Expect an Increase in ESG Hires at Financial Firms

By Acre's Gloria Mirrione
May 3, 2023 1:35 PM ET
Looking up towards the tops of high skyscrapers

​Sustainability skills are needed in positions far beyond the C-suite. 

ESG concerns are impacting how consumers, investors and executives make decisions in business and their everyday lives. And just as we have seen a wave of resource commitments toward chief sustainability officer hires at financial firms in previous years, now we will start to see the trickle-down effect. 

Meaning sustainability skills are no longer contained within the C-Suite. Sustainability skills are becoming more integrated across all functions, every position and at every level. Risk, compliance and finance professionals will likely need expanded skills and a deeper familiarity with climate data, for example. 

Part of understanding and strengthening ever-evolving talent needs means unpacking what is driving some of the changes, including pending regulation. 

Following investor demand, the timeline for the International Sustainability Standards Board (ISSB) has confirmed required global climate and sustainability disclosure rules to take effect next year (January 2024). 

The rules, which will be issued by the end of June 2023, will provide a general framework for reporting material on sustainability-related issues and specific rules for climate, including extreme weather events and greenhouse gas emissions, according to the board’s announcement. 

Companies will be required to disclose the risks and opportunities they face related to climate, including the implications for the company’s financial position, performance, prospects, business model and strategy. 

The SEC has also proposed new reporting requirements that will require transparency. Under the new requirements, companies must measure and publish their scope 1 and scope 2 carbon emissions beginning in 2024. And for larger companies, required reporting on scope 3 emissions – carbon emissions from customers and the supply chain – may be enforced next year. 

Climate change is also calling into question the traditional role of corporate sustainability, a company’s leadership initiatives and how their business practices impact society and the planet. 

Investor perception also continues to be an important driver toward leading the push to more sustainable business practices early on, with investors increasingly looking for ways to interrogate and drive business strategy. 

In early 2021, nearly 200 countries agreed at the COP26 summit to improve their emissions-cutting pledges in time for COP27, but only two dozen countries had done so by the time the next summit commenced. 

What we saw was ambitious commitments from companies unable to deliver in time, which spurred mounting pressure from investors for companies to ramp up efforts and action. 

ESG investing, which considers nonfinancial factors like social accountability, can ban investments in gun and fossil fuel companies, for example. ESG fund inflow in the U.S. reached $70 billion in 2021 before falling to $3.1 billion by year 2022, according to Morningstar research. However, it is important to note that inflow to sustainable funds still far outpaced the rest, according to the research. 

That decrease in investments took place against the backdrop of an increasingly political and contentious ESG landscape. This showed that public and shareholder perception holds great sway with financial firms and investors – both favorably and otherwise. 

This means that, in today's boardrooms, sustainability is becoming a much more vital aspect of an organization’s brand strategy. 

Consumers are increasingly demanding sustainable practices from the companies they interact with and products they purchase. Leaders will be increasingly tasked to go beyond just meeting regulatory standards and net-zero commitments to actions that focus on innovation, healing the environment and having meaningful societal impact. 

For example, Adidas has been increasing their sustainability and usage of recycled materials. The brand aims to only use recycled polyester from 2024 onward to decrease their effect on the environment. Adidas is also set on reducing water consumption in production, using renewable energy and adhering to fair labor practices. 

Sustainability is in constant transformation, but success should be quantifiable. Companies need to set clear goals to drive the direction of the business. 

The need for qualified employees trained in sustainability has led to a war for talent. However, we are running out of time. Companies that set environmental goals for 2030 are starting to realize that’s not that far away anymore. 

Climate change and societal fractures require immediate action. Sustainable goals have to start at the top with buy-in from leadership. From there, the most success will come from companies that invest in training their existing workforce, rather than hiring a select few. 

Gloria Mirrione is Executive Director and Head of Sustainable Finance & Impact Investing, Americas, at Acre. 

Original Source: Directors & Boards | Written by Gloria Mirrione | Published on 28/03/23

About Acre

At Acre, we work with the most aspirational businesses with potential to make real change; from those who are just starting out to those who are well on the journey to crafting a legacy.

Our 18 years' experience in sustainability recruitment, combined with our extensive global network, enables us to provide talent solutions that are designed to deliver this change.

Through our unique behavioural assessment technology, we understand the types of people, skills and behaviours required to create impact. We can develop these qualities within your existing teams too.

We find talented people and develop their skills to ensure they make a true impact in ambitious, progressive organisations.

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