ESG skills in hot demand in risk, compliance hiringBY RACHEL ALEMBAKIS | MONDAY, 12 FEB 2024 3:05PM
Read more: ESG, risk and compliance, APRA, Kaizen Recruitment, recruitment, Simon Gvalda
The advent of mandatory climate-related financial disclosures and the increased focus on greenwashing and ESG disclosure have driven hiring demand for candidates with expertise in ESG, risk and compliance, according to Kaizen Recruitment.
In an update in hiring for risk and compliance roles, Kaizen Recruitment identified specialised knowledge including ESG expertise and the increasing pace of regulatory change as two catalysts stretching demand for a "shallow pool of candidates with in-depth experience within the different facets of risk and compliance in Australia."
"With demand remaining high in financial services risk and compliance, we forecast the shallow skill sets of risk and compliance professionals, particularly in superannuation and funds management, will continue into 2024 as organisations compete for niche skill sets as they all mirror the same scaling in preparation for regulatory changes impacting business," Kaizen said. "For example, LinkedIn statistics in January 2024 indicated there was a 40% increase in the creation and demand for director-level risk and compliance professionals within financial services."
Demand for ESG-related expertise is part of the equation, said Simon Gvalda, a manager at Kaizen Recruitment.
"Businesses need to ensure that standards of reporting, systems and policy procedures are in place to make sure that they are able to cover off what they need to for requirements, especially with mandatory climate disclosures that are coming up in July," Gvalda said.
"The reporting side has been in demand at the moment, especially, again, with mandatory climate-related disclosures, but a lot of demand for a broader skill set on the sustainability side, including policy roles, stewardship roles as well as in the due diligence, risk and compliance side."
Kaizen pointed to regulatory changes such as RG97 around disclosing fees and costs in PDSs and period statements, the Financial Accountability Regime (FAR) Bill of2022, legislation driving fund retirement support, ASIC and ACCC's focus on greenwashing, and APRA's updates to SPS and CPS 230 and 530 - Investment Governance Regulations.
In SPS 530, APRA states that super fund trustees must demonstrate "how risk considerations connected to ESG factors are integrated into investment analysis, decision making and oversight, ensuring that the appropriate resources are available to identify and respond to material ESG factors," and specified assessment of climate risk exposures as part of that.
The APRA guidance also states that super funds can incorporate environmental and social impact-related objectives "where it can demonstrate that pursuing such additional objectives is consistent with the outcomes the RSE licensee seeks to provide to beneficiaries," and specifies that "where investments are linked to objectives, such as environmental or social impact related objectives, APRA expects an RSE licensee would be able to demonstrate how it monitors the objectives, using recognised industry criteria."
When it comes to filling roles that cover risk and compliance and ESG, Kaizen is seeing candidates from both pools - both risk and compliance professionals moving into ESG and ESG professionals taking up roles with risk and compliance functions, Gvalda said.
"There's a crossover between the two and we're seeing a spectrum of candidates with ESG experience and clients with risk experience," he said. "[In general], demand for ESG skill is still quite high and the challenge of finding candidates with the specific skill set that employers are looking for.
"Just saying ESG in general doesn't capture the specific skill sets employers are looking for - there can be roles that are related to a specific area - at larger firms, candidates are becoming much more expert in certain areas - climate change, or modern slavery and human rights, proxy voting, etc. But in smaller firms, they don't have the ability to have that degree of specialization, therefore that broad skill set can be in demand for most of those roles."