In Focus: Megatrends  

Majority of financial services firms to hire ESG specialist

Majority of financial services firms to hire ESG specialist
Firms are preparing to hire ESG specialists (Luke Sharrett/Bloomberg)

The vast majority of financial services firms plan to hire an ESG specialist in preparation for the UK's new rules on sustainable investments.

A poll of 200 banks, investment managers, financial advisers and others has shown 77 per cent planned to make a permanent hire specifically to handle ESG.

It also found that 86 per cent of businesses have performed an ESG assessment ahead of the UK’s Sustainable Disclosure Requirements (SDR) and future ESG regulation.

Those that have not have mainly been held back by a lack of clarity over how to perform the assessment, according to the research, which was carried out by Tisatech and ESG provider The Disruption House.

The government's new ESG rules will bring together sustainability-related reporting requirements for corporates and financial institutions.

A roadmap was published in October last year, which stated the rules should be implemented in the coming years.

The UK’s anticipated sustainable disclosure requirements could potentially go further than the EU’s SFDR, said Tisatech 

The SFDR requires financial market participants and financial advisers to provide clients and investors with certain ESG-related information in relation to the provision of their services and the marketing of certain financial products, using the mandatory disclosure templates (where applicable).

The disclosures are required to be made in pre-contractual information communications, on ESG firms’ websites and in periodic reports.

The Financial Conduct Authority has already said it is poised to require intermediaries to take into account sustainability issues when advising clients, in line with the EU's SFDR rules.

Gary Bond, CEO of Tisatech, said: “The UK has long been at the cutting edge of financial services. However, this is a time of unprecedented technological and operational change, causing institutions across the sector to re-examine how and why they do what they do.

"I am heartened to see that the industry is overwhelmingly prepared for regulation, and indeed that there is scope to go beyond regulations and hire specialists.  

“I hope regulators take notice of this appetite when drafting SDR, ensuring that the UK can not only retain its place as a global leader in financial services, but establish itself as a moral leader too.” 

Bond said the poll showed the industry was primed for change.

"The data presents a counterpoint to the view of ESG regulation as confusing, excessive, and performatively adopted," he said.

E comes out top

The poll found the social aspect of ESG was the lowest priority for businesses, with just 24 per cent of respondents citing it as the highest priority - contrasting with the environment (42 per cent) and governance (34 per cent).  

When it came to why businesses were motivated to address ESG, a moral obligation came out top (21 per cent), alongside regulatory (18 per cent), financial (15 per cent), or competitive necessity (13 per cent).  

Furthermore, 76 per cent of businesses affected by the EU’s SFDR measures agreed that they had meaningfully changed the way they do business and internally consider ESG.