HSBC Asset Management was in damage control mode on Friday following a speech made by Stuart Kirk, who is head of responsible investing at HSBC. The former Financial Times journalist was speaking at the FT Moral Money conference when he laid into concerns over the climate crisis, which he compared with the hysteria around Y2K.
Kirk also said central banks were alarmist, deliberately designing climate stress tests to generate hysterical results. “Who cares if Miami is six metres underwater in 100 years?” he said. “Amsterdam has been six metres underwater for ages, and that’s a really nice place. We will cope with it.”
He also complained about the large amount of additional regulatory paperwork which was being generated by politicians and regulators. He argued that HSBC had bigger worries to deal with, including further US regulation, economic slowdown in China, and the challenge of digital currencies.
HSBC: “committed to net zero”
HSBC Asset Management has been quick to distance itself from Kirk’s remarks, which will make interesting reading for managers of pension funds invested with it. Nicolas Moreau, the CEO of HSBC Asset Management, has already said that Kirk’s views do not reflect those of his firm or indeed the broader HSBC group. He said HSBC “regards climate change as one of the most serious emergencies facing the planet, and is committed to supporting its customers in their transition to a net zero and sustainable future.”
HSBC has already said it is committed to achieving net zero by 2050.
Some wealth managers were wondering whether Kirk’s remarks reflected HSBC Asset Management’s somewhat confused messaging over ESG issues. Gavin Haynes of Fairview Investing told Investment Week that “culture in an organisation is important when looking for credible ESG investment providers and such views make it very difficult to consider HSBC’s ESG range.”
HSBC criticised for misrepresenting green credentials
HSBC is also known to be taking fire from the Advertising Standards Authority for misleading customers over its so-called green initiatives. It excluded information on its financing of companies with substantial emissions. HSBC’s own annual report was cited as evidence that its activities financed emissions equal to 35.8m tonnes for carbon dioxide each year for oil and gas financing alone. It is also committed to funding thermal coal out to 2040.
Investors will be asking themselves whether Kirk’s comments reflect the real culture within HSBC Asset Management, despite Moreau’s statement.
HSBC Asset Management is in good company here. Rival BlackRock has also been criticised following revelations that, despite being vocal about the need for the world to transition to a carbon-free economy, it continues to invest in and support fossil fuel companies. This disclosure was made by the US fund manager in an effort to reassure Texas officials and local trade groups in the oil-rich state. In a letter signed by Dalia Bass, head of external affairs at BlackRock, the fund manager described itself as “perhaps the world’s largest investor in fossil fuel companies, and as a long-term investors in these companies, we want to see these companies succeed and prosper.”
Large fund managers are finding themselves in a tight spot, as by the very size and diversity of their investment product ranges, they remain invested in oil and gas companies to a significant degree. What remains to be seen is whether this starts to cause investors to redeem their money.
