In H1 of 2023, we have seen the beginnings of a transition towards ESG integration into the investment portfolios and the investment firms’ general business dealings in the European landscape. This year has been marked by a significant focus on regulation, disclosure, and targets for ESG. European regulations such as Sustainable Finance Disclosures Regulation (SFDR), EU Taxonomy Regulation, TCFD, Corporate Sustainability Reporting Directive (CSRD), and the ISSB regulations have led many infrastructure funds to hire either dedicated teams or specialists to drive the data collection, and analysis, integration, and reporting. Limited Partners have placed added pressure on General Partners to comply with these regulations.
The types of skills required for these teams vary in part due to the size and focus of each fund and in part due to the current market composition (which includes sustainability/ ESG professionals who could have either a consulting, strategy, scientific, or financial/ investment background). On this basis, it is clear that this is a fluid and evolving talent pool, therefore funds need to be clear on their strategy in order to build a fit-for-purpose team across all sustainability roles if they intend to reach their goals. Funds that have recently made hires in this area include but are not limited to: Jupiter Asset Management, Goldman Sachs AM, Partners Group, Schroders, etc.
From a portfolio company perspective, there is still a high demand for Sustainability Executives and Non-Executive Directors or Advisors and we expect this trend to continue well into H2 and 2024. At the fund level, generalist ESG hires have continued at a slower rate at the mid to senior levels. Based on our report, the average number of female hires at the mid to senior level was 56% and 54% respectively (excluding any promotions). Other market trends include the convergence of impact with ESG and sustainability, supply chain challenges, and biodiversity loss. We expect that more varied specialists and professionals will be required.