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Sustainable Finance Market

expect in 2023

Sustainable Finance Market: What to expect in 2023

The year 2022’s emphasized on raising awareness and achieving harmonization. A shift towards a focus on implementation, execution and delivery in 2023/2024 is expected. ​There will likely be less effort spent on advocating for sustainable financing and more emphasis on the practical aspects of integrating sustainability into the market. Considering this, we have identified three significant trends that are expected to shape 2023.

There are three overarching trends to keep an eye on in the coming year or two on the the Sustainable financial market. These trends are interconnected and multifaceted, each deserving separate attention.
Trend 1

Defining Greenwashing

Greenwashing has been a recurring topic for some time, but its prominence in sustainable finance surged when the U.S. authorities initiated an investigation into the ESG claims of Deutsche Bank’s asset management arm, DWS. As we venture into 2023, this issue takes center stage, driving discussions and shaping decision-making processes.
Despite the growing momentum and the serious implications associated with greenwashing, one fundamental question remains: How do we precisely define “greenwashing”?
While different stakeholders may offer varying interpretations, there is a growing call for establishing a common understanding of greenwashing. Institutions like the European Supervisory Authorities (ESAs) and the UK Financial Conduct Authority (FCA) emphasize the need for clarity. Additionally, the European Commission is expected to propose a directive to regulate “green claims” made by organisations.
The call for a clear and shared definition of greenwashing is justified, but one must approach this challenge with caution and objectivity. While the consequences of greenwashing are indeed undesirable, there is a risk of overly severe punishments that could hinder the necessary investments and innovation. It is important to recognize that inaction can also pose significant risks beyond the issue of greenwashing.
Trend 2

Unraveling the Essence of Transition Finance

Similar to the concept of “greenwashing,” the notion of “transition finance” has been part of the market discourse for a while. However, it has recently gained substantial traction, making a significant impact on the market. This trend comes as no surprise, considering the ongoing global efforts to transition toward a low-carbon economy, which necessitates diverse parties moving at different paces through various iterations and investment cycles. ‘The OECD ‘2021 review of transition finance-related approaches suggests that, under existing approaches, transition finance has been generally understood as being intended to decarbonise entities or economic activities that: (i) are emissions-intensive,1 (ii) may not currently have a low- or zero-emission substitute that is economically available or credible in all relevant contexts,2 but (iii) are important for future socio-economic development. ‘ Source: OECD Guidance on Transition Finance.Ensuring credibility of Corporate Climate Transition Plan.
Within the financial markets, this topic has been extensively debated, leading to tangible developments such as the emergence of “transition bonds.” Even structures labeled as “sustainability-linked,” supported by reputable organisations like the International Capital Market Association (ICMA) and the Loan Market Association (LMA), inherently embody the essence of “transition finance.” Numerous publications from prominent institutions have aimed to clarify the concept and enhance transparency in these discussions.
​Despite these well-intentioned efforts, the nature of “transition finance” remains elusive, much like “greenwashing.” It is unrealistic to expect a definitive top-down framework or a single universal definition for “transition finance.” Instead, it is likely that a globally aligned understanding of “transition finance” will emerge organically, resembling a mosaic of diverse applications, some explicitly labeled as such, while others are not. In 2023, we may witness the initial glimpse of this evolving landscape.
Trend 3

Evolving Landscape of Sustainable Finance Products—Innovation and Quality Take Center Stage

One of the pivotal factors in reshaping the financial markets towards sustainability has been the remarkable growth of the green bond market and other sustainable finance products. These products have now become an integral and stable part of the market, with the ICMA Green Bond Principles soon celebrating their decade-long existence.
​At first glance, it may seem peculiar to consider this area within sustainable finance as a trend for 2023, given its established presence. However, a closer look reveals the potential for a second wave of products and innovations to emerge. With the momentum behind the “transition finance” theme, we anticipate a resurgence of the “transition” label, which could gain significant traction this time around.
Moreover, the notion of “hybrid” structures is poised to enter the sustainable finance conversation as market participants seek fresh and innovative approaches to stay relevant to stakeholders.
This novel structure combines a dual approach: a “use-of-proceeds” (UoP) framework level and a “sustainability-linked” asset level. Investors’ funds are allocated to assets that align with the framework’s definitions, similar to other green bond frameworks. However, the assessment of these assets goes beyond their eventual use of proceeds and extends to the overall commitments of the borrowing entity, initially focusing on climate-related aspects.
​In addition to the drive towards new structures and tools, a steadfast commitment to quality is expected, particularly in relation to definitions (such as “materiality” and “ambitiousness”) and EU Taxonomy-related categories, as well as data accuracy and verifiable impact. While this topic has received attention for several years and demands ongoing focus, it is worth highlighting its significance this year due to the imminent launch of the EU Green Bond Standard, the introduction of additional Taxonomy categories, and the overall push for higher quality ESG data.

