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With the rapid development of ESG finance in China, the employment of ESG finance professionals has also entered the "rigid demand era". However, there is a large gap between the supply and demand of professional talents, and the lack of professional talents has become a problem restricting the development of ESG finance.

"The gap between supply and demand in China's ESG financial professionals' job market is still large, and talents in ESG investment positions are the most in short supply." Recently, during the first green finance capacity building event in Asia held by the Alliance for Sustainable Investment Capacity Building (CASI), Paul Moody, managing director of global partnerships and client solutions at the CFA Institute, accepted an exclusive interview with a reporter from 21st Century Business Herald. He said that China's ESG financial professionals' job market is generally characterized by strong demand and weak supply, and the shortage of professional talents has constrained the development of ESG finance.

CFA Institute, an organization composed of global investment professionals, is one of the founding members of CASI and has long been concerned about global sustainable development. According to the CFA Institute's "China ESG Financial Talent Career Development Report" (hereinafter referred to as the "Report"), the number of positions in China's ESG field is growing rapidly, the demand for positions is strong, and the professional group of ESG financial professionals is relatively young as a whole, with an average age of 35.5 years old. Most ESG practitioners have salaries comparable to those of senior executives. More than 60% of the interviewed ESG financial talents have annual salaries ranging from 300,000 to 1 million yuan, most of which can reach the level of senior executives in the financial industry.

Paul Moody said, "Currently, there are nearly 200,000 CFA charterholders worldwide, of which nearly 10,000 are in China." In order to facilitate Chinese candidates to smoothly participate in the CFA Institute's ESG certification examination, the CFA Institute plans to set up test sites in mainland China as soon as possible, and will continue to help China and the world build sustainable financial knowledge capabilities in the future.

The trend of ESG driving employment is obvious

"21st Century": What do you think about the development prospects of ESG investment in China?

Paul Moody: Compared with developed countries, China's ESG investment started late, and the initial development speed was relatively slow. The current market size is still relatively low. However, under the guidance of the "dual carbon" goal, China's ESG investment development has entered the fast lane. According to statistics from the CFA Association, as of the end of 2021, 73 institutions in mainland China have signed the PRI guidelines, and the number of pan-ESG funds has risen to 128, with a total scale of 232.3 billion yuan (about 34.6 billion US dollars). Although it only accounts for 1.3% of the 2.74 trillion US dollars of global ESG funds in the same period, China's ESG investment has received more and more attention and support for its unique social responsibility attributes and investment principles, and ESG-related financial products continue to emerge. Under the general trend that global ESG investment has become one of the mainstream investments, China's ESG investment is increasingly showing a good development trend.

"21st Century": Which ESG jobs are in short supply?

Paul Moody: CFA Institute research found that ESG financial talents are more dispersed and diversified in terms of departments and positions. Among them, investment departments and investment and investment analysis positions are representative departments and positions where ESG financial talents are more concentrated. ESG investment positions refer to positions that can make decisions on investment behavior, while ESG investment analysis positions emphasize technical research and analysis before investment behavior occurs. Talents in ESG investment positions are considered to be the most scarce, followed by ESG investment analysis positions, and then ESG risk management positions.

The report shows that among the 18 items of knowledge and abilities that ESG financial talents should possess, the experts interviewed believe that the most important ones are ESG evaluation methods and techniques, knowledge related to the governance field, professional learning ability, policy sensitivity, and finance-related knowledge; the talents interviewed believe that the most important ones are policy sensitivity, ESG evaluation methods and techniques, knowledge related to the environment, professional learning ability, and knowledge related to the governance field.

"21st Century": What are the pain points in China's current ESG talent training?

Paul Moody's: According to the International Energy Agency, by 2030, clean energy investment driven by carbon neutrality will create 14 million jobs and an additional 16 million jobs in areas such as building energy-saving renovation and new energy vehicles. It can be seen that the trend of ESG creating jobs and continuously driving employment is very obvious, and the ESG financial field is no exception.

The overall employment market for ESG financial professionals in China is characterized by strong demand and weak supply. At a time when markets, customers, and services are increasingly becoming key elements in the development of modern finance, the lack of professional talent as service carriers has become a major problem restricting the development of ESG finance.

From the perspective of the current labor market, there is a great demand for improving multiple integrated capabilities, such as interdisciplinary knowledge in science, engineering, economics, and society, information collection and analysis, cross-departmental collaboration and communication, application and development of data technology, and interpretation and application of standards.

Regarding how to promote the development of ESG financial professionals, the "Report" points out that the first step is to establish ESG, green finance, and sustainable finance development guidelines, the second step is to clarify the standards for practitioners in China's ESG, green finance, and sustainable finance development guidelines, and the last step is to launch authoritative professional qualification certification.

"21st Century": How do you view the current demand for ESG among Chinese companies? What new opportunities does China have in cultivating ESG talents?

Paul Moody: I ​​think China has a huge demand for ESG, and it can even be said to be the largest in the world. Europe has been paying attention to ESG topics for a long time, and the knowledge related to ESG is relatively complete. China is catching up. Although China's ESG development did not start as early as Europe, it has developed very fast.

