HSBC’s Stuart Kirk – hero or villain?


Stuart Kirk is smart. If you watch the video (and it is essential viewing for anyone thinking about the climate risk in their investments), you will see how smart he is.

Stuart Kirk is also media smart, he worked for the FT on the Lex desk (he missed the place “horrendously”) , he was not speaking at an FT conference for nothing, he knew exactly what he was doing and the impact his comments would have. He knew he would outrage a part of his audience and I’m sure he knew his comments would be reported out of context. Most of the “hate” stuff sent his way seems to be based on a very limited knowledge of what he actually said.  That is why people should watch and listen to him here.

Whether he considered he would be suspended for his job, is another matter. You do not speak at a major conference with your bank’s name on the slides and not expect to have those slides approved to ensure regulatory compliance and minimise reputational risk.

Here is the number one person at HSBC trying to repair the perceived damage Stuart Kirk’s 16 minute speech has done.

It had, at my last click 31,000 views, when I watched the video two hours ago, it had 26,000. There is every possibility that the video will go viral, Noel Quinn’s intervention should see to that!

Did the mask slip?

The title of the talk had been advertised for two months, the slides were consistent with what Stuart Kirk said and what he said was unambiguous.

He called for an end to “hyperbole”, virtue signalling as elsewhere he has called for an end to relying on 2030 zero emission strategies which over-rely on offsets

Much of the reporting has been around Kirk’s statement

“Who cares if Miami is six metres under water in 100 years?

As if Kirk was a nihilist. Kirk went on to say

“Amsterdam has been six metres underwater for ages and that is a really nice place. We will cope with it.”

Kirk is an optimistic realist who sees answers to the threat of a changing client in the adaption to those changes by a resourceful human race.

Mitigation through offset or changing the mindset?

We are clearly dealing with someone with a sense of humor and some very particular insight. He is not alone. An excellent article by Dan Misulskis of LCP

The art of marketing is of course putting a positive spin on anything and for the investment industry this is particularly so. Where this manifests in damaging ways is when managers make inflated claims based off limited data and overpromise on what they think will sell a product – performance – rather than what actually matters. Marketers in particular are drawn to happy but overly simplistic win-win-ism, thinking that makes the case stronger when it makes it more fragile. We end up with too much fuzzy, friendly language and confused, mixed arguments. Anyone who insists on an evidence based approach is rightly going to get disengaged and push back on the whole lot.

The system favours sales not independent thinking

There’s been a real hollowing out of the investment industry – particularly in the UK – while the broad pension system is fragmented and beholden to platforms and providers, packed with sales people chasing the next deal to grow their revenue and light on deep independent thinkers acting on behalf of the investors they serve.

This all leads to glossy marketing underpinned by overstated, refutable claims about the efficacy of responsible investment that add fuel to any sceptical fires and undermines trust in the whole thing – potentially fatally.

… and that’s a problem

The result is that reasonable people who might otherwise be brought along with a more balanced approach instantly see through the superficial headlines and woolly arguments and sense this is too good to be true, they turn fully sceptical on any and all claims put forward by anyone connected with responsible investment, dismissing it all as marketing puff to sell funds. So they jam the brakes on, or at worst switch off entirely, halting or stopping progress. I see and hear this happening absolutely all the time.

Let’s have some real talk – what’s sustainable?

Let’s take just one example, the terminology “sustainable”. There’s actually no such thing as a sustainable fund. There, I said it.

Think about it for a second – is there really a single listed company out there that’s fully sustainable, once you take into account emissions, pollution, waste, biodiversity, supply chains, forced labour, exploitation of communities, consumers and workers? There isn’t.

The CEO of Patagonia, by all accounts one of the world’s MOST sustainable companies recently wrote in the Times that they can’t yet be considered sustainable. If they can’t, then pretty much no-one can.

A quick search on Morningstar revealed over 3,000 funds with the word “sustainable” in the name. So we have 3,000 sustainable funds but no sustainable companies for them to invest in? In fact it’s even worse than that, most “sustainable” funds actually hold pretty much the entire spectrum of companies (even some of those listed as EU “article 9” compatible). So effectively the funds industry has deemed every single listed company to be sustainable. You can see why people get skeptical!

As it happens, it turns out Dan’s also commented on Kirk’s 16 minutes of fame, though he is not a fan of the speech

So where do we go for an authorative position? Dan wants to change the world, Stuart wants us to change.

What are HSBC doing employing a man who not only knows his own mind but is prepared to speak it the FT and on youtube? He seems to have annoyed everyone but me!

My initial answer to my question was that- only a few days after getting a rap over the knuckles from the advertising standards authority for green-washing- this was HSBC coming out fighting, explaining that they actually employ people who do the opposite of the marketing B/S Dan’s article highlights.

But then came Noel Quinn’s intervention

Why did the Group Chief Executive look to post on his personal  linked in account, on a weekend , that his bank’s Asset management’s Head of Responsible Investment and Head of Research did not reflect the views of the senior leadership of the bank or its asset management team? (Hang about – isn’t the head of research part of that team?)

I don’t have any answer to that.

Stuart Kirk is now suspended from his post – presumably while HSBC works out whether to fire him or accept that his views are indeed representative of his banks asset management division. If the former, then it is hard to see his dismissal ending happily. If the latter  there is a strong case for the bank withdrawing from asset management.

It is perfectly possible that Stuart Kirk is right and that it is the HSBC bank’s strategy which is wrong, which would mean returning Stuart Kirk to post and reconsidering it’s overall strategy. But don’t get your expectations up!

Meanwhile, where does this leave debate on climate change? I would say in a pretty bad place. Stuart Kirk is actually arguing that the financing of action needs to focus more on adaption than mitigation. As far as I can make out he is suggesting that what done is done, that we are getting warmer, that the world is going to have to adapt to that, as it has adapted to previous “existential threats”.

As for the argument that he is out of step with the rest of the conference – out of step with Mark Carney, Deloitte et al, he makes the reasonable comment that he is in step with the markets who  continue to price energy stocks in an upward trajectory (see video).

Since banks, their lending policies and their asset management decisions drive the prices of equities and bonds, it is hard to see how Noel Quinn and Stuart Kirk can be of such different positions. Maybe Stuart Kirk’s speech may actually be the call for a new approach to the management of climate risks where we move from faking net-zero to coping with 1.5 degrees + .

And as for G in ESG…

It strikes me as bad governance that HSBC are hanging a senior researcher out to dry for expressing opinions that haven’t gone down well. If banks did not have diversity of opinion, they would in danger of group think, as it is, the views of Stuart Kirk suggested to me, until this unfortunate intervention from the CEO, that the bank really had something different to say on a challenging topic.

Perhaps the biggest mystery is how Stuart Kirk has lasted so long in what is clearly a very difficult place to have contrarian views

Stuart Kirk

Stuart Kirk

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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