By Dr. Jelena Janjusevic, Associate Professor at Heriot-Watt University Dubai
According to the United Nations, the global population currently comprises approximately 1.2 billion people aged between 15 and 24, making up around 16% of the total population. As we approach 2030, the designated target year for the Sustainable Development Goals (SDGs) outlined in the 2030 Agenda, the number of young people is expected to rise by 7%, reaching nearly 1.3 billion.
Highlighting the importance of empowering young people with the necessary skills to navigate the challenges of the modern world, the United Nations General Assembly has designated 15 July as World Youth Skills Day (WYSD). Among the various skills required, financial literacy and skills stand out as crucial for the youth of today. Financial skills play a pivotal role in shaping the future of young individuals, as they provide the necessary tools and knowledge to make well-informed financial decisions, attain financial independence, and establish a secure foundation for the years ahead. In today’s era of relentless digitalisation, the acquisition of financial skills has become imperative in navigating the ever-evolving financial landscape. With fintech advancements, online banking platforms, and digital payment systems revolutionising the way we manage and access our finances, young people must possess digital financial literacy skills. These skills enable them to fully leverage these innovations, safeguard themselves against potential risks, and capitalise on the unparalleled convenience and opportunities they present. Furthermore, financial skills empower youth to become responsible global citizens, capable of actively contributing to the betterment of society.
The United Nations General Assembly has designated 15 July as World Youth Skills Day
The financial sector is taking on a crucial role in shaping and transitioning the economy towards sustainable principles. Emerging trends such as Environmental, Social, and Governance (ESG) investing, sustainability, and fintech are reshaping it. Moreover, the financial market has witnessed the introduction of novel financial instruments that incorporate sustainable or green attributes. Consequently, the realm of financial literacy has become more complex, necessitating a growing emphasis on sustainability literacy. Today, financial literacy encompasses not only knowledge, attitudes, and behaviours related to finance but also a deep understanding of sustainability principles and practices.
The younger generations, driven by a profound concern for the well-being of our planet, are actively shaping the development of economic and sustainable finance through their actions, choices, and decisions. Notably, the rise of Environmental, Social, and Governance (ESG) investing exemplifies this impactful trend as individuals and institutions increasingly prioritise sustainability and ethical considerations in their investment strategies. Young professionals need to grasp the fundamental principles underlying ESG investing, which entail evaluating companies’ environmental impact, social responsibility, and corporate governance practices. Equipping oneself with familiarity with ESG rating systems, sustainability metrics, and impact measurement tools will be indispensable for professionals in this realm.
Moreover, essential skills will include the ability to analyse ESG data, interpret financial statements, and identify investment opportunities based on industry trends. Additionally, professionals must excel in articulating both the financial and non-financial impact of investments to clients, stakeholders, and colleagues, while also demonstrating adeptness in risk management practices. These skills will remain a high priority in the evolving landscape of economic and sustainable finance.
Essential skills will include the ability to analyse ESG data, interpret financial statements, and identify investment opportunities based on industry trends
Companies are increasingly recognising the importance of sustainable initiatives to enhance their reputation, mitigate risks, and attract investors. Also, proficiency in financial analysis will remain crucial, as it allows professionals to understand and interpret financial statements, evaluate costs and benefits, and assess the financial viability of sustainability projects. Hence, young people must develop a deep understanding of sustainable business practices, green technologies, and social impact strategies.
Sustainable-minded professionals use comprehensive financial analyses to make informed decisions and allocate resources effectively, considering both financial and sustainability factors. Through rigorous analysis, they can identify potential risks, anticipate long-term costs and benefits, and make strategic choices that align with sustainable objectives. By leveraging financial data and incorporating sustainability metrics, these professionals can ensure that resources are allocated optimally, maximising both financial returns and positive environmental and social outcomes. This holistic approach to financial analysis empowers professionals to drive sustainable practices within their organisations and contribute to a more resilient and responsible future. By quantifying the potential financial impacts and benefits of sustainable practices, professionals can effectively communicate the value proposition to key stakeholders and secure necessary funding and support.
Lastly, the rise of financial technology (fintech) is revolutionising the global financial industry, including banking, payments, lending, and investing. The Middle East region is clearly showing a growing focus on digital transformation. To thrive in this evolving landscape, young professionals must embrace digital transformation, acquire skills that merge finance with technology, and foster an innovation mindset.
Prioritising financial literacy and skills among youth is crucial to ensure their success in a complex and interconnected world. Fintech requires expertise in data analysis, cybersecurity, and an innovation mindset. By embracing these trends and acquiring the relevant skills, young professionals can position themselves for success in the future financial industry that values sustainability, ethics, and technological innovation. We must prioritise and promote financial literacy and skills among young people to ensure their success and well-being in an increasingly complex and interconnected world.