The Singaporean regulator’s pledge to spend SGD35 million (US$26m) to upskill and reskill financial industry professionals in sustainable finance has highlighted a global shortage of ESG talent.
The Monetary Authority of Singapore (MAS) said the cash will be spent over three years to support training initiatives that meet the expertise challenges of the novel investment space. The regulator’s announcement was packaged with a Sustainable Finance Jobs Transformation Map (JTM), a publication that examined the talent needs of the Asian city’s sustainable finance markets. It identified 12 key sustainable finance roles, including data-centric tasks such as risk and compliance management.
MAS’ commitment seeks to help ease a talent shortage that ESG professionals the world over say is preventing financial institutions from taking advantage of the investment opportunities in sustainable finance. They also voice concern that a lack of skills within firms is leaving them vulnerable to inadvertent greenwashing and regulatory compliance breaches.
Tight Market
The relative novelty of the ESG space, its rapid growth and a constantly changing regulatory landscape has been blamed for the shortage of ESG-linked data skills. The tight market for talent has also driven up salaries of personnel that do possess the necessary skills, making it prohibitively expensive for smaller financial firms to recruit a sustainability team. Many, instead, outsource those functions.
In the UK, a study by the Financial Services Skills Commission (FSSC) and the Aldersgate Group said that a skills gap within financial services was likely to widen as demand for sustainable finance and regulatory compliance grew.
Data vendor Persefoni supported a Sustainability Talent Gap in Finance survey in the US last year, which found 70 per cent of responding companies had an immediate need for sustainability regulatory controls talent. The survey, carried out for the Financial Education & Research Foundation, also found that just less than half the respondents planned to hire new personnel to fill the skills gaps over the following year.
New Certification
The speed of the sector’s growth has made it difficult for companies, colleges and schools to put together courses to adequately teach the specific skills needed by sustainability data professionals and analysts. Some institutions are trying fill that gap.
In the UK, the CFA Institute launched a six-month self-taught qualification in climate risk, valuation and investing. And the nation’s Treasury has begun a skills-building initiative with Imperial College Business School, the Singapore Management University and MAS.
Globally, the Future of Sustainable Data Alliance has created a directory with the support of the World Economic Forum that lists institutions that offer expertise development. Among them are the University of Hamburg, the University of Hong Kong and MIT’s Sloan School of Management.
Nevertheless, data companies say they are finding it difficult to secure the right talent.
“It’s less about getting people to help analyse the data – it’s more difficult for us to find people who have the investment background and experience or the quant experience that can package that data into products,” Chris Lee of ImpactCubed told ESG Insight earlier this year.
The challenge is also one faced by asset managers, investors and corporate sustainability officers.
At last year’s A-Team ESG Summit London, Sam Livingstone, head of data science and data engineering at Jupiter Asset Management said that a “lack of aptitude, or no exposure to technical tools”was the cause of more “frustration” than the technology needed in the company’s ESG processes. And research published last week by New York University’s Stern Center for Sustainable Business, said that boards are “woefully underprepared in certain areas” of ESG topics.
New Courses
The MAS’ JTM, which was researched and written by KPMG, highlights technology and innovation as an area ripe for upskilling in Singapore. It estimates that the city state’s green markets will create as many as 5,000 new finance jobs, many of them new roles that will require technical knowledge. But it recognises that many existing roles will have to be changed to meet new technical requirements, and that will require investment in upskilling and retraining.
In response, MAS said it had launched two sustainable finance-focused undergraduate programmes as well as 65 executive courses. The city’s Institute of Banking and Finance has also created an IBF Skills Badge that recognises the efforts by individuals to better their skills.
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