ESG continues to be a substantial factor shaping business transformation in 2022, as consumers, investors and policymakers drive businesses to operate more sustainably, responsibly and ethically across a range of environmental, social and governance factors.
“In the past 18-24 months there has been a seismic shift of the position of ESG,” explains Kester Guy-Briscoe, a Principal for Gerard Daniels in London. “Traditionally it was a specialist, even niche area, but today it is an expected part of corporate strategy, across industries, continents and ownership structures. In people terms, the demand for this expertise is no longer driven by speciality organisations, it has just become the norm.”
To meet market expectations and deliver on the social licence to operate aspect of ESG, many businesses are now looking to develop this expertise within their organisations. But what happens when the demand for ESG talent exceeds supply?
“This shift has created a shortage of ESG professionals, and great competition for the talent that is available,” says Kester. “This arms race is evident in the growing number of roles that Gerard Daniels is delivering, and in what our sources in the market tell us about the efforts made by internal recruitment teams, across all sectors and geographies.”
According to Kester, ESG consulting is one area with particularly strong demand. “Hiring a specialist to deliver a finite policy or sustainability report is one thing, but many businesses have found that they need much deeper expertise and guidance to define their ESG strategy,” Kester says. “Businesses need help incorporating ESG principles into their organisational strategy and behaviours, work that consultants are best placed to support.”
Navigating Scope 3 emissions reduction
Understanding and reducing Scope 3 emissions is another area where Kester believes considerable expertise is required. “Scope 3 emissions reduction is much more difficult than addressing Scope 1 and 2, because by definition, there is less capacity for companies to directly compel change” Kester explains. “Trying to influence and drive accountability through the supply chain that you’re selling into is a lot more complex, making specialist ESG support essential for navigating this issue.”
Carbon capture, and storage and utilisation (CCUS)
Although the capture, storage and utilisation of carbon can be a vexed issue, Kester notes that it is yet another area of strong demand for ESG expertise. “The renewed focus on CCUS under the Biden administration demonstrates a policy shift from a more idealistic approach to emissions reduction, to a more practical application of ESG principles; CCUS is almost by definition technology that abates, rather than terminates processes which produce carbon,” he says. And while this technology is not new, to date there has been limited incentive for businesses to implement it at scale, as a result a small talent pool exists with both the necessary technical and business experience to move this agenda forward.”
Challenges and opportunities
With growing demand for a limited pool of talent, this is undoubtedly an employee-led market. This means that as an ESG professional in search of a new role you will be spoilt for choice, and if you’re looking to integrate this type of talent into your organisation the competition will be fierce.
Here are some other challenges and opportunities that stem from the war for ESG talent.
The need for speed
When competition for talent is strong, businesses must be able to move quickly or risk missing out on the available talent. “Organisations that are slow to respond to candidates and make decisions are at a disadvantage compared to businesses that can deliver fast but rigorous recruitment processes,” says Kester. “Partnering with an experienced executive search firm can help less agile businesses to move more quickly and successfully on the acquisition of ESG talent.”
Strong competition for talent is also enabling ESG professionals to secure more lucrative employment terms, while putting pressure on employers to meet growing salary expectations. “ESG professionals are now typically having conversations with multiple potential employers in parallel, so they are able to develop a better sense of the market for their skills, and what that market is willing to pay,” says Kester. “This provides better leverage to negotiate much larger salary increases.”
Finding the right fit
While money is always a factor in recruitment, to compete for ESG talent businesses are also trying hard to differentiate their value proposition beyond salary.“ Today ESG professionals can afford to be far more discerning about the types of roles they will take, and organisations they will join,” he says. “And the more roles there are to compare, the more due diligence candidates can perform, and the more confidence they can have in finding the right fit.”
From a job satisfaction perspective, the recent shift has created a unique opportunity for ESG professionals to be supported and incentivised. “Historically it’s been an uphill battle for many specialists to be heard, to gain support from business leadership and to deliver their aims,” Kester says. “But today the need for their expertise has entered the zeitgeist, so instead of fighting for progress, their expertise is actively sought. In some cases there’s even a seat waiting for them at the top table.”