HSBC’s green agenda is under intense scrutiny following a speech made by its global head of responsible investing on 19th May.
Stuart Kirk addressed the Financial Times Moral Money event with a presentation entitled Why investors need not worry about climate risk – perhaps the only time a clickbait-style headline lived up to expectations.
The presentation lasted just 16 minutes, but the reputational damage caused during this time to HSBC and Kirk’s own career prospects was extraordinary. So, what did he say that was so controversial?
The tone was set just two minutes into his presentation. Kirk said that:
“25 years in the financial industry – there’s always some nut-job telling me about the end of the world. I’ve dealt with gold bugs my whole financial career – the roof is going to cave down, [remember] Y2K? … the lifts didn’t stop.”
“What bothers me about this one [climate change] is the amount of work these people make me do.”
How bloody inconvenient this all is.
Likening the climate crisis to the Y2K bug was only the beginning of what became litany of reputational faux pas. But none more so than the question-statement he posed to the audience:
“Who cares if Miami is six metres under water in 100 years? Amsterdam has been six metres underwater for ages and that is a really nice place. We will cope with it.”
And there was more to come. Kirk went on to say that “[I] don’t doubt the science… there will be fires” just as he was readying the next slide in his presentation, entitled ‘Unsubstantiated, shrill, partisan, self-serving, apocalyptic warnings are ALWAYS wrong.’
At this point, Kirk took the opportunity to lash out at the former Governor of the Bank of England, Mark Carney. Carney is quoted as saying that “Climate change will dwarf cost of living pain.” Kirk took issue with this. He proceeded to accuse Carney of being bored since stepping down from his post and taking to issuing sensationalist rhetoric in a bid to stay relevant.
“I completely get that at the end of your central bank career there are still many, many years to fill in. You have to say something, you have to fly around the world to conferences, you have to out-hyperbole the next guy, but I feel like it is getting a little bit out of hand.”
Ouch. You’d think that attacking the ex-Governor of the Bank of England as well as accusing those who are taking positive action to mitigate the damage caused by climate change as being guilty of hyperbole would be pretty darn close to stepping over the mark. But no, Kirk had one more shot to take – this time at HSBC itself.
He brought into doubt the extent to which HSBC is truly committed to its green agenda by suggesting that, when it comes down to it, the impact of climate change has no relevance to running a business:
“At a big bank like ours, what do people think the average loan length is? It is six years. What happens to the planet in year seven is actually irrelevant to our loan book. For coal, what happens in year seven is actually irrelevant. Let’s get back to making money out of the transition.”
Watch the full presentation via the FT on YouTube.
How did HSBC respond?
In a statement afterwards, HSBC AM’s CEO Nicolas Moreau told Investment Week the remarks made by Kirk “do not reflect the views of HSBC Asset Management nor HSBC Group in any way”.
“HSBC Asset Management is committed to driving the transition to a sustainable global economy and has a fiduciary responsibility to ensure its clients’ monies are managed for positive long-term environmental and social outcomes.”
“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 net zero and a sustainable future and, like HSBC Asset Management, is committed to achieving net zero by 2050.”
Should HSBC take some of the blame?
Simply put – yes. Moreau said that Kirk’s comments “do not reflect the views” of the bank, yet Kirk was acting as a brand ambassador at a high-profile event and was free to develop a script on behalf of the business.
Yet, if HSBC’s comms team been involved during the planning stage– even if just to sense-check Kirk’s presentation – then any controversial comments could have been picked up on to ensure that the presentation would have been on-message and on-brand.
Furthermore, there would appear to be a distinct lack of media training provided by HSBC. Despite Kirk being a former FT journalist speaking at an FT event, he either ignored any communications directive he may have been given or simply used the cover of the HSBC name as a pretext to set his own agenda.
“I don’t believe HSBC was unaware of Kirk’s controversial views, which he says are shared by many others. They must take some of the blame. Their comms function showed its frailties and they were naiive to think Kirk would tow the company line.”
Either way, HSBC failed in its comms and the reputational damage could prove significant.
What impact will this have on HSBC and possibly the wider financial services sector?
Moreau’s statement sought to allay stakeholder criticism and its reaction statement contained several well-considered and re-affirming words aimed at reinforcing confidence (and trust) in its green credentials – ‘committed’, ‘responsibility’, positive outcomes’, ‘serious’ ‘emergencies’, and ‘future’.
However, will this be enough to pacify a growing body of detractors? Questions will be asked, and answers demanded on how serious HSBC actually is about responsible investing and its values as an organisation. Are Kirk’s views unique to him or are they more wildly shared within the financial services sector? And what to do with Kirk himself?
Personally, I would seek to remove him from the role of global head of responsible investment for being, well, irresponsible. Not to mention culpable of bringing HSBC’s name into disrepute.
“Kirk is culpable of bringing HSBC’s name into disrepute. The damage done could be significant. He should go.”
He chose to air his personal views whilst donning his employer’s hat, and that for me is serious misconduct. I have fired an employee for mis-representing the Clearly name at a public event, so I would err towards Kirk being dismissed from the business altogether both for what he has already done and to prevent him from inflicting more damage further down the line.
An organisation’s reputation is everything. It takes time – years in fact – to build it up and a lot of darn hard work to maintain it. All business leaders and comms people understand that it can come crashing down in an instant. That doesn’t mean it becomes irreperable, though.
Indeed, most if not all damaged reputations can be mended, but only if the organisation clearly communicates the steps it is taking to resolve the issue and demonstrates the impact their actions are having at every stage towards achieving that resolution. Only then can it ever regain stakeholder trust and loyalty.