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Monday, Mar 27, 2023

What makes someone an ESG talent?

What makes someone an ESG talent?

Companies in Hong Kong are urgently seeking employees who can help them meet their sustainability goals, but finding the right skill set is a challenge This talent gap is driving the development of new courses and qualifications that encompass training in both business and the environment

Who qualifies as a sustainability professional? This is a matter that has yet to be settled. Employers in Hong Kong are seeking to hire people with experience in measuring the sustainability of a company or investment from the perspective of its environmental, social and governance (ESG) performance.

Such experience is increasingly sought after owing to the pressure on companies to disclose their ESG performance, amid a global and local push for them to reduce their carbon and other emissions, as well as improve their social impact. Companies are collecting data on their environmental and social performances because regulators, bankers, insurers and investors are demanding to see it – especially with respect to climate risks, since mitigating climate change is now a major endeavour across economies.

For example, the Hong Kong Monetary Authority, which regulates banks, is requiring lenders to report their climate risks. The banks, in turn, are asking their corporate clients to disclose their climate risks, because these are part of the bank’s risks.

The Securities and Futures Commission, which regulates the securities market, including the stock exchange, is also requiring similar disclosures of listed companies. The stock exchange has also been strengthening its ESG disclosure requirements.

Disclosure of environmental information is complicated because it is not just about one’s own emissions or the emissions one can control, such as how much energy a company generates or uses, but also the indirect emissions that are produced along a company’s supply chains, such as through purchased products and services.

The disclosure of social performance poses new challenges too. The social component of ESG boils down to relationships. It requires a company to address how it manages its relations with stakeholders: employees, suppliers, customers, shareholders and the communities in which it operates, often covering many jurisdictions.

People walk through Exchange Square in Hong Kong on October 28, 2022. The Hong Kong stock exchange advises listed companies to assess climate-related risks.

While the governance element should be familiar to companies as they are used to disclosing their management systems and internal risk controls to bankers and investors, the “G” in ESG expects them to describe how they balance the interests of stakeholders in pursuing the company’s business objectives, including the degree of transparency of their ESG disclosures.

Collecting data and measuring impact is the first step in the journey of a company to understanding what risks it is exposed to. For example, a company may face much higher energy prices if it doesn’t become energy efficient; it would be liable to high waste charges if it does not reduce its waste because new regulations are being implemented; or it could face higher extreme-weather risks if it does not invest in defensive and resilient infrastructures.

More and more listed companies in Hong Kong are committing to carbon targets and adopting the 2050 timeline by which Hong Kong is set to become carbon neutral, as per the government’s commitment.

The authorities are keen to see a reduction in emissions from the corporate sector so that Hong Kong can meet its target, and a growing group of global investors are declaring they will prioritise investment in companies with such targets and timelines.

All this has contributed to the hiring spree within the corporate sector of talent with skills to help companies with what is often referred to as the climate and sustainability transition.

But what skills qualify someone to be a sustainability professional? One important criterion is a certain depth of knowledge about the environment, which includes an understanding of climate change.

In 2015, the Hong Kong Institute of Qualified Environmental Professionals was created by dedicated people working on various aspects of the environment to define the qualifications needed to be an environmental professional.

The institute has created a new qualification with a syllabus that spans across the broad field of environmental knowledge. Candidates can be assessed through two levels of examination that include prerequisite relevant working experience. Those who pass are considered a qualified environmental professional.

Graduates at the campus of the University of Hong Kong (HKU) on December 20, 2022

The qualification is now quite widely accepted in Hong Kong and the institute is working with universities to align undergraduate environmental courses with its assessment so that graduates can be better equipped to pass the exam.

Within the corporate sector, finance firms are just as keen to hire green talent to meet global climate and sustainability goals. The Hong Kong Green Finance Association, a professional body focusing on finance, has been plugging the ESG talent gap by running courses to get finance professionals up to speed on sustainability issues, including collaborating with the Hong Kong University of Science and Technology (HKUST) on short-term courses.

HKUST started a groundbreaking – Hong Kong’s first – green finance undergraduate degree last year, in which students can gain a strong foundation in both environment and finance. This is the coming together of a broad range of knowledge covering environmental science, pollution control, economics, business and finance.

With Hong Kong’s aspiration to be a leading centre for green finance as declared by the government, organisations like the Hong Kong Institute of Qualified Environmental Professionals and the Hong Kong Green Finance Association have a role to play. There are opportunities for them to collaborate with universities and the authorities to upgrade Hong Kong’s capabilities in professional services, creating new industries, jobs and careers in the environmental and sustainability fields for our future generations.


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