Welcome to part three ‘Key skills for success in sustainable finance’ of Jumpstart – A five-part hitchhikers guide to careers in the sustainable finance universe by Ortec Finance’s Climate Science Lead, Dr. Bronwyn Claire and UNEP FI’s TCFD Program Lead, David Carlin.
Sustainable finance professionals can play a pivotal role in advancing environmentally responsible and socially conscious investment practices. To thrive in this dynamic field, individuals must possess a diverse skill set that combines financial expertise with a deep understanding of environmental, social, and governance (ESG) factors. The following key skills are essential for success in sustainable finance:
1. Financial acumen
A good understanding of traditional finance is crucial for professionals in sustainable finance. They must understand the concepts of financial analysis, investment strategies, risk management, and asset allocation. Knowing the language and trends of financial markets and economics allows them to tailor information to make or contribute to informed decisions that align with sustainable objectives and deliver insights on financial returns.
2. Ability to develop effective metrics
One of the key challenges in sustainable finance is measuring the impact of investments on ESG criteria. Professionals in this field need to employ various methodologies and tools to assess the real-world effects of their investment choices. They should be able to quantify environmental benefits, social improvements, and governance enhancements resulting from sustainable investment initiatives.
3. Knowledge of sustainability frameworksProfessionals in sustainable finance should be familiar with internationally recognized sustainability frameworks and standards. The United Nations Sustainable Development Goals (SDGs) are a vital reference point for aligning investment strategies with global sustainability targets. Moreover, understanding frameworks such as the Taskforce for Climate-related Financial Disclosure (TCFD) and the International Sustainability Standards Board (ISSB) helps them navigate climate-related risks and evolving reporting requirements.
4. Risk assessmentAssessing environmental and social risks using quantitative and qualitative measures is a crucial aspect of sustainable finance. Professionals need to identify and analyze the data as well as the outputs for insights on risks related to climate change, resource scarcity, social inequality, and corporate governance issues. By understanding these risks and assessing their materiality, you can develop strategies to mitigate potential negative impacts and strengthen positive impacts both on and by investments.
5. Collaboration and multi-stakeholder engagementStrong communication and collaboration skills are essential for sustainable finance professionals. They need to engage with diverse stakeholders, including investors, clients, regulatory bodies, and non-governmental organizations (NGOs). Effective communication helps build trust and consensus around sustainable investment strategies and fosters a shared commitment to positive change. With investment stewardship being preferred over divestment, it is important to be able to be clear and considerate with stakeholders.
6. Integrate ESGSustainable finance professionals must be adept at complex systems thinking to integrate ESG factors into their financial decision-making processes. This involves evaluating how environmental risks, social impact, and corporate governance practices influence the long-term sustainability and financial performance of investments. Building on the evaluation to incorporate the insights to identify opportunities that prioritize ethical practices and contribute to positive environmental and social outcomes.
7. Review ethical decision-makingEthics and integrity are central to sustainable finance. Professionals in this field are entrusted with making responsible investment choices that align with their clients' values and contribute to broader sustainable development goals. Ethical decision-making involves understanding each stakeholder, and most importantly your own, view on balancing financial considerations with environmental and social responsibilities.
8. Adaptability and continuous learningThe field of sustainable finance is constantly evolving, driven by emerging environmental and social challenges, regulatory changes, and shifting market dynamics. Professionals need to stay informed about industry trends and best practices, remaining adaptable to new developments and incorporating the latest insights into their strategies.
Given the rapidly changing landscape, professionals are encouraged to continually expand their financial acumen, ESG integration, ethical decision-making, and risk assessment skillset. These diverse skills, combined with extensive ongoing knowledge of sustainability frameworks, will enable individuals to drive positive change in the financial sector that balances both fiscal returns and sustainable outcomes and head towards a more responsible global economy.