With as many as 450 financial institutions, banks, insurers and asset managers committing to invest $130 trillion of private money to help the world become a net-zero carbon emitter by 2050, ESG opportunities in the financial services sector will abound for years to come. $130 trillion approximately equals 40% of all asset under management, globally.
The deal was brokered by former Bank of England governor Mark Carney, who helped bring together financial institutions from 45 different countries at the recent United Nation’s COP26 Climate Change Summit in Glasgow. From now on, financial services firms will have to issue more green bonds, publish mandatory sustainability disclosures, carry out proper climate risk surveillance, increase their global ESG reporting standards, as well as improve the consistency of data in fields such as climate change.
This global effort will require an army of bankers, experts, scientists, quants, portfolio managers, sales teams and marketing officials, among many others. This means that a traditional economics and financial background may not be enough; candidates will have to sharpen their sustainability knowledge to access the many opportunities in the field (don’t miss our recent article on ESG accreditations).
As ESG evolves in financial services, the kinds of jobs that are on offer are proliferating. These are some of the key catagories:
Sustainable Finance Investment Banker and Green bonds specialists:
In order to help companies and governments around the world in their Net-Zero transitions, investment banks will have to sell green bonds to finance cleaner energy projects or subsidise an expensive transition out of more polluting energy sources. The green bond market has reached records this year: combined labelled issuance of Green, Social, and Sustainability, Transition, and Sustainability-linked bonds reached USD 767.5bn in the first three quarters of 2021, bringing the total cumulative labelled issuance to USD 2.3tn. Bankers working on primary issuance will have to be well versed in their ESG and SDG (Sustainable Development Goal-linked bonds) to work on their covenants and meet investors’ requirements.
ESG Coverage Bankers:
Investment banking Coverage bankers, in charge of client relationships, will also have to step up their game and ESG knowledge to help pass the message to clients – for instance, some SDG (Sustainable development goals) bonds will pay a higher coupon if the sustainability targets are met (just like an inflation-linked bond will pay more to compensate for inflation). Coverage bankers will also need to embrace the global Net-Zero objective in order to engage with an increasingly ESG-conscious client base.
ESG Portfolio Manager (PM) – Integration:
Asset management firms are hiring ESG-specialist PMs to help governments and corporations reach their Net-Zero transitions. More than blocking non-ESG issuers, PMs are seeking engagement to incentivize greener or socially responsible policies that bring positive change. This, for example, may include a Residential Mortgage-Backed Securities (RMBS)-specialised PM who will help developers build more sustainable and inclusive housing projects. ESG PMs may also specialise in selecting the best sustainable infrastructure projects to invest in, or in negotiating new social targets with governments of countries whose humanitarian practices have been questioned.
ESG Product Specialist:
Asset managers are also transitioning to their own sustainability targets. But before ESG factors are well integrated into the investment criteria of a firm, some companies are creating an ESG version of their best-known funds, hoping that the two will merge once the ESG criteria integration process is complete. This will require much explanation to clients, a role that ESG Product Strategists or Specialists will carry out.
Chief ESG Officer:
Consultancy and accountancy firms, charities and trade finance bodies will need leaders to champion their ESG efforts – or risk losing clients or missing out on ESG opportunities. From regulatory developments to data analysis, tax benefits and climate change risk scenario research, the ESG champion will set the sustainable strategy of a firm.
Head of ESG Data Services:
As an employee or as a consultant, climate change and other sustainability factors will require accurate data in order to value investment projects and assess their risk. From weather experts to social scientists, ESG-conscious quants are sought to develop models that assess profitability and risk.
Although the title is more generic, large and well-known organisations such as the United Nations and the International Monetary Fund are constantly looking for ESG specialists to help them monitor the global Net-Zero transition. The “analyst” job may include an entry-level research assistant role, or a PhD-educated specialist in deforestation. NGOs and governments are also potential employers.
If anybody is still thinking that ESG is a temporary fashion, just type the acronym on eFinancialCareers' job search box.
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