Canada faces an ESG talent gap.
There’s no shortage of discussion about the nuts and bolts of environmental, social and governance issues. Governments, regulators and investors are demanding more disclosure, more analysis and more management of business risks related to sustainability.
The stated goals are well known: less impact on the environment, net-zero emissions, better participation in the work force by people from all walks of life, and safeguards against unforeseen risks, such as a pandemic.
But achieving them depends on making sure there are enough professionals to deal with all of the machinery, and that managers and employees know how it is all integrated into their jobs.
Banks, insurers and asset managers have all signed onto global efforts to tally up financed emissions and integrate environmental aspects into all investments and lending, efforts that intensified with the COP26 summit in Glasgow, Scotland, last year.
They are going to need an army of ESG experts. Recruitment is not keeping pace.
“Everyone feels that we’re at this tipping point with regards to climate and we’ve got to start acting quickly. We’re going to start seeing regulations in Canada start coming at us, so we’ve got to be ready for it as an industry, and in broader Corporate Canada as well. So the urgency is starting to increase, which is a good thing,” says Jennifer Reynolds, chief executive officer of Toronto Finance International, a public-private partnership that promotes the city as a global financial hub.
“No longer can ESG skills live in a little silo; they have to permeate throughout the organization.”
A new survey of released by TFI, Deloitte and the United Nations-convened Financial Centres for Sustainability Network, called Taking the Lead in Sustainable Finance, shows the industry’s struggle to attract talent and what the stakes are as sustainability becomes more embedded in finance.
All of the more than 100 financial services industry pros surveyed said sustainable finance skills and talent were important to their organizations, and 68 per cent said the supply of people that have both is insufficient, and that more recruitment and training is necessary. Nearly three-quarters said sustainable finance skills are integral to nearly all their organizations do. Forty-three per cent said they had difficulties hiring people with the necessary sustainable finance know-how.
The sense of urgency is not universal. Nearly a quarter of respondents said they don’t believe the skills are required immediately or are past due. Some of them are waiting for further direction from regulators. Others see ESG as important to some, but not all, asset classes.
It’s important to remember that ESG knowledge is not the purview of just one profession. It has become part and parcel of management, science and engineering, the law, accounting, marketing and communications. The results of the survey show the need for better co-ordination between financial institutions, industry associations and postsecondary education, Ms. Reynolds says.
This has proved effective in the technology industry, which has been a focus of universities and polytechnic schools across the country.
There are schools that provide ESG programs, including the Institute for Sustainable Finance at Queen’s University’s Smith School of Business and the Centre for Building Sustainable Value at the University of Western Ontario’s Ivey Business School.
Professionals from such programs are required to engage in highly technical tasks such as climate scenario analysis, which the Bank of Canada and Office of the Superintendent of Financial Institutions are using to gauge potential outcomes of the transition to a low-carbon economy.
But there are other important avenues, including the integration of sustainability topics in specific traditional fields, as well as more executive and employee training across professions under the heading of “micro-credentials.”
“No matter what the discipline you’re in, the lens of ESG and climate certainly needs to be brought into almost everything. That’s really the end game of where we should be,” Ms. Reynolds says.
One area where Canada could shine is in ESG-related disclosure, which is slowly becoming standardized globally as investors clamour for comparable information on companies and securities. At stake here is improving access to capital for companies across all industries as institutional investors demand strong performance, she says.
Can green investing save the planet?
A new 5-part newsletter course for the climate-conscious investor. Taking the course? Tag us on Twitter (@globeandmail) using the hashtag #GlobeGreenInvesting.
Follow Jeffrey Jones on Twitter: @the_Jeff_JonesOpens in a new window