China Faces Acute Lack of Talent in Green Finance Amid Growing Demand, CFA Institute Report Says
China is grappling with a shortage of finance professionals with expertise in environmental, social, and governance (ESG) issues, according to a report by the CFA Institute. The demand for such talent is surging as sustainable investing gains momentum. The report highlights the need for a structured and standardized system for cultivating ESG talent, with collaboration between the government, enterprises, and universities.
David Zhang, the China head at the CFA Institute, emphasized the massive gap in knowledge and skills to deliver on ESG goals as more companies in China adopt ESG practices. The increasing demand for sustainability-related work, particularly in the financial market, is driven by both the global “do-good” investment boom and China’s commitment to reaching net-zero greenhouse gas emissions by 2060. However, unclear career paths, a lack of training opportunities, and limited career guidance hinder the development of ESG talent.
Even professionals currently working in ESG-related roles lack the necessary expertise, as 60% of ESG professionals have received no relevant training, the report found. Last year, the number of active ESG-related job postings in China rose by 64.5% compared to the previous year. Salaries for such roles, which are 30% higher than average financial jobs, attracted a surge of candidates, with the number of applicants increasing by over 150%.
Despite the growing interest, there is a shortage of qualified individuals with sufficient ESG-related expertise. Less than 10% of ESG professionals in mainland China hold at least one ESG-related qualification or accreditation. The importance of acquiring relevant qualifications is highlighted by various certifications, including the CFA Institute’s certificate in ESG investing and the certifications offered by the European Federation of Financial Analysts Societies and the Global Association of Risk Professionals.
The CFA Institute suggests that China has a significant opportunity to catch up to developed economies in terms of ESG-related products, given the fast-growing market interest in sustainable projects. China’s sustainable finance market could exceed ¥70 trillion ($9.8 trillion) by 2031, quadrupling its current size. To accelerate its transition to a low-carbon economy and align with global standards, China is introducing stricter ESG disclosure rules. The Shanghai Stock Exchange has encouraged companies to disclose ESG information, and all companies listed on the Science and Technology Innovation Board will be required to disclose ESG information in their annual reports from 2022.
To bridge the talent gap and meet growing demand, the CFA Institute recommends that the government establish guidelines for ESG, green finance, and sustainable finance development, clarify practitioner standards, and introduce more qualification and degree certificates. Universities should accelerate the development of ESG finance-related courses, and professional organizations should facilitate vocational education and training. The report concludes that addressing the shortage of ESG skills and expertise is crucial given the imminent pressure to comply with mandatory ESG disclosure requirements and evolving ESG reporting standards.
Analyst comment
Positive news: China is facing a shortage of finance professionals with expertise in ESG issues, highlighting the growing demand for sustainable investing. The market for sustainable finance in China is projected to quadruple by 2031. To address the talent gap, the CFA Institute recommends establishing guidelines, clarifying practitioner standards, and introducing more qualification and degree certificates. Accelerated development of ESG finance-related courses and vocational training are also recommended. The market is expected to grow as China aligns with global standards and introduces stricter ESG disclosure rules.
