Bankers with ESG skills manage to dodge wave of layoffs, study shows

Asset managers, asset owners and banks continue to seek ESG talent, defying a broader hiring downturn and outpacing every other sector, Barclays says

Goldman Sachs Group embarked on one of its biggest rounds of reductions ever last month, cutting about 3,200 positions. Reuters

A wave of job cuts that has swept through the global finance industry has not affected demand for environmental, social and governance (ESG) specialists, where hiring growth continued through 2022, a study by Barclays showed.

Analysts at the UK bank, who used natural language processing to trawl through more than 200 million job postings, found that asset managers, asset owners and banks “continue to seek ESG skills and talent, defying a broader hiring downturn and outpacing every other sector”.

The findings suggest that it pays to build expertise in ESG strategies, as some of the world’s largest banks resort to deep cuts in more traditional corners of their business.

Goldman Sachs Group embarked on one of its biggest rounds of reductions ever last month, cutting about 3,200 positions. Morgan Stanley parted ways with 1,600 employees in December, while others such as Bank of America have also resorted to layoffs, albeit on a smaller scale.

Many of the announced cuts will restore banks’ headcount to pre-pandemic levels and coincide with efforts in the industry to adjust to a slowdown in deal-making.

A company's ESG hiring record tends to be a good indicator not only of its commitment to sustainability, but also of its stock performance going forward, said Alexa Walls and Jason Goldberg, the Barclays analysts behind the research, and data scientist Adam Lauretig.

They singled out BlackRock as a firm with a high level of interest in adding ESG jobs. At Goldman Sachs, they found the interest level to be moderate.

“Firms with higher than normal ESG hiring interest were more likely to experience subsequent rating improvements and enjoyed better stock performance two to three years following the posting date,” they said.

The Barclays study also indicated that the headwinds faced by firms embracing ESG in the US, where Republican states have issued several bans against the investing form, have not dented the finance industry’s commitment to it.

“Even as news headlines have questioned whether ESG is losing traction, it seems buyside and sellside alike remain convinced of its strategic relevance and future demand,” the Barclays analysts wrote.