There has been a marked slowdown in year-on-year growth in ESG headcount at asset managers, according to IPE’s latest global asset management research study, Top 500 Asset Managers.

The number of ESG and engagement specialists grew by nearly 26% from 2021 to 2022, then by 13% and last year by 4%, the data shows.

The slowdown comes against the backdrop of rapid regulatory change for asset managers and a backlash to ESG investing from some quarters alongside a strong commitment in others.

IPE’s Top 500 data also showed that in 2024 the average number of ESG and engagement specialists grew by nearly 60% at asset managers with over €1trn in assets under management.

Asset managers reported bigger ESG headcounts across the board, with the total number of specialists rising from 2,457 to 2,559, corresponding to an increase in the average headcount from 15 to 17.

Vanessa Bingle, partner, ESG and responsible investment at consultancy Alpha FMC, said asset managers continue to invest selectively in sustainability roles, although “additions are more muted following several strong years of expansion of ESG resourcing”.

“Asset managers are thinking more holistically about their sustainability organisational design, moving beyond central ESG teams supporting the investment process, to consider the needs across their organisation as a whole, including client-facing and operational functions,” she told IPE.

ESG investment specialists, total number and average per reporting company

“This has resulted in a rise in demand for sustainability expertise in distribution, risk, compliance and data functions, as well as continued demand for climate expertise.”

A headhunter also said hiring in 2024 so far has been muted.

“Only business critical/replacement hires are being instructed,” the headhunter said, adding that hiring was being driven by private market firms building client coverage in Europe, and also in private markets investment teams.

“Overall 2024 year-to-date there is a marked sense of ‘juniorisation’ when any hire is done now and in part driven by cost management,” the headhunter told IPE.

Citing European Union regulation, the headhunter said the European asset management industry would still need ESG talent but potentially more at the level of data or investment analysts “as the metrics within ESG continue to confound but are still required”.

Earlier this year another headhunter told IPE there had been a surge in senior ESG specialists looking for new roles recently, with “some people starting to feel like their big sustainability job is actually just a glorified risk management function”.

Tom Strelczak, founder of TWS Search, said he had received more enquiries from potential candidates in the first quarter of 2024 than at any time over the past five years.

The 2024 Top 500 Asset Managers report and downloadable dataset is now accessible with an IPE Professional Membership package, click here to learn more.

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