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‘Reactive’ hiring for ESG roles plagues a nascent green fintech industry in Asia: experts

‘Competence greenwash’ remains an issue. The talent scramble has led to the roles of finance and investment professionals being ‘repurposed’, which is not sustainable in the long run, say those familiar with the hiring situation.

Ravi Menon_Greenfintech_ESG Impact Hub
Ravi Menon, managing director of the Monetary Authority of Singapore (MAS) (left), speaking at the launch of Greenprint Hub, formerly named ESG Impact Hub, in October last year. The hub is set up to facilitate collaboration between green fintechs, financial institutions and real economy stakeholders in Singapore. Image: MAS / X 

The recruitment of professionals for sustainability roles in Asia’s nascent green financial technology, or fintech industry has been mostly “reactive”, and a knowledge gap has resulted in start-ups scrambling to “hire someone rather than the right people,” experts familiar with the talent shortage situation said.

Speaking on a panel discussion hosted by Eco-Business last Thursday, Paddy Balfour, Asia director for sustainable recruitment firm Acre, said that while he has noticed an uptick in demand for green fintech professionals in the region over the last 12 to 18 months, companies are struggling to find the right people to fill the required roles.

“The opportunities are probably running ahead of the [available] talent at the moment in sustainable finance and green fintech [in Asia],” said Ravi Chidambaram, founder of software-as-a-service start-up RIMM Sustainability and adjunct professor at Singapore’s Yale-NUS College, at the event at Rochester Commons in Singapore. It is part of an event series launched in partnership with Greenprint Hub, an initiative designed by the Monetary Authority of Singapore (MAS), Singapore’s central bank, to help grow the country’s environmental, social and governance (ESG) fintech space. 

For now, the roles of finance and investment professionals are being “repurposed” and given an “an extra ESG hat” to integrate ESG into their applications, which Chidambaram said is “not sustainable” in the long run.

Greenprint Hub_Rochester Commons_ESG skills gap

Speakers at the Greenprint Hub conversation series included (from right) Ravi Chidambaram, founder of software-as-a-service start-up RIMM Sustainability, and Paddy Balfour, Asia director for sustainable recruitment firm Acre. Ng Wai Mun, assistant editor of Eco-Business, moderated the session. [Click to enlarge] Image: Liang Lei / Eco-Business

Shoe-horning finance professionals into ESG roles is bubbling up the issue of “competence greenwash”, said Chidambaram, referring to a problem coined by academic Kim Schumacher, where underqualified candidates exaggerate their ESG credentials to get hired for in-demand, lucrative sustainable finance roles.

“Finding talent with both ESG and finance knowledge is not easy. We’re having to look in global talent pools to grow the industry,” said Chidambaram, referring specifically to the Singapore market, which is trying to position itself as Asia’s sustainable finance hub.

Sustainable finance is still a new industry in Asia, and green fintech is even newer, the industry emerging in the last few years off the back of growing appetite for greener financial products in the region.

People may have read articles about sustainability or about Scope 1, 2 and 3 emissions – but they are not specialists. Going forward, we will need more specialists.   

Claudia Marcusson, managing director, Zero Emissions Fund

According to a survey by banking software company Mambu in 2021, demand for greener financial products is higher in Asia Pacific than the global average as consumers look for more responsible ways to invest their money.

Of the respondents polled across Asia Pacific, 31 per cent indicated having knowingly banked with a sustainable finance institution or made use of a green banking product or service – higher than the global average of 29 per cent.

Skills crunch

Claudia Marcusson, managing partner at Zero Emissions Fund, a Singapore-based seed-stage sustainability venture fund, said that while sustainability departments in Asia are being “parked” in various corporate functions in response to regulatory or legal requirements, there is a need for more specialists with the requisite skills to drive sustainability progress in corporate Asia.

“People may have read articles about sustainability or read about Scope 1, 2 and 3 emissions, but they are not specialists. Going forward, we will need more specialists,” she said.

As corporate sustainability evolves in Asia, ultimately every member of staff will have ESG-related key performance indicators (KPIs) to fulfil, she said, and the “soft skills” in sustainability roles are often missing. 

In a recent interview with Eco-Business, Anita Neville, the chief sustainability and communications officer for palm oil company Golden Agri-Resources, pointed out that the art of persuasion is fundamental to her role in driving progress internally.

A forgiving industry

Chidambaram pointed out that, until recently, sustainable finance has been a “very forgiving industry”, with a dearth of standards that seriously police what is defined as a sustainable finance product or service.

“Anything could be deemed sustainable, anyone could give you an ESG rating, and anything could be marketed as sustainable,” he said. “Almost any sustainable financial product right now is unregulated.”

But this is changing, as central banks in some jurisdictions, for instance in the European Union, start to crack down on financial institutions trying to exploit regulatory loopholes, Chidambaram said.

“There will be consequences if you’re not compliant, and sell yourself in that way,” he said, pointing out that MAS is moving in the same direction. 

This is where the talent gap comes into focus, he said.

“If these markets start getting regulated, if you hire inexperienced people to take care of compliance, there will be a problem,” Chidambaram said.

This, he said, is where the “rubber hits the road” and presents the industry with a “moving challenge”.

Sustainable finance professionals, Chidambaram said, need ESG domain knowledge, tech skills, and data science knowhow to address “huge data gaps” in a very young industry.

“It’s very hard to make investment decisions without data,” he said.

Balfour noted that one of the problems for sustainable finance professionals is that their skillsets do not intersect with the sustainability world.

“There is a lack of a playbook [for sustainable finance] because it’s an emerging space,” he said. “At the moment, the sustainability skillset sits in a circle by itself. The challenge is in bringing skillsets together.”

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