It is no secret that ESG is one of the hottest areas in financial sector recruitment. Under ever-increasing pressure from customers and regulators on sustainability, firms have been on an ESG hiring spree.
“There has been a mad scramble for people,” says recruitment consultant Neil Farrell.
This hiring frenzy is not an entirely new phenomenon. Farrell, who founded a firm focusing exclusively on sustainable and impact investing recruitment – Farrell Associates – in 2010, dates the start of the boom to 2019.
Initially, he says, most of the activity was in the EU and the UK. Then in 2021, the US came online – and this year, Farrell Associates has seen demand from Singapore, Canada and Australia.
At the same time, the first signs of a potentially worrying slowdown are emerging in the UK. “It seems investors see a recession coming – and, with everything with Russia, there has been a bit of a pause in hiring as these roles are not deemed as essential,” says Farrell.
For the moment, however, business is still booming – and seasoned ESG professionals are taking advantage of a shortage of supply to demand ever larger pay packages. “It’s been the fastest salary growth I’ve seen since just before the financial crisis,” says Farrell.
Room at the top
The supply issues are particularly acute at the top of the profession.
A recruiter who asks to remain anonymous tells Responsible Investor: “What is difficult is finding and sourcing senior hires. A candidate might have the financial background or skillset for a job, but it’s harder to find those with [substantive] ESG experience.”
This has prompted some financial firms to expand their universe of potential candidates, the recruiter adds. “For example, for an investment role they are open to hiring someone from a consultancy,” they say.
At Verdant Search, director Serrol Osman agrees that the expansion of demand at the senior appointments level “has meant a struggle to secure talent”. This in turn has prompted intense interest from “experienced candidates looking to pivot their careers to enter ESG”, he adds.
Osman also notes that when top candidates enter the market, they are receiving multiple offers and significant pay rises, and that employers are now utilising substantial counter offers to retain staff.
Farrell’s solution to the senior staff shortage is to encourage investors to identify the skillset required for specific positions.
“Rather than focus on someone who has the same title as what you are looking to hire, try and find someone who has the right technical, soft and ESG skills to do the role,” he says. “This opens up the candidate pool to more diverse, and high calibre, candidates.”
Climate focus top of wishlist
When it comes to thematic areas of focus, unsurprisingly, climate remains top of financial firms’ wishlists – although the anonymous recruiter notes a growing interest in roles related to biodiversity and social issues.
Osman has also noticed increasing demand for “social value roles”. “More businesses are placing increased value on their social impact,” he says.
More broadly, Farrell identifies ESG integration – “broken down into research, stewardship and data” – as a key focus area for financial sector recruitment.
Again, demand is most intense at senior level. “There is a lot of demand for heads of ESG, or heads for the research team, or head of ESG data,” he says.
Farrell also notes that finding suitable candidates in this area is made more challenging by changes in employers’ priorities.
Two years ago, he says, it was all about “finding people who could explain to them how sustainable themes affect asset valuations”.
“Then in 2021, it was ‘we now need to be able to find raw data which can inform our decision-making, rather than just the ratings data from the service providers’, so it was all about hiring heads of data who could strategise the onboarding of data providers, and develop their own tools and frameworks to source alternative data (NLP/AI).”
This year, the emphasis has shifted to impact more broadly. “Firms don’t want to hire more ESG risk screeners, as in people who can look at companies and information from the bottom up,” says Farrell. “They want people who can understand sustainability themes and the affect on the triple bottom line: asset valuation, company development, and world impact. That’s really hard.”
Another challenge is financial firms’ demand for expertise in more than one area. The anonymous recruiter notes that, while it is “fairly easy” to find a candidate for a generalist role such as ESG manager or analyst, “when it comes to things like climate stewardship, there is a low supply of people who are experts in both”.
In some cases, firms have even more unrealistic expectations. Osman notes that Verdant Search have been asked to source candidates with more than 10 years’ experience for frameworks that have only been in existence for half that time.
Do you have any thoughts you’d like to share on the recruitment situation in sustainable finance? Are you struggling to source and retain qualified staff? Are you receiving tempting job offers with bumper salaries, and if so, where are they coming from?
This is the first in a series of articles we will be running on sustainable finance recruitment and we’d love to get your input. Please email any comments to email@example.com. All contributions will be assumed to be off-the-record unless otherwise indicated.