2021 Observations of the Dublin market

The uncertainties fueled by Brexit saw many Irish expats, living in London looking to return to Ireland. Dublin has stood out as a “key winner” of this exodus, which has been further propelled by COVID19.

In a post-Brexit context, Dublin continues to be the preferred jurisdiction to establish funds in Europe. According to an Ernst & Young article, “to maintain access to investors in the EU after Brexit, several international Asset Managers have continued to grow their Dublin-based management companies or are in the process of establishing new ones.”

 

2021 has seen an increase in the hiring of risk and compliance professionals. We have been supporting several Asset Managers who are building-out their governance structures in Dublin. Roles such as “DP for Operational Risk, DP for Investment Risk and DP for Compliance” are highest in demand. At this level, the Senior Executive Accountability Regime has influenced hiring processes; candidates are cautious when moving into a PCF position, and firms are more rigorous in their recruitment process when hiring for PCF roles.

 

The market has also been buoyant at the junior-to-mid level. We have been recruiting for firms that are in the second phase of developing their governance teams. Senior London-based candidates are particularly interested in Dublin roles as they offer the unique opportunity to join global players, while at the same time, from a local perspective, these positions offer a “Greenfield” environment. These types of opportunities are attractive to senior candidates because of their autonomy, seniority, and technical challenge. At the junior-to-mid level range, finding risk or compliance candidates with asset management experience, willing to change jobs, still remains a challenge. 

 

In addition to an increase in hiring for risk and compliance professionals, according to the Financial News, “Portfolio Management roles have opened up too, as Asset Managers look to have front office personnel located in other parts of Europe, not just London.” Fideuram, Architas and Mediolanum Asset Management are among those advertising for portfolio manager roles in Dublin. From our conversations with clients and candidates, we foresee that an increase in PM vacancies will proportionally also increase the hiring of governance positions. 

 

ESG regulation – What this means for governance recruitment in Dublin?

Climate change is the strongest driver for new approaches to investing. Asset Managers are now exposed to new risks, but also to new investment opportunities. Firms with robust ESG (Environmental, Social and Governance Investing) or sustainable investing strategies will be better positioned for the future. In addition to reaching regulatory good governance, these firms will be satisfying the growing and increased demand by stakeholders and investors to meet new ESG accountability metrics. In a Financial Times article, Peter Harrison Chief Executive of Schroders stated that “clients are looking to have a social impact beyond just purely financial returns with their investments.” 

 

According to new data from PwC “ESG represents the largest fundamental change in the investment landscape. It forecasts that European ESG Assets are set to reach between €5.5 trillion and €7.6 trillion by 2025, compromising between 41% and 57% of total mutual fund assets in Europe.”

 

New risks bring new regulation

A)     SFDR – EU Sustainable Finance Disclosure Regulation – applies to asset managers, managers of UCITS and all forms of AIFs, insurance companies that provide insurance-based investment products, occupational pension funds, personal pension providers and financial advisers. 

 

SFDR requires firms to incorporate sustainability risks across various of their operations, this includes: 

• ESG Disclosures – firms must be able to demonstrate whether and how ESG factors are integrated into the investment decisions; the disclosures must be included in pre-contractual documents, periodic reports and on firms’ websites. 
• ESG Integration into policies – policies must also be published on company websites. 

SFDR requires mandatory ESG disclosures to be completed by the 10th of March 2021 deadline. 

 

B)      Taxonomy Regulation: defines the standards for determining whether an economic activity is environmentally sustainable and includes additional product-level reporting requirements for products that promote environmental characteristics.

 

Increased reporting

Asset Managers will thus need to refine their data collection capabilities to satisfy increasing regulatory reporting requirements, and the obligation to disclose ESG Strategies to client and fund investors. To facilitate, the European Supervision Authorities will design a mandatory reporting template, which will specify where companies should place disclosures on their websites. 

 

A recent KMPG study revealed however that this is not a straightforward task, as “the biggest challenge for a typical asset manager that invests in multiple asset classes, industries, and geographies, is that they have various ESG considerations, which depend on underlying data for informed and accurate decision-making.” 

 

How has Dublin responded to ESG regulatory requirements? 

According to a review by the Irish Times, Ireland issued “its first sovereign green bond in 2018.” Investments in these areas have since accelerated rapidly. 

ESG has been identified as a key pillar in “Ireland for Finance,” which outlines the strategy for the development of Ireland’s International financial services sector until 2025. As a requirement investment firms must include ESG Criteria in the financial advice that they offer their clients. 

 

So, what does this mean for governance recruitment?

Increase in Hiring – Across Europe, firms such as Standard Life Aberdeen, AXA IM, BlackRock, Aviva Investors, Columbia Threadneedle have publicly disclosed the planned growth in their sustainable investment teams. 

Increase in contract/project type work – Because Asset Managers are working at pace to adhere to new ESG regulations, there is scope for specialist contractors to guide firms in implementing their ESG action plans within tight timelines. 

Increase in ESG Training – Russell Investments among many other Asset Managers are investing heavily on “comprehensive training for all investment professionals on how to effectively integrate ESG into their investment process” (Financial Times). 

 

Candidates across governance specialisms are pursuing employers that offer ESG training and accreditations 

This is specifically relevant to the Dublin market as the surge of new firms applying for authorizations and licenses in Dublin has meant a rise in the enhancement of governance structures, and a need to hire both risk and compliance professionals. Candidates are aware of their worth and are asking for higher salary increases, and better benefits packages when making an external move. With a buoyancy in the market, and a tight candidate supply, the competition is high. Employers are increasingly obligated to pay higher salaries, higher bonuses, and LTIP schemes to lower their attrition rates. With ESG becoming centre stage, many employers will need to offer enhanced ESG training and educational support, to avoid losing staff to competitors, while at the same time, continuing to attract the top talent in the market.

How can Barclay Simpson help? 

If you are a company looking to hire and would like to discuss the themes outlined above or your recruitment plans in 2021, please do not hesitate to get in touch, as I welcome the opportunity to partner and collaborate with you. 

If you are a candidate, who would like to have a confidential conversation and discuss opportunities in the market, please do not hesitate to get in touch, as I would welcome the opportunity to support you in your job search. 

Nicole Madriz – Principal Consultant – Risk Management – Luxembourg & Ireland

nm@barclaysimpson.com