HSBC AM’s climate ETFs face questions after responsible investment head Kirk goes rogue

Stuart Kirk has since been suspended from his role following his comments, but has the damage already been done?

Theo Andrew

a man in a suit

The collective sound of jaws hitting the floor in the City of London reverberated far and wide last week after HSBC Asset Management’s global head of responsible investments Stuart Kirk said investors should not worry about climate change risks.

Speaking at an FT Moral Money event on 19 May, Kirk (pictured) questioned whether it was the financial market’s job to worry about the climate, adding “what bothers me about this one is the amount of work these people make me do,” Investment Week reported.

The asset manager has worked extremely hard over the past 12 months pushing its climate-related ETF range (piling on the workload for poor Kirk, no doubt).

Its Paris-aligned ETF range is now six-strong having launched its first in July 2021, the HSBC MSCI World Climate Paris Aligned UCITS ETF (HPAO), which has seen its assets grow to £124m in the 10 months since coming to market.

However, there are early signs all their good work could have been tarnished.

As Damien Lardoux, head of impact investing at EQ investors, said: “We do not own any HSBC AM funds or ETFs and this is definitely making me quite cold to carry due diligence on any of their ‘responsible’ products.”

In a separate LinkedIn post, he added: “We would love to hear from HSBC AM as to how climate considerations are embedded within their process. How can any investors believe in their recent net-zero pledge?

“How can finance push for change across the whole economy if within our industry the key persons driving the engagement work such as at HSBC AM are not willing to play their part? We all have many questions that we would love to see answered.”

HSBC AM moved quickly to distance itself from Kirk’s comments, with CEO Nicolas Moreau stating the company was “committed to driving the transition to a sustainable global economy”. Kirk has since been suspended pending an investigation.

HSBC’s Stuart Kirk: Divestment in fossil fuel stocks risks falling into private hands

But will HSBC AM seriously be able to fully distance itself from comments made by a man they appointed head of responsible investing? Was Kirk breaking rank? Or, simply shining a light on the greenwashing practices of another large asset manager?

Alan Miller, CIO and founding partner of SCM Direct, highlighted the issues with ESG investing but questioned the sanity of Kirk’s comments.

“While there are significant greenwashing issues with numerous ESG products, ignored by the industry and the regulator alike, the comments made by the HSBC AM head appeared random and ill-informed. I am not surprised HSBC AM has suspended him in such circumstances,” he said. 

Miller’s point touches on a wider issue with the investment industry’s complex relationship with responsible investing and its greenwashing practices.

While Kirk undeniably went overboard with some of his comments on a subject that clearly irks him – “who cares if Miami was six-metres underwater in 100 years?” was a personal highlight – what is more damaging to the planet’s climate fight is asset managers claiming they care about the transition to a net-zero economy while blatantly greenwashing. Ultimately, investors will vote with their wallets.

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