The “war for ESG talent”. It’s a concept we’ve heard about a lot. And it’s true, the sudden surge in sustainable investing over the last few years caused a surge in demand for people to do the job. At times, it felt like there wasn’t enough talent to go around.

ESG may have worked its way down the priority list in recent months. But whether it still wears the label of ESG or evolves into something else, the underlying drivers of sustainable investing are going nowhere.

Regulation, consumer pressures, and economic necessity will see competition for talent heat up again in the not-too-distant future and firms need to think about how to expand their abilities in the space, for which they need the right people.

So, how can investment firms find the right people? The truth is that there is no talent shortage and investors can find the people for the job. It just requires a certain degree of pragmatism.

1. Don’t fall into the experience trap

Understandably, investment firms want someone who slots perfectly into the role like a missing puzzle piece.

Of course, experience is highly desirable and should not be compromised on when recruiting for senior ESG roles. But there has to be more wiggle room when recruiting for more junior roles.

All too often, firms have tunnel vision and only look at people who are already in sustainable investing roles, dismissing anyone else. But the reality is that recruiting for sustainable investing isn’t like other specialisms. It’s a relatively new area meaning experienced talent is scarce.

At the mid-junior end, you probably won’t find hires with the perfect experience or at least can’t them convince to make a sideways move. As such, firms need to keep an open mind about what other candidates could work, which brings us to point two.  

2. Dig out people with transferrable skills

Once they have come to terms with the experience deficit, employers must work out exactly what is needed for the role then find candidates who have the right transferrable skills.

There’s a broad range of roles in sustainable investing, so the first step is to establish where the role sits on the traditional investing vs sustainability scale. Do they need to be an experienced stock picker? Or could they hire someone who works in the charity sector, but read economics at university? The key to a successful hire is matching the role to where someone sits on that scale, which informs how flexible you can be on direct experience.

In some cases, investors can give themselves an advantage if they prioritise specific skills over ESG knowledge. Let’s say they need someone to do mathematical modelling, why not reach out to mathematicians at universities? Although someone like this doesn’t have sustainable investing on their CV, they could potentially apply their abilities to the job with great effect – and probably for less money than the specialist.

This approach has the added benefits of expanding the overall pool of talent and improving diversity. By exploring alternative avenues, investment firms open themselves up to a wider range of potential hires with different skills and from different backgrounds, which could provide a welcome boost to both gender and ethnic diversity.

However, it must also be said that this is a riskier approach so there must be clear justification for making a hire like this. They must have some credentials that show enthusiasm for making the transfer, such as an ESG course.

3. Do not compromise on soft skills

When embracing the above approach, it’s also a good idea to work out what areas can be compromised on. What is non-negotiable and what is a nice-to-have?

As touched on above, it might not be essential for everyone to know how to determine the value of a stock – even if working for an asset manager. It’s a nice-to-have.

That said, firms should never compromise on personality match. I often see firms compromise on personality in favour of experience, bringing us back to the experience trap, but it can be a terrible mistake. It’s much more important that they are passionate and will fit into your team.

Similarly, investors must be mindful of potential culture clashes, especially when hiring someone from a philanthropy background. Philanthropy and investing are built on very different philosophies and operate in very different ways as a result.

Investing firms are often more demanding of their employees, so it’s important candidates know exactly what they are getting themselves into. If not, they might not last long.  

The right thing to do

It might seem counterintuitive for a headhunter to undermine experience as I have. But the fact is that we need to re-think how we expand sustainable investing departments.   

The future of sustainability – and by extension our planet – depends on us finding people with the right transferable skills, bringing them in, training them up, and expanding the pool of talent.

Otherwise, we’ll keep chasing the same people and calling it the ESG talent war.