With the material impacts of climate change becoming increasingly apparent across the global economy, and with Australia committing to net-zero emissions by 2050, there is a need to ensure that those working across the financial system have the skills required to support an orderly transition of the Australian economy.
The Institute for Sustainable Futures (ISF) at the University of Technology Sydney (UTS) undertook a national ‘Climate Skills Survey’ of finance professionals to understand the level of skills across Australia’s financial system.
The survey looked at the current level of climate skills, defined as climate/climate risk-related skills, knowledge areas or competencies, in relation to existing market demand and explored barriers to increasing skills. It also investigated mechanisms that could provide the necessary upskilling.
The key conclusion from the survey is that there is currently a climate skills gap and that this gap is likely to grow unless urgent action is taken.
The range of functions where climate-related and sustainable finance skills are required is diverse, from accounting through to risk management and assessment of investment opportunities. Failure to address the skills gap could impede the rapid, economy-wide decarbonisation and reallocation of capital needed to meet net zero emissions targets.
The results of the survey are published in the report, Advancing climate skills in the Australian Finance System.
The report includes a range of Australian and International examples of climate skills being integrated into financial system regulatory practices and presents case studies of financial centres that are focusing on climate and sustainable finance skills development – including Singapore, United Kingdom, Ireland, Japan and Hong Kong.
The report calls for Australia to develop a ‘sustainable financial system learning ecosystem’ by:
1. Establishing a Sustainable Finance Skills Partnership between industry, government, regulators, universities, researchers and other professional finance training providers. This would encourage collaboration and knowledge-sharing across the entire finance system.
2. Producing an annual Australian Sustainable Finance Skills Report to benchmark development on an annual basis.
Alison Atherton, Program Lead, Business, Economy and Governance at the Institute for Sustainable Futures says, “There is currently no structured system-wide mechanism to identify and monitor climate or sustainable finance skills and competency. An annual survey would provide valuable data on skills for financial system participants to identify and proactively respond to skills needs and gaps.”
Gordon Noble, Research Director at the Institute for Sustainable Futures says, “If financial system participants are not sufficiently skilled or business practices are not updated, in areas such as insurance, lending and investment, it could lead to a worsening of the risks and impacts on the stability of the financial system. It could, at worst, impede the rapid, economy-wide decarbonisation and reallocation of capital needed to meet the Paris Climate Goals and the Sustainable Development Goals. As overseas financial markets move to upskill, Australia risks being left behind.”
- More than three-quarters of survey participants said that climate skills are in moderate-to-high demand in their industry.
- Current demand for climate skills is greater than supply, with 67% indicating there is less supply than demand and nearly 40% of respondents saying there is much less supply than demand.
- The most important skills identified for current roles are reporting and disclosure followed by climate risk management. The skills topic in greatest demand for upskilling is scenario analysis.
- Lack of time is the most significant barrier to upskilling. Lack of information about, or access to, relevant training resources and a lack of relevant credentials was also noted.
- Survey participants work in asset management, banking, superannuation and professional services such as accounting.