Banking sector must prioritise building its sustainability talent pool

The degradation and erosion of South-east Asia's natural environment, the effects of rising climate, and an increasing urbanised population demands urgent action.

Fortunately, (or "finally", as many would argue), the recent COP26 and Singapore-hosted Bloomberg New Economy Forum give us hope that 2022 is when government and corporate carbon transmission plans will be put into action.

This is a good thing but it is not without its challenges, including for banking. Banking will play a very big role particularly in providing the financing necessary to help countries, industries, and businesses transition to greener ways.

As it stands, Singapore has already established some strong global sustainable finance credentials including the Monetary Authority of Singapore's sustainable bond and loan grant schemes; its leadership in green bond issuance; and having one of Asia's first regulators to launch the Environmental Risk Management Guidelines for Financial Institutions.

But the industry needs the right people who understand how and why the climate is changing - and how to stop it - and we need visionaries to guide our transformation.

The key challenge is that these skills are not easily obtainable right now and risks slowing Singapore down in achieving its aims.

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According to HSBC's recent Sustainable Finance Survey, 40 per cent of institutional investors in Asia are held back on ESG-based investing, due to a shortage of expertise or qualified staff (26 per cent in 2020). The skills deficit reflects the wider industry - from wider banking coverage, risk management and product specialism.

This is a known challenge with upskilling already underway through industry-led sustainability training via external partners like the Institute of Banking and Finance Singapore; the Singapore Green Finance Centre; and Green Finance Industry Taskforce.

TALENT CRUNCH

But sustainability is so fast moving, urgent and nascent, particularly in Asia, that the talent pool is not large enough to cater to the emerging needs. Moreover, banking is now competing with other industries for this finite talent pool

The talent crunch will be further exacerbated, following COP26, as countries' climate action pledges become larger and more immediate for governments and businesses alike.

All of this requires banks to further "lean in" to develop a talent pool that is globally perceived as knowledgeable, diverse and a source of future global leaders in the green finance space.

There are some practical steps that banks can take to deliver on this.

First is to further develop, prioritise, promote and remunerate the right skills. Historically, banking has been about financial modelling. But given how climate change is now an all-of-society problem, we're requiring skills that go far beyond the technical to include business and ESG acumen, and broad knowledge of sustainable products.

Just as important are the soft skills to help stakeholders - ranging from colleagues and customers to NGOs and the public sector - in their transition journey. For example, we are looking for professionals who are agile in their thinking and ways of working, given how broad and fast-evolving sustainability is in its growth. We also need really strong communicators because this continues to be a learning space for everyone. And finally, we need people who have empathy and can adapt to varying perspectives and motivations of stakeholders.

RECRUITMENT HORIZONS

Linked to the widening of skills, banks will need to widen their recruitment horizons from business and financial professionals, to attract lateral hires from non-traditional fields including urbanists, engineers, lawyers, teachers, and scientists.

Second, banks can start to collaborate more proactively with our schools and universities to provide a greater steer on what is needed as well as develop strategies to funnel more students into the sustainability industry once they graduate.

Finally, as banks compete with the tech sector and other complex customer-service industries, we need to demonstrate to Singaporeans that green finance is a specialism within banking that has a strong future and that a banking career in this space will offer strong career progression and a clearer pathway to industry leadership.

The world is undergoing a fundamental change and we are witnessing the next "industrial revolution". Time is critical, and financial institutions need to further accelerate our ESG agenda and aspirations.

Underpinning all of this will be a redefining of the roles and skillsets that Singapore as a country, and financial services as an industry, will need to survive and thrive in the coming decades. We are also in a global competition for a limited pool of talent, and we need to persuade talent to work and stay in banking.

Singapore's banking industry needs to further prioritise the development of sustainability through the emphasis in skills development (working with industry partners and tertiary institutions), non-conventional recruitment, and installing structured succession and leadership development in this space.

Done right, there is nothing to stop Singapore from establishing itself as a sustainability banking hub that will attract engaged professionals from within Singapore or further afield.

• The writer is chief executive officer of HSBC Singapore