Call for more support to help Scotland make headway in growing ethical investment sector

Scotland is missing an opportunity to become a leader in the rapidly growing field of ethical investment due to an unprepared workforce and a lack of clarity around regulation – according to two senior figures in financial services.

Betsy Williamson, MD of specialist recruiter Core-Asset Consulting, and Jamie Mariani, portfolio manager with Trillium Asset Management, which specialises in socially responsible investment (SRI), are calling for action from the likes of academia and the Scottish Government to help improve the situation.

SRI is described as aiming to generate positive social change, while excluding investments that are seen to be harmful to the planet, or that have a negative impact on society, and the two experts say the number of job listings for ESG (environmental social governance) analysts in Scotland has jumped by 70 per cent over the last two years.

'I believe the Scottish Government could play a more active role in helping to frame definitions and standards, specifically for those working Scotland,' says Jamie Mariani. Picture: Helen Pugh Photography.

Speaking ahead of publication of Core-Asset’s eighth annual Industry Trends and Salary Guide report – which features environmental and social governance throughout – Ms Williamson said ESG and SRI have rapidly become a core focus. “Nearly every big business has an ESG strategy and the major investment firms are [widely] advertising SRI portfolios,” she added.

“Yet there is a shortage of candidates coming through to meet the demand for ESG-related roles. We need academic institutions in Scotland to catch up with trends. Those in and around the sector must be encouraged to upskill.”

The pair also said regulation around SRI has struggled to keep pace with the growth of the industry, and attempts to better define it have faltered, with delays in the last two years to introducing the EU Sustainable Finance Disclosure Regulation, which aims to make the sustainability profile of funds more comparable and better understood by end-investors.

Trillium Asset Management launched in the US in 1982, and established its UK offices in Edinburgh in 2021, with Mr Mariani of the firm saying: “I believe the Scottish Government could play a more active role in helping to frame definitions and standards, specifically for those working Scotland.

“Such a framework would not need to carry legal force but could be a set of principles that investors sign up to and uphold. Institutional investors and individual investors need help to separate the wheat from the chaff and this could help them in making more informed decisions.

“One of the biggest issues we have is how business is defining ESG – or what ethical investing actually means. It can have so many flavours or takes.”

Greenwashing

He added that this opaqueness opens the door to greenwashing – the term used when false claims are made about the sustainability credentials of an investment.

Mr Mariani added: “I think a lot of asset-managers would be quite frightened of providing greater disclosure – they might be talking an ESG game but in practice when you look at what they are doing in their own organisation they are not walking the walk.”

The upcoming Salary Guide – which Core-Asset says is the only report of its type dedicated to firms and employers working in Scotland – suggests fund managers can play a key role in fighting back against greenwashing.

The Edinburgh-based recruiter was formed in 2005, and says it is now a £14 million business with 22 staff working across the entire financial and professional services sectors.

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