Stockholm (NordSIP) – “Who cares if Miami is six metres underwater in 100 years? Amsterdam has been six metres underwater for ages, and that’s a really nice place. We will cope with it,” Stuart Kirk, HSBC Asset Management’s Global Head of Responsible Investing is reported to have said at a FT Moral Money event on Friday, May 20th, generating an uproar in the financial community and causing him to be suspended this morning.
At the time of these comments, Kirk wore two hats at HSBC Global Asset Management. He joined the asset manager in January 2020 as Global Head of Research and Insights, a function he continues to exercise on top of his appointment as Global Head of Responsible Investing since July 2021. An Economics graduate of the University of Cambridge, Kirk worked as Global Head of Research Institute at DWS Group from July 2017 to November 2019 and as Global Head of Multi-Asset and Thematic Research at Deutsche Bank between 2013 and 2017. He was a Lex Editor at the Financial times between 2006 and 2013. Following his remarks, media reports suggest he has been suspended pending an investigation.
Contempt For Climate Mitigation
In an intervention laced with ostensible contempt for some of the responsibilities he acquired in July 2021, Kirk went on to compare climate concerns with Y2K fears, investors concerned with climate change with “gold bugs” and stated that “unsubstantiated, shrill, partisan, self-serving, apocalyptic warnings are ALWAYS wrong”.
Kirk went on to vent his frustrations about the disproportionate amount of (seemingly unnecessary) work that (seemingly unwarranted) sustainability fears was causing him to have to deal with. “What bothers me about this one, is the amount of work these people make me do; the amount of regulation coming down the pipes, the number of people in my team and at HSBC dealing with financial risk from climate change,” Kirk complained.
“Last night TARGET fell 25% and people are asking the board of US companies to spend time dealing with climate risk. I work at a bank that is being attacked by crypto. We’ve got regulators in the US trying to stop us. We’ve got the China problem. We’ve got a housing crisis looming. We’ve got interest rates going up. We’ve got inflation coming down the pipes. And I’m being told to spend time and time again looking at something that’s going to happen in 20 or 30 years hence. The proportionality is completely out of whack,” Kirk added.
Focusing on Adaption
The presentation will be applauded by many as an honest blow of fresh air. In a field often perceived to be riddled with greenwashing, Kirk stands out as being unapologetically against the grain.
Sadly, to those whom it outrages, the form of Kirk’s comments might lead people to gloss over what would have otherwise been a relatively interesting perspective about the benefits of focusing on climate change “adaption” (or adaptation, as most people seem to say) vis-à-vis the benefits of climate change mitigation. “Human beings have been fantastic at adapting to change, adapting to climate emergencies, and we will continue to do so,” Kirk said before adding that “I don’t doubt the science but we do need to adapt.”
There were also interesting insights for regulators and investors keen on aligning asset managers’ preferences with the long-term horizons characterising climate changes. “At a big bank like ours, what do people think the average loan length is? It is six years. What happens to the planet in year seven is actually irrelevant to our loan book. For coal, what happens in year seven is actually irrelevant. Let’s get back to making money out of the transition,” Kirk explained.
Undermining HSBC’s Climate Credibility?
Sadly, the damage was done. Analysts and commentators immediately started warning about the effect that Kirk’s comments would have on the credibility of HSBC’s commitments to climate change mitigation. It certainly casts a shadow over Group Chief Sustainability Officer Dr Celine Herweijer’s comments from the middle of March regarding HSBC’s commitment to net-zero emissions.
“HSBC understands that the sudden energy crisis that the world finds itself in will necessitate actions in the short-term around energy security. Our clients, like us, are operating in this new reality, but the longer-term imperative over the coming decades to transform business models for a net-zero future remains unchanged. If anything, the current crisis should galvanise the need to supercharge investment into the clean energy transition,” Herweijer said.
By Monday morning, British media was reporting Kirk had been suspended from his functions, pending an internal investigation. In a post published on Linkedin, Noel Quinn Group CEO at HSBC noted that “I do not agree – at all – with the remarks made at last week’s FT Moral Money Summit. They are inconsistent with HSBC’s strategy and do not reflect the views of the senior leadership of HSBC or HSBC Asset Management. Our ambition is to be the leading bank supporting the global economy in the transition to net zero. I hope my colleagues, customers and others will all know, from our work and my public comments, that HSBC is absolutely committed to a net zero future. Given our global reach and capabilities we have an obligation to lead. I want HSBC to be a leader in supporting our clients, the finance sector and others through the massive transformation that’s needed to build a better future. We have a lot of work to do, and I am determined that our team won’t be distracted by last week’s comments.”
The prompt response would be more credible were it not for the fact that it seems an afterthought. Indeed, the presentation, its title and contents, was reportedly agreed and checked by Kirk’s colleague’s and superiors months in advance, which raises the question: Whose view is most representative of HSBC’s attitudes towards climate change? The one that Kirk voiced, which is consistent with HSBC’s participation in Aramco deals, or the ones approved by HSBC’s investor and media relations? – Hopefully, HSBC’s main takeaway from this controversy won’t stop at the need to have better internal checks on public presentations.
