A lot of ink (including my own) has been spilled to cover the ESG job market, and there’s no question it’s hot.
One of the most significant drivers of ESG job growth is the abundance of emerging standards and measurement frameworks for reporting, disclosure, performance — you name it. Described by TSC.ai in its new ESG Playbook as an "increasingly connected and data hungry" ESG ecosystem, the authors counted more than 2,000 reporting frameworks, requirements, methodologies and protocols that include over 1,424 potential ESG performance indicators. See their visual below:
Source: ESG Playbook; TSC.ai
My own research and conversations have revealed a few additional factors driving the demand for talent in this space: a move from voluntary to mandatory reporting; an increase in the amount of information that firms must disclose; and a need for data that’s (much like a corporation’s financial statements) robust, auditable, assured and standardized.
As a recruiter, I’ve noticed a strong uptick in requests from hiring managers in the financial services sector — including asset management, insurance, private equity and others — who demand that new hires have the experience and skills to compile, decipher, analyze and disclose information to satisfy requirements from a range of different (acronym-heavy) stakeholders. That includes the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD), the Task Force on Nature-related Financial Disclosures (TNFD), the Glasgow Financial Alliance for Net Zero (GFANZ) and The Corporate Sustainability Reporting Directive (CSRD).
CDP conducted an analysis on my behalf revealing a striking increase in the number of capital market signatories to the CDP, up from roughly 530 in 2019 to 680 in 2022.
In parallel, the number of financial institutions supporting TCFD has more than tripled, from 287 in 2018 to 1,069 in 2021.
So what does this all mean for people seeking ESG jobs and those hiring for them in the finance sector? For perspective, I asked several leaders representing different angles of ESG the following question:
Given all the changes in the ESG reporting landscape, what skills and/or job titles will exist in your space in 2025 that you don’t have now?
Here’s what they told me, organized by ESG perspective each individual represents:
New roles in ESG and climate alignment will emerge as companies extend their reach: "In the coming years, there will be increasing demands to have proper governance frameworks in place, relevant expertise in data management and operational integration, and a coordinated ESG-centric leadership team. We’ll see new jobs emerge, such as ‘Head of Scope 3 ESG’ for when companies extend their reach within supply chains or ‘Head of Climate Alignment’ to lead efforts for future net-zero commitments. Some positions will evolve as ESG becomes embedded across business functions such as accounting, compliance, legal and investor relations. What will remain are ‘translators and conductors’ — experts who can bridge these different verticals and work together to drive change as reporting requirements rise."
— Lissette Jorgensen, COO, Goldman Sachs Sustainable Finance Group
Alternative Asset Management
Cultivation of "adaptive teams" built to learn and evolve: "I have always built adaptive teams with skills and expertise that evolve with the profession. At Apollo, we’ve built a strong talent bench encompassing reporting, engagement, communications, strategy, climate, impact, human capital, ESG data/tech, citizenship, diversity, equity and inclusion, research and legal. It’s hard to predict exact titles that will be needed, but I will continue to evaluate resource needs based on the growing and new regulatory reporting environment in Europe, the U.S. and globally."
— Dave Stangis, Partner and Chief Sustainability Officer, Apollo Global Management
Movement of ESG jobs to operations and value creation roles: "One of the shifts I expect to see is a change to where ESG talent sits on the org chart. Traditionally, we have seen ESG sit close to [investor relations], focusing on reporting to [limited partners] and collecting portfolio-wide data for the ESG Data Convergence Initiative and other frameworks. I expect the next wave of ESG jobs to sit closer to the portfolio operations team and focus on value creation and operational improvements to company ESG performance."
— Ryan Werffeli, COO, Malk Partners
A push to improve trust across all sectors: "Future leaders in 2025 will need to produce solutions that can be architected and implemented across all sectors — business, nonprofits, and governments. Thus, the skills of quantitative impact investing analysts, high impact portfolio managers and chief impact officers must include (1) analytically rigorous multi-sector solution design, (2) outcome mapping and impact accounting to the 17 global [United Nations Sustainable Development Goals], (3) collaborative entrepreneurship and teamwork, and (4) being a member of the 'nice people network.'"
— R. Paul Herman, CEO and Founder, HIP Investor
Reporting and Data
Depth and breadth in disclosure requirements: "Sustainability disclosure has increasingly required more skills due to more complex disclosure requirements. Asset managers need to add resources to support ESG reporting. Large firms have dedicated teams focused on reporting. Reporters need to have a deep understanding of current disclosure standards as well as what is coming down the line. Reporting leaders’ skills include a keen analytical mind coupled with the insight and resolve to set strategy."
— Elaine Cohen, Managing Director, Beyond Business Ltd.
Upskilling of deal teams: "By 2025, we are going to see significant changes in ESG skills and job titles within private equity. While today we’re witnessing an uptick in the number of chief ESG officer roles, a few years from now, as ESG becomes a fundamental part of the investment process, there will be less of a need for an ESG subject matter advisor at the center of the PE firm. Instead, leading firms will have direct partner or portfolio manager oversight on ESG principles and how to apply them. In addition, we expect that ESG skills and capabilities will become core to every role in the firm from analyst to managing partner."
– Amy Silverstein, Partner and ESG Leader, e2p
Demand for expertise at the intersection of sustainability and business: "As insurance firms continue to integrate sustainability and climate education across their business models, increasingly we will see roles that demand both sustainability and business acumen. Climate scientists who can translate evolving climate data into risk for internal and client education, as well as specialists who understand biodiversity-related risks, will also be highly sought after."
— Rakhi Kumar, SVP, Sustainability Solutions and Business Integration, Liberty Mutual Insurance
Specialists and experts who can prepare for mandated disclosures: "Given the global regulatory developments, more companies will be required to disclose ESG data. Quantifiable data, such as carbon emissions, is already increasing in breadth and depth. Verification or assurance of such data is also increasingly expected. Specializations are already emerging in climate science and data collection, and management, as well as carbon and natural, social and human capital accounting. This will only increase as more financial institutions scrutinize the companies in their portfolios."
— Mike Wallace, Senior Vice President, Strategic Market Engagement, Persefoni
Three predictions for ESG jobs in the financial services sector
So what does this all mean when it comes to ESG talent trends in the finance sector? I predict three trends:
- Continued growth: Despite economic slowdown on many fronts, the volume of jobs will continue to grow in line with the hockey stick of growth of standards used to evaluate ESG progress.
- ESG roles will grow closer to the CFO: As ESG disclosures become more standardized, they are also becoming more integrated to financial reporting and risk disclosures that live in the office of CFO. I predict more CSOs reporting to the CFO as their work going forward will require more alignment.
- "E" specialists will have the steepest growth curves: The urgency of climate change is undeniable, and for many companies net zero by 2050 (or even 2030) is on the horizon. The work needed to begin yesterday. Moreover, younger generations who are especially attuned to global warming will look for work with companies that take the subject seriously, which will increase the demand for these jobs.
On Sept. 14, I’m leading a discussion at Private Equity International’s Responsible Investment Forum in San Francisco specifically on how to Win the War on Talent. We’ll dive more deeply into these trends, and talk about what hiring managers can do to attract and retain ESG professionals. Join us or reach out to share your perspective on the explosion of ESG jobs in the financial sector.