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We are an exclusive Sustainability and ESG Executive Search and Recruitment Agency, offering both permanent and temporary contracts recruitment solutions, across all sectors. We assist employers find their next great hire in ESG and Sustainability Integration/ Green Energy & CleanTech/ Responsible Investment, Sustainable Finance & Impact Investing.

The Paris Agreement at COP21 identified capacity building as a core challenge our governments, institutions, organisations and civil society need to overcome to build a sustainable world.
Companies need to build business strategies and develop activities to keep growing and create value for their shareholders without exhausting resources or harming future generations. Therefore, engaging in building a decarbonised and equitable economy is at the core of their mission and success in the long term. Their ability to build resilience of human and ecological systems will enable them to navigate this ever-evolving world.
As a recruitment agency, we truly believe, we have a substantial part to play in equipping those thriving businesses with the best candidates to conquer those challenges.
Our purpose is to support businesses in their sustainability journey by connecting them with the best talents in the ESG and Sustainability job market.
We focus to provide tailored solutions to our clients’ needs and enhance candidates’s experience in finding their ideal jobs.

Qualifications and Education: Building Expertise in the Field

In terms of qualifications, academic programs and certifications in sustainability and ESG management have gained prominence. Universities and professional organisations offer courses and certifications that equip individuals with the necessary knowledge and skills to excel in the field. Additionally, relevant degrees in environmental science, sustainability, business administration, and finance are highly valued by employers.
The ESG and sustainability job market is experiencing significant growth and offers diverse opportunities for professionals. Dedicated roles, as well as the integration of ESG knowledge into traditional job functions, highlight the increasing importance of sustainability in business strategies. Specialized skills, regulatory expertise, and industry knowledge are highly sought after.
​As companies strive to embed ESG practices into their operations, professionals with ESG expertise will continue to play a crucial role in driving positive change and shaping a sustainable future.

Diverse Opportunities: ESG and Sustainability Across Industries

The ESG and sustainability job market is not limited to specific industries. While sectors such as renewable energy, cleantech, and sustainable finance have a well-established presence, organisations across diverse industries are recognizing the need to prioritize ESG and sustainability practices. From manufacturing and retail to technology and healthcare, professionals with ESG expertise are sought after to drive sustainability initiatives and help companies future-proof their operations.

Navigating the Regulatory Landscape: Compliance and Governance Expertise

The increasing regulatory focus on ESG factors has led to a rise in demand for professionals who can navigate the evolving compliance landscape. Knowledge of relevant regulations and frameworks, such as the Task Force on Climate-related Financial Disclosures (TCFD) and the United Nations Sustainable Development Goals (SDGs), is highly valued. This includes expertise in managing ESG risks, conducting audits and assessments, and implementing sustainable governance structures.

Specialised Skills and Knowledge: Key Areas in High Demand

The ESG and sustainability job market also offers opportunities for specialised skills and knowledge. Professionals with expertise in renewable energy, circular economy, sustainable supply chain management, impact investing, and environmental conservation are in high demand. Additionally, individuals with experience in sustainability reporting frameworks, such as the Global Reporting Initiative (GRI) or Sustainability Accounting Standards Board (SASB), are sought after to ensure transparent and standardized reporting.

ESG Expertise in Traditional Job Roles: The Integration of Sustainability Principles

Another emerging trend is the growing importance of ESG expertise in traditional job roles. Professionals in finance, legal, marketing, operations, and human resources are increasingly expected to have a solid understanding of ESG principles and their implications for their respective fields. For example, financial analysts need to assess the financial risks and opportunities associated with ESG factors, while marketing professionals must effectively communicate a company’s sustainability initiatives to consumers.

Dedicated ESG and Sustainability Roles: A Shift Towards Holistic Approaches

One significant trend in the job market is the rise in dedicated ESG and sustainability roles. Previously, these responsibilities were often dispersed across different departments, such as corporate social responsibility, environmental management, or investor relations. However, as companies recognize the need for a holistic approach, they are creating specialised positions such as ESG managers, ESG analysts, and corporate sustainability officers. These roles focus on integrating ESG considerations into business strategies, measuring and reporting on sustainability performance, and engaging with stakeholders.

ESG and Sustainability Job Market Trends

The ESG (Environmental, Social, and Governance) and sustainability integration job market has experienced significant growth and transformation in recent years. As companies worldwide recognize the importance of incorporating ESG principles into their operations, the demand for professionals with expertise in this field has surged. This article will explore the evolving landscape of the ESG and sustainability job market, highlighting key trends and opportunities.
The integration of ESG and sustainability practices into business strategies has become a top priority for organisations across industries. This shift is driven by various factors, including the increasing awareness of climate change, social justice issues, and corporate governance standards. As a result, companies are actively seeking professionals who can navigate the complexities of ESG and sustainability and drive positive change within their organizations.