China is facing a shortage in both the quantity and quality of financial professionals specialising in environmental, social, and governance (ESG) matters amidst a surge in demand for such expertise amid the rise of sustainable investing, as highlighted by the CFA Institute.

The institute's report points out the challenge China is encountering in nurturing ESG analysts, strategists, and executives to meet the increasing demand in the finance sector.

It suggests a collaborative effort among government bodies, businesses, and academic institutions to establish a structured and standardised system for cultivating ESG talent.

David Zhang, the China head at the CFA Institute, remarked on the widening gap in knowledge, skills, and capabilities required for companies to fulfill their ESG-related objectives as more entities in China embrace ESG principles. This growing demand is fueled by both the global trend toward socially responsible investing and China's commitment to achieving net-zero greenhouse gas emissions by 2060.

However, obstacles such as unclear career pathways, limited training opportunities, and insufficient career guidance hinder the development of ESG talent in the country, according to the CFA Institute's findings. Even those currently in ESG-related roles often lack the necessary expertise, with 60 per cent having received no relevant training.

The report highlights a substantial increase in ESG-related job postings in China over a recent one-year period, with a surge in both applicants and salaries offered. Despite this, qualified individuals with adequate ESG-related expertise remain scarce, with fewer than 10 per cent holding relevant qualifications.

Zhang stressed the massive opportunity for China to catch up with developed economies in terms of ESG-related products and sustainable finance skills. He stressed the need for expertise to drive growth in this sector, particularly given projections indicating substantial growth potential in China's sustainable finance market.

To address these challenges and facilitate China's transition to a low-carbon economy, Zhang proposed several measures. These include establishing guidelines for ESG and sustainable finance development, clarifying standards for practitioners, expanding qualification and degree certificate programmes, enhancing university-level ESG finance courses, and promoting vocational education and training through collaboration among professional organisations, government bodies, and academic institutions.

For more regulatory news

Discover an extensive network of ESG providers here

Source: South China Morning Post