The End of the Masquerade – Stuart Kirk Confirms That Financiers Don’t Care About the Climate.

Sidelined by HSBC, Stuart Kirk has the advantage of having said out loud what everyone else is thinking aloud.

“Investors don't need to worry about climate change.”

This is the message delivered by Stuart Kirk during a conference organized on May 20, 2022, by the Financial Times. The man in charge of responsible investment at HSBC dared to say out loud what many have been whispering for some time.

HSBC is the leading European bank. Hearing Stuart Kirk drops the masks in this way has been a bombshell in the financial world.

His point is not to deny the reality of climate change, nor the risks it implies for the environment. But it is to say that, however serious these upheavals maybe, they will have practically no effect on finance. He paints a scenario of a stock market that will continue to rise, banks that will suffer almost no losses from global warming, and central banks that will waste their time dealing with what is none of their business.

Stuart Kirk's point is based on a simple observation:

“What do people think the average loan term length is? It is six years. What happens to the planet in year seven is actually irrelevant to our loan book.”

If climate change has a catastrophic impact ten, twenty, or fifty years from now, what does it matter? Huge for humanity, but absolutely nil for the vast majority of the financial world who invest in the relatively short term. Financiers don't care about the climate.

Voluntarily provocative, Mr. Kirk even dares to say:

“Who cares if Miami is six metres underwater in 100 years? Amsterdam has been six metres underwater for ages, and that’s a really nice place. We will cope with it.”

Mr. Kirk presented a graph comparing two curves: the number of press articles talking about “climate catastrophe” and the S&P 500 index of the American stock market. The two rise in tandem. This is, of course, a correlation, not causation (the stock market does not go up because of climate change awareness!), but it proves at least one thing: all the claims that climate change poses risks to financial equilibrium have, for the moment, been proven wrong.

The discomfort was palpable in the reaction of HSBC bank: “these remarks do not reflect the opinion of HSBC”.

To put on a brave face, HSBC even suspended the man from his duties. However, Mr. Kirk only repeated a widespread opinion. It is often heard in another, less cynical form, but it amounts to the same thing: the vast majority of investors are well aware of and concerned about climate change, but feel that their mandate to maximize returns does not support the fight against it. When faced with a choice, their professional obligation prevails. Because it's their job, because they are legally obligated to maximize returns, and because it's their bonus.

The success of the climate transition will not come from finance, whether it is stamped “green” or not

Mr. Kirk recognizes that climate change will make some companies winners (renewable energies ...) and losers (steel ...), but that is precisely the job of finance: to choose sectors, reject others, and make trade-offs.

The inescapable conclusion of this speech, which has the advantage of honesty, is that green finance will not help the planet. Of course, banks and investment funds will go to windmills and green hydrogen if they are profitable.

For a transition to take place, it must come from governments and public authorities. Only they can impose a carbon price, encourage electric cars with standards, and develop renewable electricity by guaranteeing a constant price …

The money will follow, wherever the profit is. Finance is not useless, far from it. Private money is necessary to bring oil to the good progress of the climate transition. But it is not from finance, whether it is stamped green or not, that salvation will come. This was probably a necessary reminder from Stuart Kirk, and it came as a shock.