Competence greenwashing: Are questionable ESG credentials putting climate goals at risk?

Fast forward two years, and the number of executives with environmental, social and governance (ESG) in their job titles has mushroomed. According to a study by Reuters last year, the number of chief sustainability officers has more than tripled globally since 2021. Demand for green skills is growing too. Even in Asia Pacific, where the energy transition has been relatively slow, hiring for green jobs has grown by 30 per cent over the past five years. 

The question is whether the skills needed to do key jobs in sustainability are keeping up with demand. As companies race to establish their ESG credentials in the face of growing regulatory and market pressure, it is no wonder that more executives are playing up their knowledge, skills and experience in sustainability – a practice coined by sustainable finance academic Kim Schumacher as “competence greenwashing” (also known as skills greenwashing) in 2020. 

“

A huge number of individuals – climate quitters – want to move into sustainability. But do we have the requisite talent to answer the world’s problems? Short answer: no.

Paddy Balfour, executive director, Asia, Acre

Joining the Eco-Business podcast to discuss the issue are Darian McBain, the former chief sustainability officer at the Monetary Authority of Singapore and Thai Union who launched a consultancy for companies wanting to outsource the chief sustainability officer role last month, and Paddy Balfour, the executive director, Asia, of Acre, a specialist sustainability recruitment firm. 

Recruiter Paddy Balfour and former Thai Union chief sustainability officer Darian McBain. Images: LinkedIn

Tune in as we talk about:

• Why competence greenwash is a problem
• Which industries are fudging ESG skills?
• Sustainability centres of “excellence”
• The rise of generalists
• Real value or buzzword bluster?
• The future of ESG talent in Asia

This podcast is part of a series on the energy transition in Southeast Asia. Read more stories in our coverage of the topic here.

Edited transcript:

Darian, why is competence greenwashing a problem and how big of an issue is it?

Darian McBain: I think it’s become a problem recently because there is such demand for sustainability skills, but there’s been a lack of investment in sustainability skills over the past three decades. If I look back, I trained in the early 1990s in environmental engineering and actually we didn’t know what we were going to do [in sustainability]. We thought we might build bridges in a different way or perhaps help with construction in a more sustainable way. But it was recognised that there was demand coming out of sort of the Rio Earth Summit [in 1992] that people would need to be thinking about the environment and sustainability.

If you fast forward now close to 30 years, there’s a high demand – every business needs somebody looking at sustainability. Particularly sitting here in Singapore, the financial sector is creating huge demand for people with a broad skill set across sustainability. But there hasn’t been that build up of competency, investment in training and skills. We are starting to see more investment in green skills and sustainability in the region. But I think the demand for people to have those skills now is contributing to this whole problem of skills greenwashing.

Paddy, as a sustainability recruiter, how big a problem do you feel competence greenwashing is?

Paddy Balfour: When we’re looking at technical hires particularly in areas such as environmental risk, pollution, climate change and resource depletion, there’s a real issue with hiring people who aren’t qualified to do the work they are employed to do. At the enterprise level, there’s also a risk that organisations positioned to do a piece of work aren’t qualified to do it.

So we do have to be very careful about this kind of greenwashing. There’s also the issue of the erosion of trust, when we’ve hired individuals or an organisation to deliver a piece of work, and they can’t deliver it.

The other side to it points to the growth in hiring in sustainability in Asia, which is ultimately a good thing. This is because organisations have made net-zero commitments, there’s increasing impetus around being able to change behaviour. I think we have to be conscious that in Singapore, for example, it’s a less developed candidate marketplace. And part of the challenge that we’re facing here is the natural evolution of that. It then comes down to supporting and nurturing talent. 

“

There’s been a lack of investment in sustainability skills over the past three decades.

Darian McBain: There’s a lot of new legislation coming out of Europe and the United States which is now starting to reach into Asia – for instance the carbon border adjustment mechanism, the sustainable finance disclosure regulation, forced labor regulations from the United States. These are all related to supply chains and extending beyond the initial regulators’ borders. And so that means that those companies working in Asia are now starting to have to comply with regulations that are enacted in other countries. And that in itself is creating a lot more demand. It isn’t historic demand, it’s demand that’s being created now and we need people with the right skills to address that gap quickly.

In which sectors is competence greenwash a particularly big issue? 

Darian McBain: Sectors that don’t have technical experts coming through the different ranks. For example, in finance, there are people with a lot of skills in finance but working on ESG might be relatively new.

In my experience of working in the real economy in Asia, with manufacturers and on agriculture, they have had to be doing this technical work for a number of years and so a skill set has been developed. It’s when you have sudden demand in a different direction that there is a lack of skills and you tend to see more competence greenwashing.

There have been lots of sustainability centres of excellence launching in Singapore. How excellent are these centres of excellence?

