When it comes to ESG issues, the Canadian financial sector needs a skills upgrade

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Canada faces an ESG talent shortage.

Discussions about the workings of environmental, social and governance issues abound. Governments, regulators and investors are demanding more disclosure, more analysis and more management of sustainability-related business risks.

The stated goals are well known: less impact on the environment, net zero emissions, better labor force participation of people from all walks of life, and guarantees against unforeseen risks, such as a pandemic.

But achieving them means making sure there are enough professionals to take care of all the machines, and that managers and employees know how it all fits into their work.

Banks, insurers and asset managers have all signed on to global efforts to account for funded emissions and integrate environmental aspects into all investments and lending, efforts that intensified with the COP26 summit in Glasgow, Scotland, l ‘last year.

They’re going to need an army of ESG experts. Recruitment is not keeping pace.

“Everyone feels we are at this tipping point when it comes to climate and we need to start acting quickly. We’re going to start to see regulations in Canada start to hit us, so we have to be ready for that as an industry, and across Canadian businesses as well. So the urgency is starting to increase, which is a good thing,” says Jennifer Reynolds, managing director of Toronto Finance International, a public-private partnership that promotes the city as a global financial hub.

“ESG skills can no longer live in a small silo; they must permeate the whole organization.

A new survey published by TFI, Deloitte and the United Nations Financial Centers for Sustainability network, titled Taking the lead in sustainable finance, shows the industry’s struggle to attract talent and what is at stake as the sustainability is becoming more integrated into finance.

All of the 100+ financial services industry professionals surveyed said sustainable finance skills and talent were important to their organizations, and 68% said there was an insufficient supply of people with both and more recruitment and training were needed. Almost three-quarters said sustainable finance skills are an integral part of almost all of their organizations. Forty-three percent said they had difficulty hiring people with the necessary expertise in sustainable finance.

The sense of urgency is not universal. Nearly a quarter of respondents said they did not think the skills were needed immediately or that they were overdue. Some of them are awaiting further guidance from regulators. Others see ESG as important for some asset classes, but not all.

It is important to remember that ESG knowledge is not the preserve of one profession. It has become an integral part of management, science and engineering, law, accounting, marketing and communications. The survey results show the need for better coordination between financial institutions, industry associations and post-secondary education, says Reynolds.

This has proven effective in the tech industry, which has been the focus of universities and polytechnics across the country.

Some schools offer ESG programs, including the Institute for Sustainable Finance at the Smith School of Business at Queen’s University and the Center for Building Sustainable Value at the Ivey Business School at the University of Western Ontario.

Professionals in these programs must perform highly technical tasks such as analyzing climate scenarios, which the Bank of Canada and the Office of the Superintendent of Financial Institutions use to assess the potential outcomes of transitioning to a low-carbon economy. .

But there are other important avenues, including the integration of sustainable development topics into specific traditional areas, as well as increased training of managers and employees in all professions under the title of “micro-certificates”.

“No matter what discipline you are in, an ESG and climate lens should definitely be integrated into almost everything. This is really the endgame where we should be,” Ms. Reynolds says.

One area where Canada could shine is in ESG-related disclosure, which is slowly becoming standardized globally as investors demand comparable information about companies and securities. The challenge here is to improve access to capital for companies across all sectors, as institutional investors demand strong performance, she says.

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