Sustainable finance shifting from niche to mainstream and will fundamentally change the financial services sector
The rapid growth in sustainable finance will require major changes to the makeup of third-level business and finance degree courses and professional finance qualifications, to embed the required skills to meet the new requirements for the sector.
A detailed analysis of the skills and talent required to service Sustainable Finance says that this once ‘niche’ area is now core to any business strategy in the sector.
The Sustainable Finance Deep Dive Skills Report, commissioned by the Sustainable Finance Skillnet, Skillnet Ireland and Sustainable Nation Ireland and researched by Deloitte, says this rapid shift in required skillsets will require integration of sustainability and environmental, social and governance (ESG) modules into all third level finance degree and master’s programmes.
The report says Sustainable Finance is quickly becoming mainstream and will fundamentally change the entire financial sector, with regulation acting as an accelerator in prioritising skills and training.
The report undertaken was funded by Skillnet Ireland, the national agency responsible for workforce development.
It adds that Sustainable Finance is not a short-term trend, but a permanent shift from ‘niche’ to ‘mainstream’ representing an entirely new focus in finance. It recommends, that in addition to changes to third level programmes, Sustainable Finance must be part of professional education and continuous professional development for finance and business professionals.
The study, an output of the Government’s Ireland for Finance strategy, found a high level of overall Sustainable Finance awareness and perception in the asset management sub-sector in Ireland.
- 60 percent of respondents indicated that their organisation would give training and skills development a higher priority if regulation is implemented
- 67 percent said there is demand for Sustainable Finance skills and talent within their organisations, but supply is inadequate, and upskilling is required.
The report identified the most important drivers of investment in Sustainable Finance skills and talent between 2019 and 2025 as:
- improved long-term returns
- brand image and reputation
- decreased investment risk and/or underwriting risk
- regulatory/disclosure demands; and external stakeholder requirement (e.g. clients, government, society at large).
It notes that training in baseline knowledge is the key short-term skills priority, the main challenges limiting the development of Sustainable Finance skills and talent in Ireland are competing internal priorities and lack of available talent, and there is significant demand for skills in data management and measurement.
All respondents said that stakeholder expectations of Sustainable Finance have grown since 2015 and will continue to grow out to 2025.
- 67 percent said they expect experienced hires for Sustainable Finance will be required within their organisations
- 87 percent said they expect that existing employees will be upskilled with respect to Sustainable Finance Investment within their organisations.
The report was launched today (Friday, November 8) at AIB HQ, 10 Molesworth Street, Dublin 2, as part of Climate Finance Week Ireland 2019.
Welcoming the launch of today’s report, Minister for Financial Services, Michael D’Arcy T.D. said
“The events and announcements during this year’s Climate Finance Week shows the increased focus that firms in Ireland put on sustainable finance. The government demonstrated its commitment to building capacity in the sustainable finance sector in the ‘Ireland for Finance’ strategy, which I launched with Minister Donohoe in April. Collective efforts will make Ireland a successful global centre of sustainable green finance.
“I welcome the fact that Skillnet Ireland supported the preparation of this deep-dive report. The report provides the first measures of the future growth of this important area of activity and of the current skills base in it. The report sets out a series of recommendations to underpin future growth in this sector here in Ireland. I will examine these recommendations in consultation with stakeholders in the context of the preparation of Action Plan 2020 under the ‘Ireland for Finance’ Strategy.”
Paul Healy, Chief Executive Skillnet Ireland, said: “For the economy and society overall, businesses’ attention and focus on sustainability has already become a source of progress. However, as evidenced through this research report, most companies are only at the initial stages of the sustainability learning curve. In collaboration with Sustainable Finance Skillnet and other Skillnets nationwide, Skillnet Ireland are developing initiatives to assist businesses in expanding their knowledge and expertise to achieve the twin goals of sustainability and growth. We view this as a national imperative and an opportunity for government, businesses and consumers to come together to strengthen measures against climate change and develop forward-thinking sustainability policies. It is really becoming clear that sustainability is a megatrend that simply isn’t going away.”
Michael Flynn, Partner, Deloitte, said: “Sustainability, once regarded as a niche area, is by necessity becoming the new business as usual. If Ireland is to continue to be a top tier location of choice for international financial services, we need to significantly invest in upskilling our people in the area of sustainable finance. Our report highlights the requirement for improved sustainable finance skills across all FS sectors as organisations bring their sustainable products and practices to the market.”
Read the full research report from Sustainable Finance Skillnet here.