Amit Puri, Global Head of ESRM at Standard Chartered on all things ESG
Sustainable finance and the war for talent within it.
The rise of ESG and responsible investing has created a skills gap and fierce competition for the best talent. Standard Chartered's Amit Puri tells Hiring Circle how candidates can assess a firm's ESG credentials, where future talent may come from and how the war for talent is likely to dominate the next 12-24 months.
ESG investing and financing has become mainstream and a company’s ESG credentials are increasingly important to investors/shareholders and often employees – can you outline SCB’s position?
Companies in the last 15 years or so have really focused on CSR or community projects, which is great, but the sustainability agenda and ESG has moved on so dramatically in the last few years. Companies need to have an in-depth, thoroughly thought through and coherent approach as to how to manage ESG across all facets – from the business it does, to the way it employs its staff, to the impact it has on its community. That’s the way Standard Chartered has tried to align itself.
We have a very strong approach to ESG in all parts of the Bank. Our HR department think about it very much from a people perspective and the experience we give staff, our supply chain people think about it in terms of the supplies we adopt and we have our community engagement programme thinking about it from the way we direct our voluntary time and where we might put our philanthropic capital.
I mention all that first because while they are very important, where the Bank – and any bank for that matter – has the biggest impact is in the choices it makes on its lending. That has become increasingly important over the last few years, and it will continue to be. It’s also moved on to the regulatory space as we have a number of regulators thinking about capital add-ons for environmental issues. From Standard Chartered’s point of view we have made this a key part of our strategy; Our investors, our shareholders and our staff expect this. It’s a given.
"Companies need to have an in-depth, thoroughly thought through and coherent approach as to how to manage ESG across all facets – from the business it does, to the way it employs its staff, to the impact it has on its community."
The investor and shareholder communities are both really interested in this, but they are also interested in sustainable results. Stopping parts of your business that make good sense purely on ESG grounds such as the Oil and Gas portfolio or the Aviation portfolio for example is not something that investors would want to see. However, there is an increasing shift as investors start to consider that while there may be a short-term impact on profitability; If a bank stops financing certain industries and if they don’t stop financing unsustainable practices then there won’t be a bank left. If we continue to finance assets or projects that won’t meet the world’s climate objectives then we’re going to be exposed to physical risk, transition risk, stranded assets and so forth. So actually, there’s a huge appreciation that they have to take a longer-term view over quarter-to-quarter profit.
Can you tell us a bit about what you and your team do?
I’ve been in the Bank for 17 years and have done a variety of roles – including heading up this team for four years now. We are responsible on a day-to-day basis for accepting the Bank’s approach to sensitive sectors. For example, what is the Bank’s approach to palm oil? To coal and fossil fuels? To aviation and shipping? We publicly disclose those as our Position Statements which set out what we won’t finance and what conditions we require from our clients to lend to them. So minimum safety guidelines on projects, protecting human rights in our supply chains, etc.
My team sets those requirements, ensures those requirements are institutionalised and are involved in policing them around the Bank. We’re a small team of eight people, split between London and Singapore. It is difficult to do what we do for the whole bank being a small team but we also give a lot of training to our front-line bankers in order for them to consider ESG directly. In that way we act like a centre of excellence and try to get our philosophy across the entire organisation.
The profile of people who sit in my team is of a combination of industry people – so those who have worked in mining companies, oil and gas, or deep experience in human rights issues – as well as bankers. We try to mesh that experience together so that the team can understand the financing aspect, but also the ESG aspects.
In a young market where opinions on best practice are varied, what are the key principles that potential candidates should consider when assessing a company’s approach to ESG?
There are a few things, but senior management buy-in and tone from the top is extremely important. I often get asked ‘when you think of ESG, what is the most important of these three letters?’. My answer is that there is no clear winner, but in order to have extremely strong credentials in this space you must have strong governance. So, the support the team is given from the top to implement social and environmental considerations is extremely important.
They should also be looking for sustainability summaries that set out their approach to emerging issues, and looking at external rating agencies, such as Sustainalytics or MSCI, that give an ESG score. These, however, should be used with some caution. While the scores are interesting, they are nascent and prepared by financial analysts that are rating a company on their credentials, as opposed to an ESG expert taking an industry view.
"I think organisations need to think a lot more broadly about recruitment and where they take candidates from. Traditionally, candidates tend to come from a financial background or an accountancy firm, rather than having degrees in mining or geography or engineering. It should go both ways."
I think looking at the make-up of the team is also important. Often if you go on a bank’s website you will see their approach to environmental risk management and they will talk about the profiles of their team. Having a combination of industry people and bankers I think is really important – although I would say that!
There is a growing demand for talent with ESG experience. What do you think organisations can do to bridge the skills gap and what are some of the steps a candidate hoping to break into this area could take?
I think organisations need to think a lot more broadly about recruitment and where they take candidates from. Traditionally, candidates tend to come from a financial background or an accountancy firm, rather than having degrees in mining or geography or engineering. It should go both ways. Increasingly people that have non-traditional backgrounds, such a shipping or mining, should be considering whether they have skills that are transferable into banks.
What are the key developments that you see happening in ESG over the next 12-24 months?
War for talent. I know people say that no matter what industry they’re in, but the demand for people with ESG experience is going to grow exponentially. People who have done ‘real world’ jobs that have ticked E or S or G are going to be invaluable.
If you think about it from a thematic view – climate change is obviously a focus and will continue to be so, but we’re going to see a massive uptick in human rights and biodiversity over the next 12-24 months.
The pandemic certainly highlights that as there is a lot of conjecture and speculation around zoonotic diseases that have moved from one species to another and how. That’s not about where it happened but how, so was it encroaching on biodiversity that led to this? This focus will be more and more important in the future.
And Human rights. People are increasingly concerned about the supply chains and where their products come from, which we will continue to see grow.
This will mean that teams that have been under pressure and not been given headcount over the past few years will be given it. But then everyone will try to go to the same place to recruit people, so I think we’ll see an inflation in salaries, but also in interest in this space.