According to the report, we found that the average age of practitioners in ESG-related fields in China is 35.5 years old, which is relatively young. They are generally in the fields of economics, management, science and engineering. The distribution in specific industry segments is also very wide, including related product design, risk management and information disclosure. From the sales of ESG products to the customer operation end, the scope is very wide and diverse, unlike what we imagined, which may be relatively narrow and focused. Recently, we have also cooperated with international organizations to jointly develop a series of mainstream courses on sustainable finance such as ESG, hoping to further promote the construction of sustainable financial knowledge and capabilities so that more people can enter this field.

21st Century: Net zero investment has become a focus of the CFA Institute recently. What aspects of net zero investment do Chinese companies need to pay attention to? What actions should they take?

Paul Moody: It is not difficult for companies and stakeholders to start working on carbon reduction, but it will become increasingly difficult to achieve net zero. Looking around the world, whether it is companies or society, the paths and methods involved in fulfilling the Paris Agreement or achieving their respective carbon reduction targets are all new. The path setting involves a wide range of new scientific knowledge and its application, and there is not much experience to draw on in the past. I suggest that companies should consider how to do it after they have a framework. Companies, institutions and even the entire industry must constantly look back at relevant data and practices, constantly analyze what they have done and what impact it has on the environment, and adjust existing practices through a lot of analysis and reflection.

ESG disclosure: local characteristics and internationalization are not in conflict

21st Century: China has entered a new stage of mandatory ESG disclosure. What preparations should companies make?

Paul Moody: When most countries implement information disclosure policies, it is mostly voluntary at first, and then the relevant departments will require the largest companies to disclose mandatory information, and then extend it to small companies. China has adopted a similar approach. For example, China, like the UK, has adopted the TCFD (Task Force on Climate-related Financial Disclosures) framework. China is developing along the path and making changes based on its own characteristics, but overall, China has learned from international experience.

As for how to disclose, I think the challenge lies in how to ensure that disclosure is presented in a clear and consistent manner. The report should have a certain added value, rather than just ticking a box and saying we have done this, but not stopping at that step.

In my opinion, corporate information disclosure includes many new methods and contents. At the same time, I also think that China is a country that is very good at learning. We can see that China actively learns from other countries and conducts cross-border cooperation. As far as I know, many Chinese companies have reached cooperation with British companies. Chinese companies really want to understand how to do a good job of information disclosure.

21st Century: Some Chinese companies’ ESG reports disclose content with Chinese characteristics, including rural revitalization. Do you think there is a contradiction between ESG reports disclosing local characteristics and internationalization?

Paul Moody: I ​​think the key to disclosure is to explain it to the international community. Each country has its own unique vocabulary or concepts in its disclosure reports. This is not uncommon. Europe and the United States have different approaches, and China is slightly different. However, we must recognize that there are more similarities than differences in the ESG field among countries. On different points, if Chinese companies want to seek foreign investment, they need to consider what approach and language strategy to take to ensure that the company's intentions and needs can be accurately conveyed to target investors so that investors understand what the company wants to express.

"21st Century": How do you think China's local sustainable disclosure standards can achieve international recognition?

Paul Moody: I ​​think it is not a problem for China's sustainable disclosure standards to be recognized internationally. China's ESG development has drawn a lot from Europe's past experience and some of Europe's current rules and standards. At present, China's sustainable disclosure requirements are based on international framework standards. In my opinion, China's local sustainable disclosure standards are more like international standards with Chinese characteristics. I suggest that different countries should seek common ground while reserving differences. In terms of sustainable development, our commonalities far outweigh our differences.

"21st Century": What do you think about the fact that the international ESG ratings of Chinese liquor companies are not very high? How should Chinese companies improve in the future?

Paul Moody: I ​​think that in terms of social value, drinking itself does not create any social value, so it is not surprising that the overall rating of wine companies is not high.

The wine company scoring system has a low score, and perhaps we need to go back to the basic dimensions, such as whether the company has fulfilled its social responsibilities, employee treatment, value orientation and other factors that may affect the score. At present, there is no unified standard in ESG rating worldwide, and each ESG rating agency has its own scoring logic and focus.

From the perspective of the CFA Institute, we need to see whether companies have enough attention and importance to ESG. An important measurement dimension is to see whether the company has relevant ESG knowledge and ability training and construction, and whether there is internal promotion and reinforcement. Therefore, I suggest that a company should disclose its own ESG report after understanding the expectations of rating agencies and other investors for the company itself.

"21st Century": Do you think ESG ratings need completely unified standards, or should standards with different focuses be allowed?

Paul Moody's: I still support the need for relatively common methods and standards. When a company is rated very highly by one institution and very lowly by another institution, it is difficult for the investment market to evaluate and make decisions. Therefore, I believe that the capital markets should take clear responsibilities and clearly state the specific standards they expect from companies. This will help us jointly form a more unified and consistent evaluation standard and jointly establish good practice examples.