New regulation for sustainable finance is changing the job market for impact professionals, with universities increasingly offering courses to prepare the next generation.
“There’s a lot happening in this industry right now, and one of the big things is obviously the increase in regulation,” Tom Strelczak, whose firm, TWS, specialises in executive recruitment in the asset management sectors in London and New York, tells Impact Investor.
The Sustainable Finance Disclosure Regulation (SFDR) is a key part of the EU Sustainable Finance Action Plan, which was introduced by the European Commission in 2018. The action plan also includes the establishment of a clear EU taxonomy for climate change mitigation and EU Benchmark Regulation, which requires investment benchmarks to disclose if—and how—they incorporate ESG criteria into their processes.
“European regulation like SFDR, in terms of how people are categorising funds, has obviously had an impact on the type of individuals that companies are looking for,” says Strelczak, who has been active in the executive search and recruitment industry for 13 years.
“And that’s going to start having a bit of an impact on companies because it’s a very time-intensive thing to interpret and integrate into an already very busy environment for a lot of businesses.”
Impact measurement opportunities
Lisa Hehenberger, associate professor at Esade Law and Business School and director of the Esade Center for Social Impact in Barcelona, recently conducted a study of impact-related job offers it had access to through its network on LinkedIn.
“There are number of job offers out there,” Hehenberger says. “I would say that probably there are still more jobs in ESG and sustainable investing than in impact investing…But I think in terms of impact measurement, there’s a lot happening in this field and there are lots of different opportunities out there.”
These opportunities range from “working in an investment fund to doing impact measurement, but it could also be in a foundation, it could be in a multilateral organisation, it could be in a multinational company”, Hehenberger says, before adding many consulting firms have started to develop expertise on impact measurement.
Two years ago, Impact Investor talked to industry insiders about the state of the job market for ESG and impact. The main verdict back then: the market for sustainable investment roles had become so overheated that some companies were being priced out of the market for the best talent. That was mainly due to the pandemic and the arrival of US President Joe Biden, which put climate change and social reform at the top of the agenda.
But a round of layoffs at big tech companies may have eased pressure on some parts of the impact investing-related job market requiring technical skills.
Hiring “is easier now, because there has obviously been a lot of companies letting people go, and there are a lot more people on the market”, says Tom McGillycuddy, co-founder and chief executive officer of impact investing app CIRCA5000 which targets socially-conscious millennials. “A year ago, maybe two years ago, it was the complete opposite. It was much tougher to find great quality people than it is today. And I think the market has now switched around.”
Sspecialists in social issues ‘hard to find’
In the past year or so, social issues within engagement ,such as stewardship issues, active ownership or shareholder advocacy, have become one of “the most prolific areas for hiring”, according to Strelczak.
“Social issues have become a really big topic of interest for a lot of asset managers,” says Strelczak. But suitable candidates in this area “are quite hard to find” because successful applicants need to be able to look at these issues both from an investment and a social perspective.
“The question is, where can you get people that can look at these issues, that can address them with knowledge?” asks Strelczak. “So perhaps people from human rights backgrounds? Finding people that can look at it from both sides of the coin is quite difficult. So you find that a lot of businesses are trying to train up people within these departments on financial analysis or, investment qualifications, so that they can become a bit more financially savvy alongside the issues that they’re looking to engage on.”
Shift in attitudes toward impact
Universities such as Esade are trying to bridge the knowledge gap. When Hehenberger joined the Spanish business school seven years ago, impact investing “wasn’t a well-known topic” she recalls. “You had to educate both internally and externally on these topics.”
“But in the past three or four years we have full support from our career department, which is kind of an indicator,” she adds. “They have done their market research and there are interesting opportunities… There are more impact funds recruiting, there are more financial institutions that are looking for people who know about ESG and impact measurement. It’s not just small start-up funds or larger institutions. I think that’s been a shift.”
Recently, Hehenberger was contacted by Esade’s finance professor to do a module on impact investing in her sustainable finance course.
“It’s becoming integrated more into the mainstream course offering, not just as electives, which is positive,” she says.
Nurturing the ‘next gen’ of impact talent
Hehenberger further points to the work she has been doing at the Esade Center for Social Impact (ECSI), which she launched as a spin-off from its Entrepreneurship Institute. Part of the work of ECSI was setting up a Social Impact Lab for MBA students. The Lab gives Esade students who are taking impact courses the chance to get hands-on exposure to the field.
For example, the Lab regularly organises career talks, where people who have developed a career related to social impact share their experiences with students. “That’s been quite successful,” says Hehenberger. “We have more and more students attending those, and the position is now supported by the school, which is great because before we had to support it from the research centre.”
More and more business students are now seriously contemplating a career in the world of impact.
“A few years ago, there weren’t that many business school students interested in the topic,” says Hehenberger. “But now, we see an increasing interest. A lot of business school students are thinking about how can they combine their skills and their experience with having an impact. So not just doing it on the side, like a charity thing and volunteering, but actually thinking about how they can go to work every day and at the same time, do something that is good for society.”