Sustainable finance is growing but do we have the skills to deliver?

A new report from Toronto Finance International has identified a gap between the skills in financial services now and what will be needed

Sustainable finance is growing but do we have the skills to deliver?
Steve Randall

As the world speeds up its journey to avoid the worst-case scenario for climate change, sustainable finance has a major role to play.

But do the skills of financial services professionals meet the needs required now and in the future?

That’s the question posed to more than 100 industry professionals in Canada, which identifies what skills are lacking now and what will be required in the years ahead.

Toronto Finance International (TFI), the United Nations-convened Financial Centres for Sustainability (FC4S) and Deloitte Canada partnered on a new report called ‘Taking the lead in sustainable finance: A case for developing critical financial skills and competencies in Canada.’

The report found a lack of ESG skills with 68% of respondents saying their firms are impacted by this; 85% said this impact was moderate to significant.

The importance of developing these skills was universally agreed, especially as 90% of respondents said that sustainable finance was either central to most of their operations, becoming integral to much of what they do, or playing a growing role.

"With Canada committing to net-zero greenhouse gas emissions by 2050, the demand for professionals skilled in environmental, social and governance (ESG) issues will continue to rise, but this demand is outpacing the current availability of talent," says Jennifer Reynolds, president & CEO of TFI.

Time to skill-up

The scarcity of ESG and other sustainable finance skills needs addressing now, with stakeholder pressures and regulatory expectations increasing.

But more than 4 in 10 respondents said they had experienced challenges in recruiting the talent with the skills they need, explaining why 95% believe that existing talent will need to be upskilled.

However, most firms do not currently have the training programs to develop these skills in-house and are not aware of external options.

"The lack of sustainable finance skills extends beyond Canada – it's an international challenge," said Stephen Nolan, Managing Director of the FC4S Network. "Addressing this talent gap is key to the success of the global financial services system's climate transition and that's why FC4S is pleased to support this critical work."

Action required

The report calls on financial services firms to assess the requirements of greater sustainable finance demands and plan to upskill their teams accordingly.

This is likely to require working with post-secondary institutions and industry associations to establish programs that are adaptive and responsive to the sector's changing requirements.

These organizations – and government bodies – should also act to facilitate the development of the skills required.

"While some financial services institutions, professional training and education organizations are taking steps to close the sustainable finance talent gap, more needs to be done for Canada to harness its world-class financial sector to facilitate the transition to a low-carbon economy," added Reynolds.