset owners to managers will become a trend. “I think it is more that some people think they will have more impact at an asset owner, and they prioritise that over other commercial considerations. I see it more as a personal choice, rather than an evolving trend.”

As to how asset owners can compete in the current environment, Jenkinson said: “One of the benefits of being an asset owner is being able to develop a very broad understanding of the market.”

As she noted, from a sustainable investment perspective their roles can span “both how we allocate capital to sustainability solutions across asset classes and how we influence capital to be more sustainable through stewardship and engagement”.

“This often results in roles with wider responsibilities than those associated with more narrowly focused strategies or products within the asset management industry,” she added.