In recent years, as many companies have faced tougher regulations and shareholder pressure, large investment firms have begun actively hiring environmental scientists.
Sustainability executives at JPMorgan have been poached from climate nonprofits. BlackRock’s Head of Climate Change and Sustainability Research comes from a leading environmental group. A climate specialist with a PhD in atmospheric and environmental science also joined Vanguard’s investment stewardship team.
Thus, Wall Street now has a growing presence of climate scientists and environmentalists.
Banks and fund managers are turning to traditional math geniuses, market geeks, and financial undergraduates to find new allies who can help them with their critical mission of tackling climate change and expose environmental risks to their investments. Looking beyond human resources.
This is a trend that has become more pronounced in recent years, as many companies face tougher regulations and shareholder pressure. But it’s not a sudden moral awakening among bank presidents and private equity executives.
Investment firms have deeper insight than their rivals and understand the importance of building stronger relationships with experts. That’s why they’re willing to pay big salaries to recruit environmental experts from academia, nonprofits, and government agencies.
“Executives at portfolio companies are generally more receptive to having scientists on their contract negotiation teams,” said a consultant at executive search firm Spencer Stuart. Lauren Callaghan, founder of ESG and Impact Investing, said.
According to Diana Retana, head of sustainability investing recruiting at recruitment firm Lawson Chase, compensation packages vary based on the age and experience of employees, but they also have a deep knowledge of climate risk, If you work for a financial institution in New York, you can earn $175,000 to $350,000 (approximately ¥23.5 million to ¥47 million, $1 = ¥134).
According to Retana, those involved in private market investments, such as working for private equity firms, can earn hundreds of millions of yen in compensation.
According to the U.S. Bureau of Labor Statistics, the average annual salary for environmental scientists and professionals in 2021 was $76,530. According to Ellen Weinreb, a longtime sustainability recruiter and founder of the Weinreb Group, private equity clients are not only good at closing deals, they are also environmentally friendly. It is said that there is a strong tendency to seek human resources who also have specialized knowledge.
JP Morgan, BlackRock, Morgan Stanley and Wells Fargo have all pledged to pull back from lending and investing that contribute to global warming. This calls for technical expertise in carbon accounting to measure and track progress in reducing environmental impact.
These companies have also developed internal climate change models to assess risks such as natural disasters, deforestation, and the shift from fossil fuels to renewable energy sources, and incorporate them into investment decisions. there is
Whether these attempts by financial institutions will actually have an impact on the climate change crisis remains to be seen. Some industry insiders and politicians have dismissed ESG investing as a waste, criticizing big money managers like BlackRock, Vanguard and State Street. Financial heavyweights have also angered climate activists by refusing to heed calls to divest from fossil fuel companies.
Some experts, such as William Boos, associate professor of Earth and Planetary Sciences at the University of California, Berkeley, are hopeful that climate experts are being employed by the financial industry. Booth believes that environmental scientists should have more career options because they can make a more positive impact on the world than in academia.
“There are a lot of people in the world who make a lot of money selling products that have no particular utility or make the world a better place,” Booth said. He welcomes the fact that the financial services industry is beginning to understand that there is value in protecting the natural environment and that it can help reduce the risk of disasters such as floods.
“I have an obligation to return.”
Sarah Kapnick is one of the experts who has stood closest to the intersection of finance and climate change.
She was recently appointed chief scientist for the National Oceanic and Atmospheric Administration (NOAA), the self-described “American intelligence agency for environmental affairs,” at the US Department of Commerce.
Kaepnick originally worked for NOAA for 10 years, but spent a year at JP Morgan’s asset management division as a senior climate scientist and sustainability strategist. But in the summer of 2022, he’s back at his old home, NOAA.
With PhDs in atmospheric and ocean sciences, Kaepnick began his career as an investment banking analyst at Goldman Sachs 20 years ago, when climate finance was still in the mainstream. At the time, Goldman Sachs partners teased Capnick’s interest in climate change by saying, “Do that as a hobby, and be a banker by day!”
“I felt obligated to go back to work with this expertise. The data, products and services that NOAA produces are the foundation of the future of commerce and the economy. Technical expertise. I wanted to give back both my experience and my experience in the private sector.” (Capnick)
NOAA (National Oceanic and Atmospheric Administration) Chief Scientist Sarah Kaepnick.
In January 2022, JP Morgan announced that Ben Ratner, who has been working with oil and gas companies on methane emissions reductions for nearly a decade, to reduce methane emissions at the Environmental Defense Fund (EDF). Ratner as Director of Sustainability.
JP Morgan aims to reduce the carbon intensity (carbon emissions per unit of sales) of its oil and gas portfolio by 35% by 2030 to align with the goals of the Paris climate change agreement. Since moving to JP Morgan, Ratner has maintained the relationships he developed at his previous job. The bank is the world’s largest financier of fossil fuels, with an estimated $382 billion in investment in the industry since 2016, according to analysis by environmental advocacy group The Rainforest Action Network. yen).
Ratner says he supports his industry colleagues in daily discussions with investors about how to balance the Ukrainian war-triggered energy crisis with climate action. Ratner has also been discussing JPMorgan’s strategy with nonprofits, government agencies and academic leaders. He is looking to broaden the scope of the bank’s private grants to more sustainability-focused initiatives, such as helping communities tackle climate change.
“I think it’s a good sign that the financial sector is starting to realize the importance of having environmental expertise and goals. I thought it would be a very rewarding opportunity,” said Ratner.
Attracting Climate Scientists from Big Banks
Wall Street recruiters have a simple slogan. “The best-case scenario is to use your expertise to influence where money flows, decide which projects are worthy of being funded, and let the big investment firms make more thoughtful decisions about the environment. steer as much as possible.”
And he says that money is better than getting it.
When a bank or private equity firm calls out to them, the company they work for presents them with a counter-offer in order to prevent an outflow of talent. It’s “previously unthinkable,” says Kate Shattuck, head of impact investing at talent search giant Korn Ferry.
Due to the high demand for the skills of climate experts and the impact of rising wages in all industries, conditions such as a 10% to 30% pay raise or accelerated promotion may be offered if a person stays in the job. says Shattuck.
Meanwhile, environmentalists are watching the industry’s next move.
Jessye Waxman, head of the Sierra Club’s Fossil-Free Finance campaign, has banned funding for new fossil fuel projects in the future. Whether the move spreads quickly will be a test of the extent of the influence of climate experts in the financial industry.
In 2021, the International Energy Agency (IEA) called on investors to stop investing in new fossil fuel sources to prevent global warming from reaching catastrophic levels. But the financial industry has so far been hesitant to take this step.
“If the financial industry is going to hire scientists, it needs to empower them so that their expertise can actually translate into financial decision-making,” Waxman said.
[Original: Wall Street firms are paying climate scientists into the millions for an investing edge on a warming planet]
(Edited by Sayuri Daimon)
Source: BusinessInsider
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