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You wanted big money for an ESG job? Bad luck

If you wanted to work in ESG in finance and to earn big money in the process, then bad luck. ESG hiring has returned to earth, and pay packages have bitten the dust. 

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Headhunters say that candidates who expect to be bid-up to move into a new ESG job are finding themselves sadly disappointed. "If they wanted to have those things, they needed to have moved within the last five years,” said Tom Strelczak of ESG executive search firm TWS. The industry has become too standardized, essentially, to accept maverick pay packages. “There is now so much available compensation data for people in this market that a lot of peers in the market are now benchmarking against each other.”

Not everyone appreciates this. A report by industry recruitment consultant Valentine Thomas said that many candidates live in “a bygone era of inflated pandemic-era packages,” and that “economic realities forced compromise on both sides.”

ESG jobs still exist, however. Data gathered by workplace intelligence firm Revelio Labs showed that whilst there was some variation during the year, ESG and ESG-adjacent jobs increased their share of the financial jobs market throughout 2023 (although, admittedly, not by much). In banks specifically, ESG’s share of the total jobs being increased by 3% last year compared to 2022. 

That might not seem like much, but given the enthusiasm for all things ESG in 2022, it could easily have fallen. ESG has shown it’s more than a novelty, Strelczak says. “A lot of asset managers acknowledge it makes sense to have sustainable investment within the portfolio of businesses that they invest in. There’s a priority for financial materiality.”

Nonetheless, ESG is less popular than it was. A recent article from Bloomberg showed that, for the first time ever, ESG funds in 2023 saw their first ever net outflows. That was mostly on account of US funds, which withdrew a net $5.1bn in the final quarter of the year, and Europe’s $3.3bn inflows weren’t enough to balance that out.

That doesn’t mean the “save the world” crew can’t notch some wins. “There is still a significant amount of investment in these strategies in the US,” said Tom Strelczak of ESG executive search firm TWS. “It's just done on the labor under the label of sustainability.”

The reason for the pullback from ESG, as Bloomberg points out, is political. ESG has become a shorthand in the United States for “Woke” capitalism, with politicians such as Vivek Ramaswamy, Ron DeSantis, and Ted Cruz rallying against the concept, accusing it of being a political tool for ideologies to impose “what they couldn’t do through lawmaking,” as Ramaswamy said.

That negative press isn’t destroying ESG as a concept but giving it a new name. “The ESG acronym that has largely been behind a lot of the stunted growth in this space is being pretty much disbanded in the US to deter clients from being put off by it,” Strelczak said.

ESG jobs haven't always paid less. Reuters reported in May '23 that ESG jobs carried a 22% premium on their equivalent non-ESG roles. This was due to ESG pay growth between the start of 2020 and mid-2021, a period of time in which “normal” finance roles stagnated in pay. In 2019, Revelio said ESG jobs paid less, so this year may be a reversion to the norm.

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AUTHORZeno Toulon

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