To complement Verdantix research on the climate skills gap, we invited sustainability executive search firm Lewis Davey to tell us about its recent experiences and expectations for this year.
We find ourselves in an interesting time, nestled between what was ultimately the greatest demand for ESG professionals I’ve seen in my 20 years of recruiting in the industry and ongoing nervousness at the macro level.
Even prior to COVID-19, we could sense a changing ambition around the climate and wider ESG agenda. In June 2019, Theresa May’s Net Zero announcement set a positive direction of travel – in the UK at least – resulting in a flurry of net zero targets and announcements.
COVID-19, and the uncertainty that followed for business, didn’t seem to overly stem the growing appetite for ESG. Many people we were speaking to – even while they weren’t hiring – were indicating a heightened demand for ESG services. The sense was that the pandemic had put ESG more firmly under the microscope. Others simply had more time to progress an array of ESG and climate initiatives than they had previously.
Coming through the worst of the pandemic, the demand for ESG professionals became insatiable, exacerbated by the impacts of the Great Resignation. Everyone was an ESG expert. Salaries were being benchmarked on a regular basis as employers struggled to keep up with spiralling expectations around remuneration from candidates who came to realize that, for once, there was a fairer valuation being placed upon their profession.
As a result, 2022 was a crazy year for Lewis Davey. We spent a fair bit of time managing expectations from clients who were struggling to hire the right people, and I actually don’t recall that we sought out much new business at all that year – outside some of our new markets such as North America. There were boutique sustainability & ESG businesses and teams we were working with that doubled in size.
But then Putin invaded Ukraine. Trussonomics happened. We ended up in a cost-of-living crisis. Rising interest rates impacting the cost of debt, rising energy prices impacting pretty much everything else.
The UK hasn’t officially gone into recession, but the appetite for growth has diminished, which can be seen in the wider GDP figures. We’re in a period of stagnation.
Some employers over-hired in the ‘boom’. Others have been exposed by rising energy prices, supply chain issues and interest rates. In many cases, it has become politically challenging even for high-performing sustainability and ESG teams to make the business case for hiring, despite the need to. In other cases, there isn’t this need.
In the US and to some extent in the UK, we have seen a politicisation of ESG – I know some teams who have rebranded to ESG to rebrand back again to sustainability. In the words of Jean-Baptiste Alphonse, “the more things change, the more they stay the same”.
So where are we now? Regulatory pressures at a European level will continue to drive the need for skilled sustainability professionals; think CSRD, CSDDD, SFDR, TCFD, TNFD, BNG. This will be particularly evident around reporting and disclosures – but that’s not everyone’s cup of tea when they are putting together their checklist for their next role. We should see some demand for nature based and biodiversity issues and a more joined-up approach to climate and nature. We are also seeing a shift to more implementation-based roles. With net zero strategies and announcements tailing off, the demand is now more for delivery experts: Energy Managers/Consultants, Decarbonization Project Managers and a continuing demand for renewables professionals are where I see firms’ needs currently and moving forward. We are also still seeing a fair bit of demand around embodied carbon/LCA and Scope 3.
The volume of career opportunities is down but the delivery pressure on teams to make do with their current resources is rising. In 2024’s worrying geopolitical landscape, I think the sustainability and ESG industry is primed for another renaissance.
