A quick look at ESG headlines these days mostly tells a story of backlash. Governors and state attorneys general are making it more difficult for state funds to be invested in funds or with managers using environmental, social and governance criteria.
Members of Congress tried to limit how retirement plans could consider ESG factors when selecting investments. Even in Europe, recent regulatory changes to ESG classifications have prompted allegations of widespread greenwashing. Still, in the U.S. and abroad, asset owners, asset managers and investment consultants are hiring for a wide variety of ESG roles, and sources say they are unlikely to stop any time soon.
“Even though it is politically charged at the moment, investors, customers, employees and other stakeholders aren’t letting up on their demands for transparency and action on material areas of risk and opportunity,” says Miriam Wrobel, senior managing director and global leader of environmental, social and governance and sustainability at FTI Consulting. Her company is both hiring for ESG roles and working with clients on finding talent.
Wrobel says there is “exponential growth and demand” for ESG-related reporting, strategies and business transformation. That is pushing investors, public companies and asset managers to bring on new people who can gather the necessary data and analyze it.
Those needs are expressed in a recent job posting from the San Francisco Employees’ Retirement System, which is looking for an ESG investment officer. The posting suggests that the role will primarily be focused on ESG reporting, data analysis and integration.
The New York City Office of the Comptroller is looking for a similar person: an ESG integration officer to work with both the CIO and the Bureau of Asset Management to find ways of integrating ESG into investment considerations. The New York State Insurance Fund and the United Nations Joint Staff Pension Fund’s office of investment management have similar roles open.
On Tuesday, Franklin Templeton also announced a new sustainability hire who will be working on ESG integration and strategy. James Andrus joins from the California Public Employees’ Retirement System to be vice president of Sustainability Global Markets, a newly created leadership role within the firm’s Global Sustainability Strategy Team.
In his new role, he will work across teams and jurisdictions to set the direction of Franklin Templeton’s sustainable investment team. At CalPERS, Andrus served as the Interim Managing Investment Director for Sustainable Investing and led CalPERS’ sustainable investment strategy.
Andrus will report to Anne Simpson, Franklin Templeton’s Global Head of Sustainability, who had previously been the managing investment director of board governance and sustainability at CalPERS.
But it may not be easy to fill these roles. All of these postings are looking for someone with at least five years of experience in ESG, and the pensions are competing against some of the world’s largest asset managers, including Blackstone, Goldman Sachs, Franklin Resources, State Street and Fidelity. Each of those companies has ESG spots open, as do many consultants, including Alvarez & Marsal, FTI and Wilshire.
“We’re seeing more and more professionals with formal ESG training, so there is a strong pipeline of talent, but there isn’t a sufficient talent pool that has both the formal training and the real-world expertise to execute,” Wrobel says.
Paul Aversano, managing director and global practice leader for global transaction advisory business at Alvarez & Marsal, agrees. He is in the process of expanding the firm’s ESG practice as a result of growing client demand. He says Alvarez & Marsal is getting requests for help with due diligence, transaction advisory and data/reporting. When he looks at clients’ ESG interests, he says it is hard to take the backlash seriously.
“On the transaction side, buyers are willing to pay more for a company with a positive or improving ESG footprint,” Aversano says. “On the talent management side, we’re getting questions about our policies, and so are our clients. New hires don’t want to work somewhere that isn’t at least looking at ESG. If you look at corporates, the ESG disclosure rules and regulations continue to evolve, and companies have to track that—especially if they have a global footprint. Other jurisdictions aren’t going to stop asking for this data.”
He adds that there are material financial risks that can be missed if companies, sponsors and investors are not tracking things like climate risk, which could lead to trapped assets down the line.
“A lot of this is really a data collection exercise,” he says. “You want to have the most information you can about an asset or a company or a transaction, and you need people who can get that data.”
These realities are also popping up for asset managers. Many asset managers have a global footprint, and there is still significant demand for ESG strategies abroad—especially in Europe, the Middle East and Asia. For firms that have operations in all of those areas, avoiding ESG just because of pushback in the U.S. likely is not the most prudent or efficient use of resources, says Tyler Cloherty, managing director at Deloitte’s asset management strategy consultant, Casey Quirk.
“It’s kind of a highest-common-denominator thing,” he says. “You need to be able to maintain credibility everywhere you do business. We’re seeing from some investors that even if they aren’t saying they are specifically interested in ESG, they’re still asking for ESG-type data in their due diligence process. ESG is an area that continues to evolve, but I think it’s hard to argue that we’re going to go back to a time when these considerations weren’t included. Firms will have to keep hiring for that.”
Tags: Alvarez & Marsal, Anne Simpson, California Public Employees’ Retirement System, Casey Quirk, environmental social and governance investing, ESG, Franklin Templeton, FTI Consulting, Hiring, James Andrus, Miriam Wrobel, Paul Aversano, Tyler Cloherty