by the MicroCapital Team - Education, Green Energy, Risks, Trends/Challenges, Youth -

SPECIAL REPORT: How Do We Build the Right Skills for a Sustainable Future?

There is no doubt that sustainability considerations recently have found their way into many areas of our lives. The global Fridays for Future movement is just one of several calls to action to significantly reduce carbon emissions and make the world more climate-resilient and socially equitable – and thus a better place to live. The adoption of the Paris Agree­ment and the UN’s Sustainable Development Goals (SDGs) are Sustainable World Academydriving demand for low-carbon goods and services around the world. Thus, the sustainability wave has spilled over into the real economy and the finan­cial sector, forcing stakeholders to rethink legacy business models and practices. Environmental, social and governance (ESG) con­sidera­tions, being the main pillars for sustainability, have become key drivers for investment and other business decisions, as sustain­ability-related risks (e.g. climate change) have started to gain wide recognition.

The COVID-19 pandemic: A (final) push for sustainability?

The fragility of unsustainable business models and lack of practices for a resilient and robust economy – as well as survivability – became apparent early in the COVID-19 pandemic, leading to the collapse of stock mar­kets and global value chains in early 2020. Now that some countries are starting to move out of the pandemic shock, calls for green recov­ery packages with environmental, regulatory and fiscal reforms intended to gen­er­ate prosperity have become prominent. For instance, the EU launched the Next Generation EU fund in July 2020, aiming to tackle the economic and social impacts of COVID-19. Thirty percent of the fund is allocated to investments that comply with the Paris Agreement and the EU’s European Green Deal. To direct these investments to­ward sus­tainable projects and activities – and to combat the practice of “greenwashing” – the EU has established the EU Taxonomy, a common classification system for sustainable economic activities.

The COVID-19 pandemic also has provided insights into sustainability-linked company performance. Investors have experienced directly how catastrophic events (e.g. climate change) can affect their investment returns. This led them to take sustainability risks more seriously and require their investees to disclose sustainability-related information (ESG data). Many companies with high ESG ratings and valuations are com­ing through the pandemic better than their peers, and ESG funds and indices have outperformed the broader market (MSCI; December 9, 2020). With total assets in sustainable funds reaching almost USD 1.7 trillion – a 50-percent increase from 2019 – we can confidently call 2020 “The Year of ESG.”

New generations take over the lead

However, the pandemic crisis is not the only factor that led to this dy­namic. In recent years, the demand for sustainable investments has been driven partly by the entry of a newly prominent investor group to the market: millennials. Among this group – those born between 1981 and 1996 – 95 percent are interested in sustainable investments. Mil­lennials will inherit around USD 30 trillion from their parents – baby boomers – within the next few decades. These young investors tailor their portfolios according to their personal values, often considering companies’ ESG track records an important factor. Similarly, they exclude investments with certain exposures (e.g. fossil fuels, child labour) and look for invest­ments that result in desirable effects (e.g. green technologies, education and health).

This transition toward a green economy (see above regarding the Euro­pean Green Deal) also has the potential to create sustainable jobs. These jobs will require technical skills as well as soft skills, including environ­mental awareness, teamwork, analytical skills, leadership, and manage­ment and entrepreneurial skills. ILO estimates that in the sustainable energy and circular economy sectors, only 2 percent of global jobs are at risk of disruption, and there is the potential to create over 100 million new jobs – if workers receive sufficient training to fill them. Many of these jobs will be taken by millennials and members of Generation Z, those born between 1997 and 2012, also sometimes called Generation Greta in reference to Greta Thunberg, one of the faces of Fridays for Future. In order to help businesses prepare for this transfor­mational change – in an even more competitive environment that goes beyond classical KPIs and takes ESG criteria seriously – future leaders and executives need to be equipped with new skills.

Building capacity for sustainable development

This is why institutions such as the Frankfurt School of Finance & Management (FS) have a crucial responsibility to educate the next gen­eration to be sustainability-conscious global citizens who understand the im­medi­acy of environmental and social responsibility. FS has taken up this challenge by implementing sustainability-related aspects in all areas, namely in its academic programmes, executive education, research, and numerous concrete consulting and training projects around the world. Since the early 1990s, the International Advisory Services arm of FS has supported its clients and partners with tailored, sustainable solutions, empowering people across the globe with education they can use to advance their businesses toward the SDGs.

Among financial institutions, there is high demand for Green & Sus­tain­able Finance Training Programmes as these institutions start to embrace the concept of sustainability. This offers both risks and opportunities for successful day-to-day management as well as readiness for the future. Among others, two six-month online programmes, Certified Expert in Sustainable Finance and Certified Expert in ESG & Impact Investing, develop the necessary skills for finance professionals to identify ESG-related risks and oppor­tunities; develop suitable financial products; and design sound, sustain­able investment and management processes and strategies for their businesses.

These programmes benefit from the huge level of knowhow within FS, namely in the form of experts from the FS-UNEP Collaborating Centre for Climate & Sustainable Energy Finance and FS’s strong global consultancy network. With the Green & Sustainable Finance Cluster Germany, which is hosted at the FS-UNEP Centre, FS and its partners are uniquely qualified to support the transition to a climate-friendly and sustainable economy by advancing the critical work of stakeholders in green and other sustainable finance areas.

By Jonas Hernán Fleer, senior programme manager, Sustainable World Academy

Jonas Hernán Fleer is a senior programme manager, trainer and experienced e-learning developer for Green & Sustainable Finance programmes at FS’s Sustain­able World Academy. He has extensive experience in developing and implementing online and classroom training on sustainable finance, climate mitigation and adapta­tion finance. As an Environmental and Social (E&S) Safeguard Expert, Mr Fleer developed and delivered trainings on E&S Sustainability Management for financial institutions and SMEs, transforming his extensive E&S knowledge into practical learning units. He holds a Master of Arts in International Devel­opment Studies from Philipps-University Marburg and is certified by FS in Renewable Energy and Climate Adaptation as well as Sustainable Finance.

This feature is sponsored by the Frankfurt School.

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