Sustainable finance must be de-mystified to better attract skilled workers, says Jacki Johnson, one of Australia’s most experienced professionals in the field.
Like many disciplines, sustainable finance is struggling to find highly qualified talent, with demand only likely to increase in the years ahead as the sector grows.
“There is a lot of ambiguity and complexity within the topic, so the challenge we’ve got is de-mystifying it,” says Johnson in an interview with Wire.
Put simply, sustainable finance refers to financing and facilitating activities that contribute to positive climate, environmental and social outcomes. But a host of acronyms and jargon has developed around the sector which can make it seem impenetrable to the uninitiated. Even to seasoned finance industry professionals it can sometimes feel like a secret society.
A 2022 study by the University of Technology Sydney’s Institute for Sustainable Futures found almost 40 per cent of finance industry respondents reporting that there were not enough climate skills to meet demand.
“What I’m hearing across all stakeholders, from boards of directors to audit firms, is that there’s a shortage of skills, and the complexity is growing rather than getting easier,” Johnson says. “It’s like any profession – the minute you have complex language you put barriers up to entry.”
Johnson played a key role in the establishment of the Australian Sustainable Finance Initiative in 2017. ASFI’s members include Westpac (a founder member) and Australia’s other big four retail banks as well as some of the country’s top insurance firms and pension funds.
ASFI’s mission is to realign the finance sector so that more capital flows to activities that will facilitate a sustainable, resilient, and inclusive Australia.
Johnson’s own interest in the area dates back to her long career with IAG, with the insurance group one of the earliest to identify climate as an issue that was likely to transform the financial landscape. At IAG, she forged links with the United Nations Environment Programme Finance Initiative, which enabled her to put a global lens on the issues she was seeing in her home market.
Having a great mentor is one of the best ways to inspire people to consider a career in sustainable finance, and Johnson is a strong supporter of ASFI’s inaugural mentor program “Limitless”, which is sponsored by the government’s Clean Energy Finance Corporation.
Westpac is also supporting the program and in October hosted an event at the bank’s headquarters in Sydney to connect mentors with mentees in an informal setting.
“The transition to a net-zero economy for our planet, customers, employees and the community by 2050 requires significant collaboration across the board for positive impact and change,” says Siobhan Toohill, Westpac’s chief sustainability officer.
“It is paramount that we continue to not only work with, develop capability, and mentor the next generation of Sustainable Finance leaders, but also learn from them. I have no doubt that they will be the ones who will find innovative and more efficient ways for us to reach a more sustainable future.”
The growth in sustainable finance deals underlines the need for more talent. Around $13 billion worth of green bonds – where the proceeds are used to finance climate-positive projects or initiatives - were issued in Australia in the first half of 2023, according to an RBA study - already the highest annual amount on record.
Johnson believes that companies cannot afford not to take ESG factors into account when making major financial decisions, and as such looks forward to sustainable finance becoming inseparable from mainstream finance in the years ahead.
“Decarbonising our whole economy is going to be a huge task. At the same time, there’s all the social inequality and fairness issues that we face as a society. So how does the industry make sure that it’s part of the solution and have an impact? There’s going to be such demand for people to think systemically and understand how finance plays a role,” Johnson says.
And in terms of the skills needed to succeed in the sector, Johnson identifies good numeracy, analytical thinking, a natural curiosity, and a strong disposition for learning as useful attributes.
Strategic decision making – where decisions are made with an eye on their future impact – is also important, along with good communication skills.
Meanwhile, the skills shortage cannot be solved by poaching from other parts the finance industry, Johnson says. The net needs to be cast more widely.
“If it’s an area that’s going to grow, and I believe it is, then we’re going to have to build new pathways into this as a career.”