Stuart Kirk’s now infamous conference presentation claiming that “climate change is not a financial risk we need to worry about” has led to speculation that he might have planned a departure from HSBC before unburdening himself, though for now he is in professional limbo as the bank decides whether or not to dismiss him.
There is a niche but growing market for disillusioned former practitioners of sustainable investing at large financial institutions.
This in turn is creating an unusual risk for banks and asset managers that staff may turn against their employers with condemnation of their business models in a twist on traditional whistleblowing about demonstrable malpractice.
Tariq Fancy, former chief investment officer for sustainable investing at BlackRock, is the best-known of these renegades, along with Desiree Fixler, former head of sustainability at DWS (where she was a colleague of HSBC’s Kirk for a time).
Both have criticised financial industry environmental, social and governance practices as hypocritical, with Fancy recently accusing asset managers and consultants of selling “a dangerous time-wasting placebo”.
Naming
The presentation delivered by Kirk was unusual in his willingness to name individuals – in the form of Sharon Thorne, global board chair at Deloitte, and Mark Carney, former governor of the Bank of England and now head of transition investing at Brookfield Asset Management, as well as UN special envoy for climate action and finance.
Kirk repeatedly mentioned “Sharon from Deloitte”, who had made a presentation before his own at the FT conference in late May.
This was mainly over her supposed scaremongering about climate-change risk. It may also have been partly driven by fundamental differences over terminology, however.
Kirk noted acidly that he must be the only head of responsible investing who has never used the word “journey” either in print or on stage to describe his work
Kirk noted acidly that he must be the only head of responsible investing who has never used the word “journey” either in print or on stage to describe his work.
If Kirk was trying to shame Thorne out of the use of corporate buzzwords, then he failed.
Just days after his speech, Thorne was on stage again, this time in Davos at the World Economic Forum’s annual meeting to discuss “unlocking the social economy”.
If anything, she doubled down on the use of language that might have been calculated to further enrage Kirk, if he was watching remotely.
“Deloitte has been living our purpose for 177 years,” Thorne said, after observing that “the world is facing multiple complex threats and challenges, and disruption is the new normal”.
Carney, the other target of Kirk’s ire for supposed exaggeration of climate-change risks, has so far maintained a dignified silence about the criticism, but Kirk’s ultimate boss was not impressed.
“I do not agree – at all – with the remarks… They are inconsistent with HSBC’s strategy and do not reflect the views of the senior leadership of HSBC or HSBC Asset Management,” said HSBC chief executive Noel Quinn in a LinkedIn post.
Disclosures
And the regulatory burden that Kirk complained about related to sustainable investing is likely to increase.
On May 25 the Securities and Exchange Commission (SEC) released proposals for increased disclosure by investment advisers and funds using ESG labels.
“Funds focused on the consideration of environmental factors generally would be required to disclose the greenhouse-gas emissions associated with their portfolio investments,” the SEC said, in an announcement made on the same day that ExxonMobil shareholders backed a resolution to publish audited reports on how a shift away from fossil fuels will affect its financial statements.
Kirk may be tired of dealing with regulators, consultants and accountants who want to make use of extrapolations to model the potential financial risks of climate change.
But it looks like this work will go on whether he ends up staying at HSBC or finding a different berth to express his views.
