“Why investors need not worry about climate risk” – Stuart Kirk

Dear Readers:

Stuart Kirk, of HSBC Bank, is Wrong.

Last week, Stuart Kirk, the global head of responsible investments for HSBC Asset Management, made a controversial presentation entitled “Why investors need not worry about climate risk” at a Financial Times event in London. If you missed it, here is the link:

Below are a few disparate comments on Mr Kirk’s presentation:

  • Mr Kirk complains that the problems of crypto, regulators, China, housing crisis, interest rates, and inflation take precedence over climate change. It is obvious that he is not a systems thinker. These problems are not separate and distinct from each other. They, like everything else in the world are connected. He just does not have the ability to connect the dots.
  • Mr Kirk says that we can solve the climate crisis by adaption. What he doesn’t understand is that climate change will be a black swan event. What Is a Black Swan? A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, severe impact, and the widespread insistence they were obvious in hindsight.
  • Mr Kirk says that we spend way too much on mitigation financing and not enough on adaption financing. This is a fatalistic perspective that CCPP rejects. Prudence requires us to do everything that we can to try and mitigate climate change. This is the rationale behind the CCPP’s Permaculture Incubator Program.
  • The problem with Mr Kirk’s analysis is that he uses current methods to forecast economic conditions in a climate change future. It is a bit like using a ruler to measure quantum physics. Climate change will be so extreme that it will require new methods of economic forecasting.
  • The one thing that Mr Kirk said, with which I agree, with one caveat, was his concluding statement that humans are spectacularly good at managing change. The caveat is that humans are only good at managing change . . . when they are alive.

Mr Kirk’s extreme views are at odds with the findings of the world’s leading climate scientists. A major United Nations report warned last month that the world could reach a threshold by the end of this decade beyond which the dangers of global warming — including worsening floods, droughts, and wildfires — will grow considerably. In 2021, there were 20 weather or climate-related disasters in the United States that each cost more than $1 billion in losses, according to the federal government.

Mr. Kirk had been suspended from HSBC pending an internal investigation. But it is too late, the damage has already been done to the bank’s reputation.

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