The finance industry needs more climate experts. Here's why

Do economists, accountants and financial advisors of the future need to add 'green' skills to their list of credentials?

Last month, Michele Bullock delivered her first speech as incoming governor of the Reserve Bank of Australia.

The topic of her speech? Climate change.

"Climate change and the actions taken in response will have broad-ranging implications for the economy, the financial system and society at large," she said, adding the bank has been building its own capacity to analyse how climate change affects the economy and monetary policy.

The industry's demand for sustainable finance skills has been growing. Alongside energy and transportation, the latest LinkedIn Global Green Skills 2023 report by LinkedIn's Economic Graph picks finance as one of top sectors that will enable countries to meet their sustainability targets.

Yet the industry has been lagging behind when it comes to hiring green talent or upskilling existing workers, with only one in 15 finance workers having green skills, compared with one in eight workers across all industries.

Dr Craig West is a strategic accountant who advises businesses on exit plans. He says over the years, environmental, social and corporate governance (ESG) has become a key valuation metric not just for large corporations but for small to medium-sized businesses.

"This means that if you're an accountant or financial adviser to clients who own their own business, having ‘green skills’ is fast becoming a non-negotiable," he writes on LinkedIn.

"Clients will increasingly want to hear from you about the impact of their ESG score on supply contracts, cost of bank loans, the value of your business and investor appetite."

RMIT University's associate professor Angel Zhong agrees ESG presents a huge opportunity for finance students and professionals, and advises them to get familiar with diverse sustainability metrics.

She writes: "The ability to not only comprehend these frameworks but also to adapt swiftly to the constantly evolving landscape of sustainability metrics is of paramount importance. This skillset is increasingly vital, given the divergent ESG ratings by different ESG rating providers."

She adds the ability to assess risks associated with climate change is crucial, as mandatory climate reporting schemes begin in Australia in 2024.

When Nicholas Boyd-Mathews started his career in asset management in the late 1980s, he recalls being told never to "mix ethics with investment".

Fast forward 30 years, the ESG investing expert says it's vital finance professionals understand climate risks associated with companies as there is more investor demand for transparency and rigour around ESG reporting.

"Finance professionals need to have knowledge and access to the growing green financial product space. This includes carbon credits, ESG focused funds and technology and commodity companies well," he says.

Climate tech expert Charlotte Connell predicts Australia's super funds will play a huge role in financing the transition to net zero. "Australia has the fourth-largest pension pool in the world and we only need to mobilise 7.2% of it to fund the entire energy transition," she writes.

Her advice for those interested in pursuing a sustainability career in the finance industry? Stop studying and start networking.

She writes: "You can study online courses until the cows producing less methane come home, but I strongly urge you to connect, collaborate and lean in to contribute to the ecosystem to land yourself a job in green finance."

How can finance professionals prepare for the transition to a low emissions economy? Share your thoughts in the comments below.

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