NYU Stern’s Tensie Whelan on ESG, sustainability and the talent pipeline
As a long-time leader of environmental nonprofit organizations, Tensie Whelan has had a wide-ranging career building relationships between business and civil society.
As president of the Rainforest Alliance, she grew the organization’s annual budget from $4.5 million to $50 million, and she expanded its engagement with business, recruiting 5,000 companies from dozens of countries to collaborate with the environmental organization. Since 2016, she has served as founding director of the NYU Stern Center for Sustainable Business (CSB).
At the heart of Whelan’s work engaging business in sustainability and ESG are two themes: a proactive, practical approach to progress; and a focus on innovation. During our current “Era of ESG,” I wanted to hear Whelan’s thoughts about what’s happening with the ESG talent pipeline.
This interview has been edited for clarity and length.
Ellen Weinreb: You and I are working in different parts of the sustainability/ESG talent pipeline. As a recruiter, I work with companies, and one of the biggest hiring trends I have noticed is clients looking for ESG as opposed to sustainability expertise. As an academic doing research and working with students, you’re seeing these trends from a different vantage point. What are you noticing vis-à-vis the rise of ESG?
Tensie Whelan: Before I answer your question, let me take a brief tangent into ESG versus sustainability: ESG is sustainability without the profitability piece and with a beefed-up governance piece. The interesting thing is that investors don’t include profitability, whereas the corporate definition of sustainability incorporates it. I think one of the challenges with ESG investing is that it actually treats the non-financial and financial aspects separately; it doesn’t look at how they integrate.
I also think that ESG is coming to represent a “tick the box” reaction to reporting as opposed to strategic investments around a company’s material ESG issues. To me, those material investments around ESG are the building blocks for a company’s sustainability strategy.
Too many ESG investors are not learning what constitutes real sustainability, and they’re approaching the process with ESG metrics that are process-based, not performance- or outcome-based. You’re not going to drive better performance if you rely solely on those reporting ESG metrics, but you will if you understand corporate strategy and sustainability objectives and you map those to ESG metrics.
Weinreb: It sounds like, from your perspective, both sustainability and ESG are both necessary roles that work together for progress. What are you noticing in terms of student demand for such roles? Are more students pursuing those trendy ESG jobs?
Whelan: The Center for Sustainable Business (CSB) is still young — we started in 2016 and didn’t start offering the sustainability specialization until 2018 — but we have seen two overarching trends: First, student interest in our program has more than doubled. “Sustainability for Competitive Advantage,” a key course and strong indicator of student engagement, doubled from 42 in 2020 to 89 in 2021.
We’ve also seen an increase in sustainability jobs coming from our network: In 2020, we had 292 job postings related to sustainability and social impact, and that rose to 981 in 2021.
In terms of the focus on corporate sustainability versus sustainable finance or ESG investing, I’d say we have students interested in both.
In terms of the focus on corporate sustainability versus sustainable finance or ESG investing, I’d say we have students interested in both. I don’t see more students interested in ESG investing than corporate sustainability. Stern is a finance school, so there are plenty of students interested in ESG investing, but I think that’s driven by an interest in how finance can be used as a force for good versus “How do I learn about ESG reporting metrics?”
I also teach thousands of executives each year, and I co-teach a class on ESG investing with Cary Krosinsky [a lecturer and faculty advisor in energy studies at Yale]. I teach corporate sustainability, and I explain to the investors: “You need to understand really how corporate sustainability is developed before you can actually develop a good investing strategy around ESG.” And then Cary takes over with ESG investing.
Weinreb: Given the distinction that you’re making between ESG and corporate sustainability jobs, what are the implications for students?
Whelan: One of the challenges for MBAs looking at sustainable investing jobs is that, generally, companies are looking for people who have worked in finance and then can bring an ESG or sustainability background. But if the student wants to pivot into finance from something else, it’s hard for them to get a job in ESG investing. And entry-level jobs are not that interesting to MBAs — they generally don’t want to spend their days filling out ESG reports.
Weinreb: So do you have people coming from finance who want to pivot into ESG finance roles?
Whelan: Our program is relatively new, but increasingly, I’m getting students who say they are enrolling because they’re interested in what CSB is doing, and they’re interested in the sustainability offerings, in particular, corporate sustainability.
That said, we just started an MBA program with funding from the Visa Foundation that aims to get more women into sustainable finance careers. We have around 20 in our first cohort! It will be a two-year program, and we’ve recruited advisers from Blackstone, BlackRock, Citi, Morgan Stanley — very senior women involved in sustainable finance, or, as many of them say: Their job is not sustainable finance, but ESG is becoming part of everyone’s job at a high level in these companies.
Weinreb: When it comes to the intersection of sustainability/ESG and the student talent pipeline, what are you most excited about right now? What concerns you the most?
Whelan: I’m thrilled to see students recognize that business as usual is not an option for a sustainable future, and that they see the opportunity for themselves to lead business innovation and transformation. I’m concerned with the scale and scope of the challenges we are bequeathing this generation of leaders — climate change, political turmoil, gender and racial discrimination. We are not moving fast enough to tackle these problems, and the years ahead are going to require enormous ingenuity and staying power to navigate.
Weinreb: Last question: From your perspective as an academic doing research and working directly with students, what advice do you have for my clients — for ESG and sustainability hiring managers looking to expand their teams?
Whelan: Good ESG and sustainability skills in students should make them excellent team members and leaders. They learn how to be intrapreneurs, manage stakeholders toward win-win outcomes, think out of the box with systems and design-thinking skills, and have a solid understanding of the ESG issues material to various industries, as well as insights into innovative strategies and business opportunities.
I would be less focused on domain expertise and more focused on strategic and people skills. A smart person will learn the domain quickly, with the right support. It’s tougher to learn the sustainability skills. I think hiring managers tend to think the opposite. Of course, the Holy Grail is the candidate who has both. And, over time, we will have more of them as well. Good sustainability skills will become like good communication skills —indispensable for most jobs.
[Continue the dialogue about ESG and green finance with the invitation-only audience of sustainability, finance and investment leaders at GreenFin 22, taking place in New York City, June 28-29.]
June 28, 2022 at 03:09PM
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