Battle to recruit ESG specialists intensifies

Source: Financial Times, published on 15 October 2018

Specialists in responsible investing are hot property. “Competition is quite intense,” says Helen Pradas-Page, an executive recruitment consultant at Acre, which helps employers recruit for environmental, social and governance roles. “There has been a distinct growth in ESG headcount.”

A few years ago she would receive requests from asset managers seeking ESG specialists perhaps two or three times a month. Now, she says, it is more like a dozen times.

As asset managers grapple with the complexities of the investment approach and seek to burnish their reputations as responsible stewards, the battle for experts in the field has intensified.

At the start of his fund management career two decades ago, David Li did not anticipate how much ESG issues would end up occupying his attention.

The senior portfolio manager and director now spends a chunk of his working day considering, for example, whether companies have a good record on corporate governance and if changes in environmental policy may affect the value of their assets. “It was more by coincidence,” he says of the shift.

Having specialised in analysing small-cap companies in his twenties, he later joined Impax Asset Management, a group that specialises in sustainable investing and manages assets of £12.6bn. Mr Li co-manages the group’s Asia strategies. “That’s how I got started.”

His expertise puts him in a cohort of fund managers whose skills are in demand. Rivalry between candidates themselves is also fierce.

UBS Asset Management, the SFr810bn (€710bn) Swiss manager, received 6,200 applications for fewer than 25 jobs when it set up its responsible investment team in 2015. Other asset managers say they receive a steady stream of speculative applications for ESG roles.

Ms Pradas-Page says a job advert for such positions can easily attract 200 applicants. But “only a handful” will have the skills asset managers require, she adds.

Candidates come from a variety of professional and academic backgrounds, from fresh-faced graduates in subjects such as environmental science or finance, to those with experience of working in international development. Some applicants are conventional portfolio managers looking to switch gears mid-career.

They need to display financial nous as well as knowledge of the wide range of factors in ESG analysis, such as climate change and gender diversity.

Their work has also become more challenging as asset managers move beyond simply screening out stocks deemed undesirable, such as weapons or tobacco manufacturers, to thinking about how to manage the shift to low-carbon economies or working out where risks lie in supply chains.

“It’s still very challenging to find people with the right skillset,” says Shami Nissan, head of responsible investment at Actis, an emerging markets investment company.

For her, a degree in biology and masters in environmental technology paved the way. After graduating, Ms Nissan worked on social development programmes in Mexico and Guatemala before joining an ESG analytics company. Later she worked as a management consultant specialising in sustainability issues.

Ms Nissan says it is critical that specialists are able to convey their ideas well to senior managers as well as investment clients. “You need to be able to communicate effectively with the C-suite,” she says.

Stanislas Pottier, chief responsible investment officer at Amundi, Europe’s biggest listed asset manager, believes the popularity of such roles reflects a desire among younger workers in particular to derive a greater sense of meaning from their careers.

Mr Pottier had an idiosyncratic journey to his current job. He moved into responsible investing following a career in the French civil service in which he worked on a French-backed initiative exploring ways to protect the environment in the Arctic and Antarctica.

“To carry out ESG analysis requires special competencies,” he says.

Those who do make the cut can expect to be rewarded more generously than in the past. The remuneration packages offered by European asset managers have increased between 20 and 50 per cent over the past 18 months, says Ms Pradas-Page.

“That’s in response to managers competing for talent and trying to retain their talent,” she says.

Ms Nissan says higher salaries demonstrate the influence specialists have. “It’s a reflection of the role that person occupies within the hierarchy of the firm,” she says.

Salaries could grow even more as demand in the US also ramps up in response to legislation, according to Ms Pradas-Page. Other regions are also looking to recruit.

In relative terms, Europe has a deep pool of expertise, but Hong Kong-based Mr Li says finding specialists on the ground in Asia is more challenging.

Ms Nissan says having an understanding of a particular geography is important and can give candidates an edge. “Being very strong on ESG issues in Switzerland is not the same as being strong on ESG issues in India,” she says.

What is in no doubt is that ESG and sustainability-focused roles are set to flourish. “It will be used more and more,” says Mr Pottier. “Everyone will have to get acquainted with ESG.”

Copyright The Financial Times Limited 2018

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