ESG hiring is no longer defined by expansion. It is being redefined by precision.
Over the past few years, financial institutions built ESG teams at pace, often hiring broadly across sustainability, strategy and stakeholder engagement. That phase has now shifted. What we are seeing instead is a more deliberate approach, where hiring is driven by specific capability gaps rather than wider ESG ambition. This is particularly visible within asset management, where demand for ESG professionals has not disappeared, but has narrowed. Firms are no longer looking for generalist ESG profiles. They are hiring for technical expertise - individuals who can stand up to regulatory scrutiny and support the accuracy of disclosures.
The driver behind this shift is clear. ESG is moving closer to compliance.
Greenwashing risk has become a central concern, and with it, the expectation that firms can evidence their ESG claims with consistent data, defined methodologies and audit-ready processes. This is changing how roles are defined. ESG hiring is increasingly focused on reporting accuracy, data integrity and regulatory alignment, rather than broader sustainability positioning.
From a recruitment perspective, this is changing both demand and supply dynamics.
We are seeing more mandates tied directly to regulatory frameworks and reporting obligations, often sitting within or alongside compliance and risk functions. At the same time, there are fewer standalone ESG roles with wide, undefined remits. Where those broader roles do exist, they are typically at senior level and closely tied to business strategy rather than delivery.
This shift is creating tension in the candidate market.
A portion of ESG professionals built their careers around strategy, engagement and high-level program design. While still relevant, these profiles are less aligned to current hiring demand. In contrast, candidates with experience in ESG reporting, data governance and regulatory frameworks are seeing stronger demand, particularly where they canoperatewithin investment or compliance teams.
However, that talent pool is limited.
Many of the most relevant candidates are already embedded within asset managers or specialist firms and are not actively seeking new opportunities. Those who are open to moving are highly selective. They are looking for clearly defined roles, credible reporting lines and a mandate that reflects the seriousness of ESG within the organisation.
Where those elements are missing, processes stall.
We are seeing searches where scope is adjusted mid-process, often because firms have not fully aligned internally on what ESG capability they need or where it should sit. In some cases, ESG responsibilities are being redistributed across existing teams rather than addressed through a dedicated hire, which can further dilute accountability.
At the same time, team structures are beginning to consolidate.
In a number of firms, ESG functions are being integrated into broader compliance, risk or investment teams. This is reducing the number of standalone ESG hires, butincreasing demand for individuals who can bring ESG expertise into those environments. As a result, ESG is becoming less of a distinct career track and more of a capability embedded within other roles.
This raises a broader question around how firms are positioning ESG internally.
For some, ESG is now firmly a regulatory requirement, driven by disclosure obligations and risk management. For others, it remains part of a wider strategic narrative, particularly where sustainability is central to client offering or investment philosophy.
In practice, hiring suggests a shift in emphasis rather than a complete repositioning.
Firms are still investing in ESG capability, but with a stronger focus on defensibility. The ability to evidence decisions, validate data and withstand scrutiny is taking precedence over broader messaging or positioning. This is reflected in the types of roles being prioritised and the profiles being shortlisted.
For hiring strategies, this requires more clarity than before.
Firms that are most effective in securing talent are those that can clearly define the purpose of the role, how it interacts with compliance and investment teams, and what success looks like in practice. Vague or overly broad mandates are no longer landing with candidates, particularly those with in-demand technical skillsets.
There is also a timing consideration.
As regulatory expectations continue to tighten, demand for technically aligned ESG professionals is likely to increase. Given the current constraints in the talent pool, this will place further pressure on hiring processes and timelines. Firms that delay hiring until requirements are fully defined may find themselves competing in a more constrained and expensive market.
What is emerging is a more disciplined phase of ESG hiring.
The focus is no longer on building teams for visibility, but on hiring individuals who can support regulatory requirements and integrate ESG into core business processes. This is resulting in fewer roles, but greater scrutiny around each hire.
For firms, the question is no longer whether ESG is strategic or regulatory.
It is whether their current hiring approach reflects how ESG is being used and tested within the business. From a recruitment perspective, that distinction is now driving the market.
How Rutherford Can Help
Rutherford is a leading compliance recruitment agency who has been specialising in financial crime and compliance recruitment for over a decade. We work solely with financial and legal services firms, meaning that we have a deep understanding of the requirements needed for a SMF16 or SMF17, especially when it comes to cultural fit.
Whether you are a SMF16 or SMF17 looking for a new role or a financial services firm looking to secure their next FCA-regulated hire, reach out today to our financial crime and compliance recruitment specialists for a confidential conversation.
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