Shortage of ESG experts could negatively affect Canadian financial services companies

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Canada’s financial sector is facing a talent shortage in the area of ​​sustainable finance, as the demand for people who can assess ESG-related risks and opportunities far exceeds the supply, according to a new study.

Environmental, social and governance factors are becoming central to investing and lending activities, but two-thirds of companies are affected by a lack of relevant skills, according to a Deloitte survey commissioned by Toronto Finance International and the Financial Centers for Sustainability.

“I think it could potentially have a very negative impact if we don’t focus on it today,” TFI chief executive Jennifer Reynolds said in an interview.

The study is another signal that talent shortages are hitting parts of the financial industry. Last week, the CEO of the Royal Bank of Canada said banks were struggling to hire enough engineers, data scientists and artificial intelligence specialists due to competition from other industries. US banks, from JPMorgan Chase & Co. to Citigroup Inc., have reported in recent days that they are paying more — sometimes significantly more — to hire and retain the people they need.

In-demand skills include ESG risk management, qualitative and quantitative analysis and ESG auditing, according to the Deloitte survey. The shortage is also being felt across the Canadian financial landscape, including banks, insurance companies, asset managers and pension funds.

“Certainly some are ahead of others in understanding some of the issues. For example, pensions have had larger ESG-focused teams for some time,” said Usha Sthankiya, Sustainable Finance and ESG Partner at Deloitte.

Ignoring the need for ESG-focused knowledge and talent can impact a company’s technical analysis, risk management, audit and disclosure capabilities, Reynolds said. “We can’t wait. We have to do it today.

Photograph: Buildings are under construction along the skyline in Toronto, Ontario, Canada, Sunday, February 16, 2020. Photo credit: Brett Gundlock/Bloomberg.

Copyright 2022 Bloomberg.

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