Insurers, thematic and impact funds drive sustainability hiring | Featuring Acre's Paddy Balfour

​Featuring Acre's Paddy Balfour for AsianInvestor, published on 10.06.2024, Original Source: Insurers, thematic and impact funds drive sustainability hiring, Author: Indira Vergis

Some roles in the sustainability arena are seeing demand even amid broader economic and job market uncertainty, according to recruitment and investment industry experts.

Demand for sustainability-focused hires is growing in some parts of the financial services industry in Asia, even as sustainability became a politically charged term in other parts of the world such as the US.

Hiring for certain sustainability roles remains robust in Asia even amid broader job market uncertainty, according to recruitment and investment industry experts.

“Insurance as a sector is experiencing significant growth having been slower to develop adequate levels of expertise internally and now seeing both the imperative and opportunity”, Paddy Balfour, Singapore-based executive director for Asia Pacific at Acre, a sustainability hiring consultancy, told AsianInvestor.

Insurers such as AIA, Ping An and Prudential have told AsianInvestor over the past six months that they are actively increasing their sustainability investments.

“We are also seeing huge growth in specialist funds. This includes thematic funds around decarbonisation, sustainable infrastructure, energy transition, natural capital and climate, as well as more specialist impact funds,” he added.

RISING REGULATORY PRESSURES
The main driver of ESG [environment, social and governance] adoption in the Asia Pacific, nevertheless, is still an increasing web of regulations.

“Financial institutions now have mandatory disclosure requirements in various jurisdictions across the region,” said Jules Bottlaender, Head of Sustainable Finance for APAC at BNP Paribas Securities Services.

“Most of them are related to climate financial disclosure aligned with TCFD, which require specific teams to collect climate data and analyse the related risks and opportunities.”

This has resulted in the creation of numerous reporting roles, although mostly for traditional buy-side clients.

“The alternatives can often avoid those regulatory requirements by justifying non materiality of these risks due to their strategy (high frequency, FX, long-short, derivatives, etc). There is no sign of easing as new regulations coming in will extend to broader sustainability topics (ISSB) or other reporting requirements (taxonomy, fund labelling, etc),” Bottlaender told AsianInvestor.

He also noted the emergence of specific investment strategies such as thematic investing and impact investing, both of which require investment managers with sustainability expertise.

The world’s largest climate finance fund, Green Finance Fund, also told AsianInvestor recently that it plans to invest in up to 40 investments in 2024, and Asia is expected to play a key role in that.

Other specialised entities focused on decarbonisation and nature-based solutions operating in the region include GenZero and Pentagreen Capital.

Family offices have also emphasised the importance of impact investing and how they see that as investing for profit and doing good.

TRADITIONAL INVESTOR’S DEMAND
Many financial institutions are increasingly also integrating ESG factors into investment decisions.

“This is driven by fiduciary duty and other frameworks such as the UNPRI [United Nations Principles of Responsible Investment]. This task requires both ESG data roles and ESG analysts.

“Traditionally, ESG factors have been integrated for equity investments since the relationship with risk/return is more obvious. However, the practice has been broadening to other asset classes such as corporate bonds, real estate, infrastructure and private equity,” Bottlaender said.

Gabriel Nam, partner leading the ESG, strategy and transformation practice in Asia for Page Executive, said the recruitment consultant recently helped a private equity fund find a sustainability expert for the real estate portion of the fund’s portfolio.

While the market is a little uncertain right now, companies continue to hire at junior levels for data crunching and data analysis or some reporting and coordination/alignment work (which is also a core part of sustainability function).

“Many people are starting to show a passion for sustainability and the barriers to entry are lower at this point,” said Singapore-based Nam.

Shortlisted candidates for sustainability roles can have very different backgrounds – from communications and accounting to marketing research, Nam said.

“Picking up the skills required for reporting is not considered very hard so it’s not a must to have prior functional background in finance, accounting, compliance or legal (that are traditionally strong in compliance, reporting) etc.”

Increasingly they also have a certification qualification, which can range from a CESGA [Certified ESG Analyst], CFA ESG Investing, Master’s degree in sustainability related subjects or at least some short-term sustainability-related courses offered by renowned organisations, he added.

“However with certain specialised topics like climate change or nature-based solutions, candidates tend to have a stronger academic background in certain subjects like environmental science, environmental engineering, geography etc.”

TALENT SHORTAGE AMID GREENWASHING
All three experts that AsianInvestor spoke to said there is an ongoing talent shortage in this space.

The financial sector is seeing a proliferation of ESG-related roles, such as sustainable finance investment bankers, green bonds specialists, and ESG portfolio managers and chief sustainability officer, said BNP Paribas’s Bottlaender.

He noted that due to the talent gap, some companies are offering premiums for individuals with ESG expertise.

Negative publicity around greenwashing has resulted in organisations in some cases reducing their sustainability commitments, yet “the regulations, risk and opportunities are only increasing and therefore we don’t see a reduction in roles,” said Acre’s Balfour.

“Teams are undoubtedly being asked to deliver more with less as part of the challenges experienced more broadly in the economic outlook.”

“The key trend that we are seeing in sustainability hiring in Asia-Pacific is a focus on value.

“Large, costly, centralised teams are being repositioned to be better aligned with business needs resulting in a smaller number but a higher value of hire.”

This includes professionals that can generate alpha through research, coverage and sector bankers who can drive deal flow through as part of the transition, and product specialists who can bring knowledge and expertise to the LP discussion.

“If anything we are seeing more specialised senior hiring from firms looking for real commercial value from their sustainability teams that they weren’t getting from larger but less qualified teams,” Balfour added.