UK and Europe:

In the UK and Europe, private equity firms are actively recruiting mid-level ESG professionals while also considering senior candidates with substantial deal experience and a comprehensive understanding of integrating sustainability into investment decisions. The focus is on candidates who can move beyond policy development to effectively quantify the financial impacts of ESG risks and opportunities. Skills in climate solutions, decarbonisation strategies, and energy transition are highly sought after, aligning with portfolio companies' net-zero commitments. Firms are also keen on ESG specialists who can provide guidance and support to portfolio companies in implementing sustainable practices.

The regulatory frameworks in both regions, such as the SDR in the UK and the CSRD in Europe, have significantly heightened the need for improved ESG disclosure and transparency. Investor expectations for rigorous ESG integration and detailed reporting, focusing on the quantification of financial impacts, are also influencing the market. Besides climate change, there is increasing attention to human rights, D&I, and responsible AI.

In the real assets and infrastructure sectors, there is a growing demand for experts in sustainable real estate development, green building certifications, energy efficiency, and infrastructure project assessments, particularly in renewable energy and transportation. Professionals who can conduct ESG due diligence and risk assessments for real asset and infrastructure investments are highly valued. Firms are also seeking individuals familiar with emerging ESG regulations and reporting frameworks specific to these asset classes.

Decarbonising real asset and infrastructure portfolios to align with net-zero commitments is a consistent theme across the UK and European markets. Regulatory pressures like the SDR, SFDR, and CSRD drive the need for greater ESG reporting and transparency in these sectors. Investor interest in sustainable real asset and infrastructure investments, particularly those supporting a low-carbon economy transition, is a significant driver.

North America:

In North America, despite political pushback and geopolitics, private equity firms focus on value creation with an ESG lens, seeking professionals with deal experience and the ability to integrate sustainability into investment decisions. Firms are looking for candidates who can move beyond policy development to quantify the financial impacts of ESG risks and opportunities. Skills in climate solutions, decarbonisation strategies, and energy transition are highly prized to align with portfolio companies' net-zero commitments. ESG specialists who can provide guidance and support to portfolio companies in implementing sustainable practices are also in high demand.

The regulatory landscape in North America, particularly the SEC's proposed climate disclosure rules, has driven the need for enhanced ESG disclosure and transparency. Investor demands for rigorous ESG integration and reporting, focusing on financial impact quantification, are shaping the market. Climate-positive investing, which involves actively removing emissions from the atmosphere, is gaining traction.

In the real assets and infrastructure sectors, North America has seen increased demand for professionals in sustainable real estate development, green building certifications, energy efficiency, and infrastructure project assessments, especially in renewable energy and transportation. Talent capable of conducting ESG due diligence and risk assessments for real asset and infrastructure investments is highly sought after. Firms are also recruiting individuals familiar with emerging ESG regulations and reporting frameworks specific to these asset classes.

Decarbonising real asset and infrastructure portfolios to align with net-zero commitments is a recurring theme across the North American market. Regulatory pressures from the SEC’s proposed climate disclosure rules drive the need for enhanced ESG reporting and transparency. Investor demand for sustainable real asset and infrastructure investments, particularly those supporting the transition to a low-carbon economy, is a significant driver. Emphasising the financial impacts of ESG factors in real asset valuations and investment decisions is critical.

Middle East:

There is growing interest and activity in ESG and sustainable investing in the Middle East, particularly among larger private equity funds. However, the region still faces challenges around governance, administration, and attracting specialised talent.

Real estate funds in the region are starting to build out dedicated ESG teams, indicating an increased focus on sustainability issues. However, they are facing difficulties finding the right talent and expertise, leading them to seek experienced candidates from abroad.

There appears to be increased interest in climate transition financing and renewable energy investments in the Middle East, though executing these opportunities remains challenging. Firms recognise the region's potential for innovation but need the right leadership and strategy.

Hiring activity for ESG roles in the Middle East is expected to pick up, particularly at the mid-level, as new regulations come into force globally. However, the region still lacks specialised ESG talent.

Quarter 3 Outlook:

As we approach the third quarter of 2024, the demand for ESG professionals in both the UK and Europe and North America is expected to continue, particularly those with deal experience and expertise in quantifying financial impacts. Recruitment for climate solutions specialists to assist in decarbonising portfolio companies is likely to intensify. There will also be a greater emphasis on ESG reporting and compliance roles to meet regulatory and investor expectations. The Middle East activity is expected to rise, driven by increased regulatory pressures and investor expectations. Firms will likely continue to recruit talent from abroad to meet their ESG needs while developing local expertise to support the region’s sustainability goals.