A raging battle between asset managers for ESG (Environmental, Social and Governance) talent that has gone on over the last three years is abating, with recruiters pointing to a worsening economic scenario and a backlash in America as reasons for a slowdown in hiring. Associate director for investments, front office and ESG hires at Bruin Financial, Sophia Deen, said recruitment activity has cooled following a frenzied period.
“ESG hiring has slowed down this year,” said Deen, citing a rush to secure talent between 2019 and 2022 as asset managers hurried to build out their ESG teams on the back of rising investor demand.
“In recent months, there has been mixed media on ESG, with more claims against greenwashing and ESG fund performance, which may have created a pause for internal recruitment,” said Deen.
ESG funds were among some of the best-selling products at the height of the pandemic. Sustainable funds gathered net inflows of $527bn across Europe and almost $70bn in the US during 2021, according to Morningstar. However, the bumper inflows have since subsided. Between January and the end of May, ESG funds in Europe gathered $49bn while in the US funds have posted net out flows of almost $9bn.
Founder and sustainable investment search head at Farrell Associates, said ESG hiring was “explosive” in 2021. “It was two years’ worth of hiring done in one year and in a very hot sector.” Looking at this year, the picture is very different, he said: “A lot of firms have slowed down.”
He added: “I’m pretty bearish about the whole thing and I’m an optimist person. It is a really bad market. But I’m fully convinced that as soon as the economy improves, this will take off again.” While recruiters are less optimistic about the current ESG jobs market, others see the hiring slowdown as an inevitability after a rush to recruit talent in previous years.
“We’ve seen some slowdown in the market in terms of ESG mandates,” said Kelly Biggar, head of practice at Fram Search. “We suspect that this is due to firms significantly investing in their ESG capability in the last couple of years and perhaps feeling they are fully staffed.”
She added: “Looking more broadly, there does seem to be some pushback on ESG, as investors and corporates balance short-term challenges with long-term ones. But we still feel there will be a tailwind for ESG-focused careers over time.” Founder of executive search firm TWS, Tom Strelczak, said hires were still being made but that firms were taking “revisionist approach to ESG”.
He added: “A few years ago, everyone was focused on active ownership, engagement and stewardship. A lot of the people hired into these functions were incredibly knowledgeable and came from government institutions or non-profits. They were experts on those topics, but they did not have the investment knowledge,” he said.
Strelczak said hires taking place now, particularly in the US have been more investment-led. These include roles such as climate analysts with Chartered Financial Analysts qualifications.
“It’s less the ESG risk-management people who have come from a corporate governance background, more the people with backgrounds in investment and research who have pivoted to ESG,” said Strelczak.
Deen said that despite the slowdown in ESG hiring, investment professionals still find ESG roles attractive – some chasing junior and mid-level roles are even willing to take a pay cut. Heads of ESG could command total pay packages of between £300,000 and £500,000 during the hiring boom, said Deen. Even in today’s market, a head of responsible investment at an asset manager could take home as much as £300,000 as a minimum.
“Candidates at the junior and mid-level range appear open to taking a small cut in compensation to secure an ESG role, as there aren’t many advertised on the market at present, encouraging them to sacrifice pay to secure the opportunity,” said Deen.” (The writer is our foreign correspondent based in the UK)
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