when finance rebels!

Souvent critiquée par les ONG, HSBC réaffirme ses engagements en faveur de la lutte contre le réchauffement climatique et sa stratégie net zéro.

As the entire asset management industry engages against global warming and multiplies professions of faith, the comments of Stuart Kirk, the global head of responsible investment (sic) at HSBC Asset Management (AM) , cast a serious chill. During the “Moral Money” conference, organized on Friday by the FinancialTimes, the latter has publicly expressed his doubts about the reality of the financial risks linked to climate change. And this in a particularly flowery language.

“For 25 years, there has always been a weirdo who (to me) talks about the end of the world”, he launched in the preamble of his presentation entitled “ Why investors should not worry about climate risk”. He believes that the risks are greatly overestimated by central bankers and public authorities. Even as more immediate risks loom on the horizon, citing inflation, rising interest rates, cryptocurrencies, China or the upcoming real estate crisis.

On one of his slides, Stuart Kirk even drives the point home in full: “unsubstantiated, strident, partisan and self-serving doomsday warnings are ALWAYS wrong”. Before throwing his shock sentence to the audience: “What does it matter if Miami is six meters under water in 100 years? Amsterdam has been under water for ages, and it’s a very nice place. We will adapt”.

Suspension of manager

The remarks, reported by the FinancialTimes, have obviously caused an outcry, especially from climate protection NGOs, which are exerting strong pressure on the banking and financial sector. The environmental associations Bank on our Future and Global Witness were particularly indignant at remarks shocking » and inaccurate », especially a leader in charge of sustainable finance! NGOs have been constantly denouncing for several years the “double discourse” of banks and asset managers, suspected of “greenwashing”.

And according to Global Witness, Suart Kirk’s remarks reflect the state of mind in finance. “Investors and customers should rightly question and take a hard look at the bank’s (HSBC) climate promises, including its upcoming oil and gas policy,” says Beau O’Sullivan of Bank on our Future.

As early as Sunday, Noël Quinn, chief executive of HSBC, tried to calm things down by pointing out that Suart Kirk’s remarks did not reflect the position of the group, which was clearly committed to the economy’s transition to net zero. According to the British press, the manager would have been finally suspended from his duties on Monday, the time of an internal investigation.

A speech far from being isolated

This loud voice can shock in an ocean of beautiful promises. But he is far from isolated in the world of finance. In his last annual letter to shareholders, Larry Fink, the powerful boss of BlackRocK, the world’s number one asset manager (more than 10,000 billion dollars under management), thus turned his back, saying that it was not the BlackRock’s role in saving the planet. And to specify that the raison d’être of companies is to satisfy its stakeholders, and first and foremost, the shareholders! Yet, in 2020, Larry Fink had (belatedly) believed that asset management should be sustainable and responsible, a position reaffirmed in 2021 with commitments from Black Rock aiming for “net zero” by 2050.

At the same time, many voices are being raised to denounce the “greenwashing” enterprise of Wall Street or the “big nonsense” of ESG classifications in the world of finance. Last year, as revealed by the FinancialTimes, the fund rating company Morningstar had to carry out a major clean-up to finally exclude nearly a third of the funds, in terms of assets, from its ESG database. Even regulators are getting in on the action to defuse the suspicious lawsuit that is beginning to spread through the financial industry.

In France, the Financial Markets Authority (AMF) reminds anyone who wants to listen that the communication of “sustainable” funds must not be clear (how?) on their real impact on the environment. Even the European Central Bank (ECB) is getting into it. It has just warned financial players, in an extract from its next report on financial stability, against the risk of a greening of the facade of finance.

In the end, Stuart Kirk’s brilliance may have a virtue: that of reflecting on what the world of finance does, what it should do and how. A useful reflection that could restore some order to the current great bazaar of sustainable finance.