Buyer’s Remorse Hits Finance Bosses Who ‘Overhired’ for ESG

There’s a course-correction underway among financial firms that went all out on ESG hiring just a few years back, according to recruiters advising banks and money managers.

Firms have had to acknowledge that the goal of generating the highest profits often “isn’t aligned with the social and environmental aspirations of the types of people they hired,” says Tom Strelczak, a London-based partner focused on sustainability at Madison Hunt, where he oversees the firm’s European business.

After having “overhired in a very evangelical and philosophical way,” many financial companies are now avoiding some of the ESG (environmental, social and governance) profiles they targeted just a few years ago, he said in an interview.

The pandemic-era, zero interest-rate environment in which ESG enjoyed its heyday drove a hiring boom across the finance industry less than half a decade ago. However, that sense of exuberance around ESG quickly faded when interest rates started to rise and green investment returns faltered.

In the US, the Republican Party seized on the moment to launch a full-scale attack on ESG, characterizing it as a “woke” perversion of capitalism. The political backlash — which intensified after Donald Trump’s return to the White House — sent a chill through the US finance industry, where labels like ESG and DEI (diversity, equity and inclusion) are rapidly being jettisoned.

Only a quarter of S&P 100 companies published reports with “ESG” in the title last year, down from a peak of 40% in 2023, according to data provided by the Conference Board. So far in 2025, with nearly half of companies having reported, just 6% have used the term.

In Europe, where ESG regulations are far more entrenched, the backlash has been less pronounced and more centered on implementation. But amid concerns that excessive ESG requirements were harming competitiveness in the bloc, European policymakers have agreed to wind back key planks of ESG corporate reporting requirements.

The upshot is a broad-based retreat from the environmental and social principles that initially led financial firms to look for hires outside their usual stomping grounds. As a result, many of the climate scientists and campaigners from nonprofits who were hand-picked by financial firms just a few years back are now struggling to adapt to their employers’ renewed focus on financial profits, Strelczak said.

They’re often “frustrated and disillusioned,” he said.

Scott Atkinson, global managing partner of the sustainability and climate practice at Heidrick & Struggles, says he’s seeing a similar trend. “Where we are right now is: Can you deliver returns at or above the level of traditional investments,” he said in an interview.

Since 2022, when job growth for ESG professionals soared 120%, demand for such qualifications has ground to a virtual halt, according to data compiled for Bloomberg by Live Data Technologies, an employment researcher. Examples include adjustments that are being made at some of the world’s biggest banks.

On Wednesday, Morningstar confirmed a report by Responsible Investor that it had cut about 6% of staff in its Sustainalytics unit. A spokesperson for Morningstar said the company made the “difficult decision” to reduce its global workforce in response to “ongoing market challenges.”

In the UK, HSBC Holdings Plc recently parted ways with a chief sustainability officer whose background included more than six years at the nonprofit We Mean Business. Now, the CSO role no longer reports directly to the chief executive officer of Europe’s largest bank, and is instead occupied by someone who used to be HSBC’s head of global banking for the Middle East, North Africa, and Turkiye.

The development is even more pronounced on the other side of the Atlantic. Wells Fargo & Co., which abandoned its net zero goals in February, has done away with the role of CSO. The highest ESG title at the bank is now its head of sustainability, which isn’t part of the C-suite.

On Wall Street, which has turned its back on net zero alliances, firms are dropping “ESG” from job titles. And globally, less than 7% of people who took on an ESG role in 2020 still retain an ESG title today, according to figures provided by Live Data Technologies.

The sustainability conference-circuit is also less active, with organizers looking for opportunities to save costs. For example, the annual GreenFin conference in New York, one of America’s biggest sustainable finance gatherings, has now been combined with other climate-focused events.

Trump’s return to the Oval office, and his administration’s vocal disdain for climate and DEI issues, has acted as a further brake on ESG hiring across America. In New York, the pace of year-on-year ESG job growth was just 1.5% in February after contracting in June by 1.8%, an all-time low, according to Revelio Labs, a firm that analyzes workforces.

“Trump has delayed any recovery from damage that was already done,” said Neil Farrell, a London-based recruiter who focuses on sustainability.

Those ESG professionals still getting jobs tend to be specialized in the minutiae of things like European regulations, with almost 90% of CSOs saying they now spend more time on regulation and compliance than they used to, according to a recent survey by Weinreb Group.

ESG professionals still have a place in the financial sector, said Ellen Weinreb, a sustainability recruiter in San Francisco.

“There are definitely still jobs out there,” she said. “But fewer.”

Photograph: Pedestrians outside of the New York Stock Exchange (NYSE) in New York, US, on Tuesday, Jan. 28, 2025. Photo credit: Michael Nagle/Bloomberg