A battle for sustainability talent is underway in Asia Pacific, especially in key markets such as Singapore and Hong Kong, as more asset owners and investment managers seek experienced professionals to help them design and implement ESG frameworks.
There is sustained growth in sustainability and ESG hires across Asia Pacific, along with growth in thematic funds focused on sustainability trends such as decarbonisation, circular economy and renewable energy, experts told AsianInvestor.
“The demand is ....real and present,” said Stanley Teo, managing director for asset and wealth management and corporate and investment banking practices in Singapore at Profile Asia, a search and selection consultancy.
“We’re not just talking about the finance industry – every industry is looking for sustainability experts. Demand is coming from government agencies to small and medium enterprises.”
Professionals with direct experience of climate markets and natural capita, in particular, are in short supply, said Paddy Balfour, Singapore-based executive director for Asia at Acre, a sustainability and ESG-focused recruitment consultancy.
He noted that while capacity is increasing, the pace of specialised hiring continues to grow.
“Genuine experience in sustainability, responsible investing and ESG is highly valued,” said Balfour.
In the case of entities with a bigger vision of sustainability, another area of shortage is data analytics, because there are not many trained professionals in this space, said Valerie Mantot-Groene, regional managing director for APAC at Apex Group, a service provider to asset managers and financial institutions on designing, implementing and monitoring ESG strategies.
Several asset owners have told AsianInvestor of their plans to develop ESG and sustainability frameworks.
Australia’s Brighter Super and Singapore’s GIC, for instance, have highlighted the importance of the social impact of investing, while New Zealand Superannuation Fund began implementing its first formal company-wide diversity, equity and inclusion strategy as part of a broader effort to improve the social impact of its investing.
“We are seeing the evolution of the responsible or sustainable investing function in pension funds from a more governance-focused function into something that incorporates environmental and social risks as well as opportunities,” said Acre’s Balfour.
The former sustainability chief of the Monetary Authority of Singapore, Darian McBain, also launched her own sustainability-focused advisory to address the shortage of qualified experts in the region.
UK insurer Prudential has, meanwhile emphasised the importance of decarbonising investments in emerging markets while ensuring a 'just transition,' a reference to enabling green developments in a fair and inclusive way to society’s various stakeholders.
Malaysian sovereign wealth fund Khazanah also announced its new sustainability framework in June 2022.
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HIRING COSTS, TALENT POOL
Not surprisingly, the cost of hiring people with experience or knowledge in ESG continues to rise – a pattern in play since the past 24 to 36 months, according to Profile Asia’s Teo.
That sentiment is shared by Acre’s Balfour: “Salary levels are increasing both in terms of base salary, but also broader total compensation figures as sustainability hires become more focused on value creation.
"We have seen the most aggressive rises in salary at the junior and mid-levels, where the supply of graduates has not yet fed through to the system,” Balfour said.
In Europe and the US, there are institutions that offer certificates and diplomas for ESG and sustainability-related training, and many young people are enrolling in these courses, one fund manager with a US-based investment house told AsianInvestor.
“In the future, we should have a lot of younger people who have the skills and training to manage ESG related activities,” he said.
The operative phrase is ‘in the future.’
Because the talent pool now in Asia is quite limited and there are not that many institutions in the region currently offering academic programs in sustainability, the emphasis while hiring remains on practical skills or experience, according to Apex Group’s Mantot-Groene.
Since many entities are still in the phase of designing their sustainability principles and framework, hiring leans towards relatively senior people who can help designing policies and procedures, she said.
"There is also greater reliance on the few external ESG consultants or experts having a presence in Asia. Outsourcing of the ESG function is the norm," she said.
In Europe and US, in contrast, asset managers and family offices have already established sustainability strategies and are in the implementation, monitoring and enhancement phase, she said.
The fight for talent has also led to cross-sector hiring in this part of the world.
“A private equity house may hire a head of sustainability from a bank or an organisation like the International Finance Corporation.
"Because this can be an expensive proposition, companies may also leverage the expertise of teams in other parts of the world and have a staff of one to two members in the region or outsource to third-parties,” said Mantot-Groene.
In many other cases, institutions are also willing to relocate experienced personnel from other markets, she added.
Overall, the concept of sustainability has evolved from being just a policy to drive a message to becoming more strategic and filtering down within an organisation to several roles internally and to their customers.
“Family offices are also seeing an increasing demand, given their ingrained culture and philanthropy combined with generational change and a more sophisticated approach to impact investing," said Acre's Balfour.