Darian McBain: You have to look into the history of where their excellence is coming from to be a judge of just how excellent they are. I think having ESG hubs is a very good idea. Myself and Paddy work out of the ESG Impact Hub in Singapore, which brings together people with different competencies. When you make a claim to say that you’re a centre of excellence, you really should have your track record in place to show why it’s excellent. If you’re considering working with a centre of excellence, be prepared to ask the questions about why it is excellent and what will you be getting from the centre of excellence?

Which sustainability roles are hardest to fill at the moment because of a dearth of skills? Where are the biggest knowledge gaps?

Paddy Balfour: There’s been a push towards generalist sustainability roles – thematic experts are becoming more generalist and we’ve seeing more demand for more generalist hires. That is creating a bit of an issue. There’s also a very, very clear push towards carbon as climate issues at the top of the agenda, so we’re seeing challenges in terms of talent coming through in other areas like biodiversity and the talent to fulfill those technical roles.

What’s the quickest way to tell if a candidate or a colleague is fudging their ESG credentials?

Paddy Balfour: It’s something that we constantly test ourselves on. There’s an issue around the language of sustainability and we’ve seen this in the finance industry. People know the buzzwords and understand some of the trends, but what’s important is to really drill into individuals in terms of the value they are really delivering.

“

There’s a challenge when you suddenly become a chief sustainability officer if you’ve only done a conversion course in sustainability.

Can’t basically anyone do a job in sustainability with a bit of training?

Darian McBain: Literacy in sustainability has increased significantly over the past few years as corporates have put their executives, boards and staff through sustainability training programmes. That is to be applauded. We do want to build that capacity. But if we look at the role of the chief sustainability officer, while not defined by any regulation, there are multiple functions that person should be fulfilling. If you were hiring a chief financial officer, there would be an expectation that they at least have an accounting background. There’s a challenge when you suddenly become a chief sustainability officer when you’ve only done a conversion course in sustainability. A course is a good thing. And you would be bringing with you other knowledge. But does it give you the expertise to make very strategic decisions? If you’re at the CSO grade, you should be at the C-suite and hopefully reporting to a CEO. Are you able to take into account the many and very different issues that come into sustainability decision-making? 

What is expected of the modern chief sustainability officer these days?

Paddy Balfour: We have been looking at the leadership competencies needed for CSOs. Interestingly – and counter to Darian’s Point – sustainability technical knowledge is not part of that competency base. Based on interviews with well over 100 CSOs, the valued qualities are business insight, driving change, executive influence, leadership, innovation and courage. It’s some of the softer elements that are needed to do that role.

The main finding about the CSO role is that it’s about creating the right technical competencies and understanding that expertise can’t all come in one person. One of the challenges we find in a market like Singapore is that CSOs haven’t operated at the C-suite level. So it’s a tricky process to identify individuals who haven’t operated at the senior leadership level who can make the step up, or alternatively people who have worked in leadership roles who would need to hire others to make up for technical deficiencies as part of a team build. 

Do you have a prediction for ESG talent in Asia, for instance climate quitting [people moving from non-sustainable industries such as oil and gas into green jobs]. Will we have the skills to do the work?

Darian McBain: Well, we have to do the work in Asia. We need to get on with it whether we have the skills or not. We can’t wait just because we don’t have the skills.

I read Paul Polman’s [the former CEO of Unilever] piece about “conscious quitting”, where people are leaving their jobs because they don’t think the values of their employer are aligned with their own. I do think that is going to have more momentum. 

I think the sustainability community really needs to embrace diversity, whether that’s from different backgrounds, age, gender, race or religion to make sure that we do have all the complementary skills that are going to be needed to address sustainability across the region.

Paddy Balfour: Do we have the requisite talent to answer the world’s problems? The short answer is no, we don’t at the moment, but we don’t really have an option [but to do the work]. And we need to welcome diversity – that’s a very important part of developing capacity. 

What advice do you have for young people coming through the sustainability sector?

Darian McBain: I tend naturally to think of sustainability as being a STEM [science, technology, engineering, and math]-related topic. I came from an engineering background, but it is much broader. When I think of the roles I’ve done in multiple organisations it is fundamentally a change management role. You have to be able to take all of the different inputs – whether it’s changing regulations, stakeholder desires, or consumer preferences – and translate that into something that’s going to be suitable for your organisation, because you need to engage the people within the organisation on your sustainability journey, as well as external stakeholders.

Sustainability isn’t just one thing, but you have to be able to convince people to change, into being more sustainable because ultimately it is about how we all behave and that we can continue to do whatever it is that we’re doing into the future.

Paddy Balfour: We’re shifting from sustainability being a defined function into a broader role. And I think that sustainability professionals need to really get to grips with the commerciality of what that business is trying to do and why sustainability is important, whether that’s from a risk management perspective or a value creation perspective.

Touching on what Darian was talking about around the change management piece… if a very technical person doesn’t understand what an organisation is actually trying to do, the ability to influence it around sustainability becomes impossible. And having spent this podcast talking a lot about the challenge of technical skill sets, it’s actually the generalist piece and that leadership piece at the CSO level that I think becomes the most important thing.

The transcript has been edited for brevity and clarity