May 25, 2022

HSBC’s head of responsible investing dismisses climate activists as “nut jobs”

By Stephen Worsley

The financial industry was still reeling this week from incendiary comments made by one its most senior figures on the threat of climate change, or rather the lack of it.

Entitled ‘Why investors need not worry about climate risk’, the 16-minute address by Stuart Kirk, apparently now the former global head of responsible investments at HSBC Asset Management, to an audience of industry experts hosted by the Financial Times last week, had at the time of writing racked up more than 90,000 views on You Tube.

Add to that a few red faces at an institution that has pledged to help its customers achieve up to US$1 trillion in sustainable investments by 2030 – and been named best investment bank for sustainability.
Stating that his beard was his “one sop to sustainable investing”, Mr. Kirk dismissed climate activists as “nut jobs” and bemoaned the tendency of his peers to “out-hyperbole the next guy” on the dangers of global warming on the international conference circuit.

Worst of all, he said, was the volume of climate change risk analysis he and his colleagues were being forced to do, at a time when HSBC was dealing with the “China problem”, cryptocurrency attacks, spiraling interest rates, inflation and a looming housing crisis.

“The proportionality is completely out of whack,” he exclaimed.

The Cambridge University graduate went on to insist that the markets agreed with him, arguing that the more the media used the term “climate catastrophe”, the more asset prices increased. Either this meant climate risk was negligible, that it was already priced in, or that investors were all wrong.

Fears about global warming were exaggerated, much like the Y2K scare at the turn of the century, because they underestimated the ability of human beings to adapt, Mr. Kirk concluded.

“Who cares if Miami is six meters under water in 100 years?” he reasoned. “Amsterdam has been six meters under water for ages and that’s a really nice place.”

While the FT will be delighted with the amount of engagement its humble webinar has received so far, Mr. Kirk’s rant raises a number of important issues.

Firstly, it shows how disconnected capital markets have become from the real economy, a recurring topic of debate since the downturn of 2008, from which stock markets have recovered strongly, unlike a great many households.

Share prices even continued to march upwards during the COVID-19 pandemic – remember that? – when capitalism itself was temporarily in a state of suspended animation.

Secondly, it reveals the worrying indifference of some financial professionals to climate change, a phenomenon that they, admittedly, will not be experiencing as acutely as billions of others around the world, mainly its poor.

While HSBC’s leadership was swift to distance itself from Mr. Kirk’s inflammatory remarks, other observers have been quick to defend his right to free speech and have praised him for dispensing some necessary “home-truths”.

These may be a minority, but even those committed to sustainable investing are generally only concerned with financially material climate change risks. The moral imperative of tackling global warming tends to feature less prominently in the debate, as Mr. Kirk’s outburst clearly illustrates.

Mr. Kirk also highlights a third issue, the genuine frustrations of policymakers in dealing with present-day crises, such as the war in Ukraine and the specter of a global recession, on the one hand, and the even more serious but relatively more distant threat of climate change on the other.

That is not to justify the head-in-the-sand thinking of Mr. Kirk, whose faith in humanity’s resilience to climate emergencies fails to account for the human cost of rising global temperatures. Nor the inability of the natural environment to adapt, on which we all depend.

Then again, who cares when Amsterdam and Miami are such nice places, even under water?

For communications professionals, Mr. Kirk exposes the reputational risk of speaking one’s mind in the online universe. Before, a frank exchange at an intimate gathering of industry professionals would have had few consequences. Today, as Kay-Achim Schönbach, the former head of the German navy, discovered when wandering off message during an online Q&A session on the Ukraine conflict in January, it can cause terminal damage to one’s career.

Webinars pose another stubborn communications problem – that of management approval.
The FT insisted that the theme and content of Mr. Kirk’s presentation had been signed off by the suits at HSBC. But can a presentation amounting to a few bullet points and three emojis on a ten-slide PowerPoint deck really be approved?

I have a hunch that HSBC’s spokespeople will be submitting recorded versions of their speeches for their managers to scrutinize in the future. Or, like Stuart Kirk, they may find themselves suspended.

Watch Stuart Kirk’s presentation here

Stephen Worsley is the Senior Vice President – Growth & Innovation at ASDA’A BCW