Jeff McDermott was not expecting that answer.

It was the 2004 World Economic Forum in Davos, Switzerland. McDermott, at the time one of UBS Group AG's joint heads of investment banking, was set to meet the CEO of Swedish utility Vattenfall AB. The meeting was supposed to be like any other the UBS executive had become accustomed to in his role at the Swiss bank. That was until McDermott asked what his client was concerned about.

"Climate change," McDermott recalled Vattenfall's then-CEO telling him. "And I actually remember thinking, 'What?'"

Fast forward 16 years and the tone at Davos has changed considerably. McDermott, now the managing partner of boutique sustainable investment bank Greentech Capital Advisors Securities LLC, described "the level of focus and intensity" on climate change at Davos 2020 as an 8.5 out of 10. Last year, McDermott said it was a 3.

The climate-change awakening that is taking place in board rooms and C-suites has led to some major changes in how asset managers, insurers and stock exchanges direct their resources. Now, after years of pushing aside investor concerns about environmental, social and governance considerations, larger investment banks seem to be ramping up their push into the sustainability business as well.

"We're in the first or second inning," McDermott said in an interview. "Every firm putting sustainability at the front of every investment-banking decision — that's what we want to become standard operating procedure."

Founded in 2009 by McDermott, Greentech bills itself as an early pioneer in investment banking sustainable technology and infrastructure fields such as renewable energies, water and advanced forms of transportation. That model attracted the attention of Tokyo-based Nomura Holdings Inc., which agreed to acquire Greentech in December 2019.

The deal positions Greentech to take its sustainability-focused view of investment banking further around the world, as the company largely operates in the U.S. and Europe today. Nomura similarly sees Greentech as an opportunity to expand its footprint both geographically in North America and strategically in the sustainable investment banking business.

"[There] is a significant and growing fee pool around sustainability, both in terms of the advisory business and financing green bonds and the like," Nomura's head of investment banking in the Americas, Mike Rintoul, said in an interview.

Greentech has already established itself as a key player in advising on green deals. From 2017 to 2019, the investment bank worked as an adviser on 26 clean energy and energy-smart-technology transactions that carried a total credit of $3.49 billion, according to BloombergNEF data provided by Greentech. That was the most deals worked on in the space, with the No. 2 adviser coming in at 13 transactions.

The surge of green bond issuances in recent years may prove fertile ground for investment banks in the sustainability realm. The debt capital markets have generally been at the heart of many investment banks' sustainability efforts, said Dan Saccardi, senior director of the company network for sustainability nonprofit Ceres.

According to BloombergNEF, global issuances of sustainable debt including green bonds and sustainability-linked loans spiked 78% in 2019 to $465 billion from $261.4 billion in the prior year. By the end of 2019, the total sustainable debt market had reached $1.17 trillion.

However, investment banks may have even more room to run in the equity markets where Saccardi says using ESG as a consideration in everything from private company valuations to M&A could become an opportunity not unlike the one presented in the early days of the internet.

"We would say the equity side hasn't captured full attention yet, but we see it as something where a gust of change may be coming," Saccardi said in an interview.

Advising and underwriting with a greener lens could help offset the sharp decline that has occurred in equity capital market revenues from the U.S. energy and natural resources industry, which dropped 76.7% between 2014 and 2019, according to Dealogic. That includes revenues from renewable energies, oil and gas and other energy-like deals.

Investment banks have not taken a uniform approach to addressing sustainability within their advising and underwriting operations. Goldman Sachs Group Inc., for instance, recently revealed that it would no longer underwrite initial public offerings of companies that do not have at least one diverse board member. Meanwhile, HSBC Holdings PLC has gone headfirst into the sustainable bond markets where it was the top underwriter in 2019. It worked on nearly 30 offerings valued at $4.0 billion, representing almost 10% of the amount issued that year, according to BloombergNEF.

London-based Barclays PLC took the approach of carving out part of its investment bank to focus exclusively on sustainable and impact banking.

Led by Brian Reilly, the Sustainable and Impact Banking Group focuses on three constituents: emerging growth companies whose business models hinge on environmental, social and governance issues; investors; and the bank's existing clients. The four-month-old effort came after discussions in Barclays' C-suite about how it needed to ensure its investment bank was factoring sustainability into its work, Reilly said in an interview. The bank also faced pressure from activists and investors earlier in 2019 over its relationship with fossil fuel companies.

Reilly previously worked as Barclays' global head of equity capital markets. He runs the new group in a similar fashion to more traditional coverage models, which he said has become reassuring to clients looking to grapple with issues many of them have never dealt with before.

"It's been music to their ears when we say we have a dedicated team that can come talk to you" about sustainability issues, Reilly said. "We see it as an imperative from a business opportunity [perspective]."