Working in Sustainable Finance: Six Career Options
With the agreement between hundreds of banking and finance firms to pay $130tn to commit fully to help make the world a net-zero carbon emitter by the year 2050, ESG (environmental, social, and governance) will be a significant player in the finance industry for the foreseeable future. Financial Institutions and banks will now have to track how many green bonds they issue, publish sustainability disclosures, carry out climate risk surveillance, and – in addition to improving their data fields in climate change – fulfil their ESG reporting standards.
This, combined with mounting pressure from consumers for more climate-friendly goods and services and a desire for more ESG-friendly investments in general, means that financial companies are now very much on the lookout for employees with the skillsets and mindsets that are grounded in sustainability.
In large US firms, for example, the number of Chief Sustainability Officers (CSOs) has increased by a staggering 228% from 2011 to 2021 (Weinreb Group Survey).
Candidates with sustainability at the forefront of their applications and motivations will find themselves with access to many opportunities in the field. As ESG evolves in financial sectors, the positions that are becoming available continue to grow. Below is a list of just some the emerging career options available.
ESG advisory teams exist to help companies who have neither the time nor the resources to build an in-house corporate sustainability team. ESG advisory firms help corporations build sustainable practices, advise on ever-changing sustainability regulations as ESG consulting services found in accounting, legal, and other related industries will be in high demand for years to come. These advisors can help with a net zero or ESG strategy, green business building, decarbonizing business systems, and sustainable investing.
2. ESG Analyst
Sustainable finance practices now use big data. Much of this data comes from third-party data providers such as Sustainalytics and MSCI, who research ESG and gather ratings and data on issuers and companies globally. An emerging area in this and many other fields is AI and machine learning. ESG scores were previously based on aggregating corporate disclosures, but more sophisticated programs today allow for a text-and-tone assessment to test the sentiment of a business. For example, an issue that goes viral on social media now can be picked up by algorithms in real time. This kind of facility means that those with strengths in computer science or data analytics will have a quantitative route to join the sustainability cause.
3. Non-Profit Organizations/ Government Positions
There are an increasing number of roles in sustainability within non-profit and regulatory organizations as they help to standardize sustainability disclosure and reporting. These reports allow for comparison of relevant and financial ESG issues facing industries and sectors. Roles within these organizations can be rewarding as they help pave the way for framework and future policies in sustainability.
Governments need to advance their sustainable finance agendas at home and abroad. These government organizations provide thought leadership, raise awareness, and highlight best practice. They create supportive frameworks and tools to ensure financial eco-systems that meet the demands of COP26. There have been studies carried out by the ISEAL Alliance to prove the benefits of sustainability standards.
On the business value, sources refer most frequently to the final benefits of improved reputation (60%), improved profitability (53%), cost reduction (30%) and growth in production (e.g. increased production volumes) (30%).
These benefits will only increase the need and want for sustainability standards.
4. ESG Investing
Investment banks will need to sell green bonds to finance green energy products or to subsidize an expensive transition out of more polluting energy sources. Bankers working on primary issuance will need to have great understanding of the ESG and sustainable development goal-linked bonds to meet investors’ requirements.
5. ESG Portfolio Management
As the pressure on firms to invest in sustainable and ethical funds mounts, there will be an increase in the need for portfolio managers who are well versed in ESG products. These managers, working in asset management firms, must keep up to date with the latest trends and insights in ESG to ensure the best return for their clients.
The main characteristics of Fintech has always contributed positively toward sustainability. Fintech will help give access to communities and enable them to have access to ESG investments via mobile. One of the key pillars in the Ireland for Finance 2025 strategy is technology and innovation. Fintech will need to work alongside the mainstream sustainable finance agendas. This technology can have a huge impact on the evolution of Sustainable Finance.
Furthermore, there are now emerging companies that are being termed Green Fintech. These companies have built Fintech products that have a positive impact on the environment. An example in this field would be Stripe Climate, where businesses can finance projects dedicated to carbon removal. The business commits a fraction of their revenue to an eco-friendly cause.
The area of sustainable finance is both dynamic and exciting. As this corner of finance grows, so too will the volume and range of roles. Those looking to broaden their career should undoubtedly consider Sustainable Finance as a potential move as it firmly embeds itself into the fabric of finance.