Banks are on a hiring spree to compete for market share in sustainable debt, one of the fastest-growing parts of finance.

Firms including Citigroup Inc., HSBC Holdings Plc, and Barclays Plc have snapped up people for bond sales, research or global sustainability roles this year as they build teams. Aside from poaching talent, they are tapping expertise among scientists, politicians and think tanks.

“We are actively hiring, we typically get 100 plus CVs per role,” said Arthur Krebbers, head of sustainability, corporates at NatWest Markets Plc, whose expansion has pushed it into the top 10 sustainable debt underwriters this year.

The rush for staff shows the rise of debt tied to environmental, social or governance factors as an emerging money-spinning asset class for banks. They have already made an estimated US$1.8 billion in fees so far this year from such customers, and that will likely climb in a market seen growing five-fold by Bloomberg Intelligence to US$11 trillion in 2025.

This is also part of a broader effort by banks to navigate a push by global policy makers toward a lower carbon future. They have been earning even more in fees from raising money from fossil-fuel clients, yet are under pressure from activists and shareholders to exit such business.

The result is a “lot of bidding” for people experienced in ESG, with total compensation easily reaching seven figures for senior global heads, according to Chris Gower, chief executive officer at executive recruiter Lawbrook Partners. Demand is particularly rising in the U.S., with skills hard to come by compared to a more mature market in Europe or for the equity capital business, he said.

That’s a turnaround for an area previously considered niche and often lumped on junior bankers -- many of whom were women. Now, as investors track female participation in boardrooms, it’s an opportunity to rise to the C-suite. Recent senior appointments include:

  • Celine Herweijer as group chief sustainability officer for HSBC, previously at PricewaterhouseCoopers
  • Claire Coustar as global head of ESG for fixed income and currencies, and Debbie Jones as global head of ESG for company research at Deutsche Bank AG
  • Marie Freier as global head of ESG Research for Barclays, previously at Sanford Bernstein

Bank of America Corp. is another expanding with C-suite representation, as its Vice Chairman Anne Finucane leads its global ESG committee.

“More women engaged in an ESG career at a time it was not popular and with more experience tend to have more senior roles today,” said Adeline Diab, head of ESG and thematic investing EMEA at Bloomberg Intelligence. “I remember male friends saying I was making a huge mistake to favor ESG to M&A as we were graduating and now they think I was visionary and they want in.”

Specialist Knowledge

Lenders are not only hiring deal bankers. As sustainable finance evolves, banks are engaging experts including scientists, data specialists and researchers, said Delphine Queniart, who became global head of sustainable finance and solutions last year at BNP Paribas SA, one of the top underwriters of ESG debt.

“From origination and structuring to syndication and sales, it is important that specialist sustainability knowledge is part of the whole issuance process,” said Queniart.

Barclays, for example, has more than doubled its sustainable capital markets team since establishing it in 2019, and the bank hired Freier this year to bring its analysts up to speed on developments. Those include constant new regulations, debuts from governments and companies, and a smorgasbord of debt types.

There’s also greater activism from investors trying to avoid paying a premium or getting caught out by greenwashing -- where the environmental benefits are exaggerated -- leading some funds to start dumping suspect assets. That’s putting banks under pressure to make sure what they market isn’t misrepresented.

“We are not hiring financial analysts from other firms but rather subject matter experts from think-tanks, NGOs and other areas, people who built their career around sustainability to make sure we are bringing that knowledge into the department,” Freier said, adding banks risked losing business without integrating ESG.

Scientific Greenium

HSBC’s Herweijer, a former NASA Fellow with a PhD in climate modeling, and Credit Agricole SA’s Tanguy Claquin both fit the mold -- former climate scientists turned investment bankers.

While Claquin, with a PhD in atmospheric physics, benefited from France’s banks taking an early lead in sustainable finance as the country became the largest sovereign green bond issuer, he sees others catching up.

“There is a transformation going on in the banking industry -- all banks are taking it seriously,” said Claquin, Credit Agricole’s head of sustainable banking.

So far this year there have been US$377 billion in ESG debt deals, already nearing 2020’s all-time high. The biggest were social bonds from the European Union and a green debut from Italy, while the corporate side was led by sales from Heineken can-maker Ardagh Metal Packaging Finance Plc and Spanish utility Iberdrola SA.

I’m Available

An ethical hiring push could help to attract younger bankers -- a Morgan Stanley report found that 95% of millennials (roughly born between 1981 and 1996) were interested in sustainable investing in 2019. Yet expertise will count -- a recent job ad for a vice president role at Citigroup required experience within sustainable debt capital markets and pulled in around 80 applicants before being closed.

“The growth we see is at the associate and VP level, where there is a deep pool of talent with ESG expertise wanting to see their careers develop in this direction,” said Philip Brown, Citigroup’s global head of sustainable capital markets. “You cannot have a leading DCM franchise today and not be engaged in ESG.”

Yet with even the concept of ESG meaning different things to different firms, working out what banks want is a challenge, according to recruiter Gower. Clients are looking for people who can add value for the buyside as there’s still a lag with what investors need, he said.

“Every single role that we fill now has an ESG angle to it,” Gower said. “One thing, for sure, is that banks don’t want to be late to the party.