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So You Want to Work in Sustainable Finance? RMI Provides Insight

Finance plays a critical role in transitioning to a more sustainable economy. Accordingly, more professionals are needed in the sustainable finance area to bring sustainability to the financial markets, and to ensure that sustainability leverages the tools of finance. Rocky Mountain Institute’s sustainable finance practice, which ensures that the application of finance in RMI’s research and programs is as rigorous and innovative as possible, fields questions frequently about how to find jobs in the sustainable finance field. This growing interest comes from a wide spectrum of individuals, from college graduates to mid-career professionals seeking a career transition. Fortunately, opportunities for prospective sustainable financiers exist throughout the economy; in the public sector, the private sector, and with NGOs.

SUSTAINABLE FINANCE INITIATIVES ON THE RISE

The interest in sustainable finance can be seen in the growing number of academic programs—undergraduate, graduate, and professional studies—that offer relevant training. It can also be seen in recent government and private initiatives, including the following:

  • June 2015—the DOE announced the Clean Energy Impact Investment Center to facilitate investor participation in clean energy initiatives.
  • November 2015—the White House introduced the Breakthrough Energy Coalition, a group of private investors organized by Bill Gates to commit capital to catalyze clean energy innovation.
  • April 2016—a consortium of financial institutions and investors unveiled a new partnership under the Catalytic Finance Initiative to direct $8 billion toward high-impact sustainable projects.
  • May 2016—the New York Green Bank announced four transactions totaling up to $220 million.
OPPORTUNITIES IN THE PUBLIC SECTOR

Agencies at all levels of government focus on clean energy, and many use finance as part of their toolkit. Some provide policy frameworks to enable capital flows, while others help finance clean energy directly.

There are, for example, multilateral development banks that help fund clean energy at the supranational level. Many initiatives also exist at the federal level such as the more than 30 federal programs in the U.S. that help provide capital for energy efficiency and clean energy. At the state level, green banks can mobilize capital through public-private partnerships. And at the municipal level, as many cities focus on a more sustainable future, professionals work to ensure that these initiatives are designed, financed, and implemented successfully.

HELPING THE PRIVATE SECTOR OPERATE MORE SUSTAINABLY

Many companies are trying to operate more sustainably, whether driven by customer preference, cost savings, regulatory imperatives, or shareholder activism. Given the capital needed to effect this transition, most companies have a need for sustainable finance expertise. These companies range from Fortune 500 companies to entrepreneurial ventures, and encompass various industries.

One industry is consulting, both firms that address sustainable finance broadly and those that focus on specific opportunities. There are also companies that develop renewable energy, manage portfolios of green real estate, and market energy-efficient goods and services. There are also an increasing number of “clean tech” businesses as well as large corporations that do not focus principally on sustainable goods or services, but use sustainability principles to drive bottom line performance. All these organizations use capital and focus on sustainability, providing opportunities for individuals seeking to focus on sustainable finance.

Then there are financial institutions. Pension funds, for example, require a long-term focus to serve their plan participants, and so are increasingly focused on sustainability. Lending institutions are deploying capital on many fronts, from global banks that see opportunities across their portfolios, to specialty lenders that focus only on specific clean energy markets. Insurance companies are also attuned to capital flows, and the opportunities and threats that climate change and the transition to a cleaner energy economy may present. Wealth managers, whether large institutional money managers, retail brokerages, or family offices, are also responding to both general interest in sustainability and the potential to reduce risk or increase returns through sustainable investing.

HELPING NGOS ADVANCE THE TRANSITION TO A CLEAN ENERGY ECONOMY

NGOs play an important role in the transition to a clean energy economy. They can provide thought leadership and drive collaboration between private and public sector stakeholders, and may also address gaps where the transition to a clean energy economy is not taking place. Numerous NGOs address sustainability in some way. In most cases, addressing these issues requires the mobilization of capital, and therefore, an understanding of sustainable finance. These NGOs include organizations with several practice areas (such as RMI), and also groups that focus on specific sustainable finance initiatives such as the Sustainability Accounting Standards Board (SASB) and Coalition for Green Capital.

Additionally, there are foundations directly involved in sustainable finance through allocating their capital toward sustainability programs. A few of these foundations have announced plans to divest from (or invest in) certain industries that are seen as contributing to (or addressing) climate change. Some of these capital providers may be considered impact investors seeking broader social and environmental impact in addition to financial returns.

Colleges and universities, which may fall into any sector (public sector, for-profit, not-for-profit), may offer opportunities as well. Sustainability has become important in curricula, operations, physical facilities, and engagement with local communities. Finance may play a key role in each of these areas. The endowments of these institutions can also serve an important role in the allocation of capital toward sustainable investments.

SUSTAINABLE FINANCE AS A CAREER

As with any career decision, it is important to consider the fit between the individual and the opportunity. Professionals interested in sustainable finance need to consider their skills, experience, interests, and temperaments in choosing a sector, an organization, and a role.

It is often more difficult to transition into an emerging field like sustainable finance because there are relatively few well-worn career paths. Many practitioners have finance backgrounds, and experience in some aspect of finance is certainly advantageous. However, professionals in this area have backgrounds in other areas as well including management, law, policy, entrepreneurship, and consulting. It is, in part, this rich combination of backgrounds that makes sustainable finance an exciting area in which to focus.

For those interested in these careers, talk not only to sustainable finance practitioners, but also to professionals that focus on related areas. For the experienced financier, demonstrated interest in the field of sustainability (e.g., through relevant professional education or through assisting related not-for-profit organizations) can often build knowledge and establish credibility in transitioning to a career focused on sustainability. Similarly, for non-finance professionals in the sustainability world, academic training or professional experience involving finance can help hone skills and demonstrate interest in a pivot toward sustainable finance.

Sustainable finance is a growing field. Although finance is not the only tool in transitioning to a more sustainable economy, it is an important one. We look forward to more sustainable finance practitioners helping to ensure that the transition occurs.