NEW YORK - Banks and asset managers are rushing to plug a hole in their skill sets. As they try to raise their environmental game, they’ll need more climate-savvy financiers. They can develop talent internally. But for better or worse, outside hires send a strong signal.

A slew of announcements on Monday linked to the United Nations Climate Action Summit shows how lenders and investors are signing up in droves to climate-related pledges. Institutions managing some $2.4 trillion of investments want carbon-neutral portfolios by 2050. Some 130 banks representing a third of the industry’s global assets signed up to new principles on responsible banking. One of them, Natixis , outlined the steps it’s taking to encourage more green lending.

Turning such promises into action will require hard work. Technology can help. Natixis, for example, overhauled its IT system as part of its plan to adjust loan risk weightings according to how environmentally friendly they are. That means bankers have no choice but to input the information needed.

But few things communicate serious intent as clearly as the people you hire. Sometimes that can be at a senior level. Lazard Asset Management, for example, this year created the position of head of sustainable investment, bringing in two co-heads from other institutions already known for their climate clout.

Hiring a few big guns is only the beginning, though. Firms needs expertise throughout their ranks – more than can be added by training alone. One money manager told Breakingviews it had increased its sustainability-focused headcount by a third in less than a year, describing the process as an arms race. Direct competitors aren’t the only source of new recruits. Nonprofits are also targets, including investor lobby groups like CDP and Ceres.

As well as pressure from the likes of Greta Thunberg, the young activist who addressed the United Nations on Monday, investors increasingly want tailored portfolios. Funds carrying an environmental, social or governance tag have jumped by a third in two years, the Global Sustainable Investment Alliance reckons, though its $30 trillion total overeggs the impact.

Annual pay at CDP, according to Glassdoor, tends to be in the five-figure range, which Wall Street and the City of London can easily beat. With financial firms and the consultants they hire chasing the same talent, it will get expensive.

CONTEXT NEWS

- Banks which between them hold $47 trillion in assets on Sept. 23 signed up to the United Nations’ new principles for responsible banking. The aim is to “strategically align their business with the goals of the Paris Agreement on Climate Change and the Sustainable Development Goals” and increase their contribution to the achievement of both.

- Also on Sept. 23, pension funds and insurers managing more than $2.4 trillion of assets between them committed to carbon-neutral investment portfolios by 2050.

- Natixis, one of the banks signing up to the responsible-banking principles, on the same day launched its so-called Green Weighting Factor for 127 billion euros of loans on its investment bank’s balance sheet. This will reduce analytical risk weightings by up to 50% for climate-friendly assets and increase those with a negative environmental and climate impact by up to 24%.

(Editing by Richard Beales and Leigh Anderson)

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