HSBC Asset Management’s former head of global responsible investments Stuart Kirk has slammed asset managers which divest from their coal shares, just days after his previous employer announced ambitious plans to rid thermal coal from its holdings by 2040.
In a LinkedIn post titled Own Coal!, Kirk (pictured) wrote that divesting coal shares from a listed equity portfolio is “worse than pointless virtue signalling, and potentially harmful to the environment”.
Kirk, who resigned from the bank in July following a controversial presentation on the finance industry’s role in climate change, said divesting makes “zero difference” to the company “just as Honda does not care if you flog your second-hand Civic”.
“Share prices are driven by fundamentals – hence why coal shares are shooting the lights out recently,” he wrote.
Instead, Kirk said engagement was a much more important tool in impacting company behaviour, noting that divesting coal shares from a listed portfolio would see “many shares end up with retail investors who do not engage anywhere near the same degree”.
“While the buying or selling of listed equities has little impact on behaviour, engagement does. Just look at how successful US activist investor Engine No.1 was at changing oil behemoth Exxon with just 0.02% of its shares. If you divest, your influence goes too,” Kirk wrote.
Furthermore, he argued such action is driving smaller companies to delist and bigger companies to offload their coal assets to private buyers.
“Pulling bank loans makes a difference. Boycotting IPOs and follow-up capital rounds make a difference. Refusing to roll-over corporate bonds makes a difference. Divesting listed holdings does not and should be resisted by everyone,” he said.
Although Kirk did not mention his former employer, HSBC AM said in its targets last week it would give itself the option of divesting from a coal company over time if its plans are incompatible with its net-zero objectives.
Despite this, the asset manager did state it would look to engage with all companies that make over 10% of revenue from thermal coal within its ETF portfolios by the end of 2025.
It would then vote against the chairs of the companies whose transition plans remain inadequate and those who do not provide Task Force on Climate-related Financial Disclosures.
HSBC AM said it did not comment on former employees.
The ETF issuer has been keen to highlight its climate credentials over the past year, launching several Paris-aligned and sustainable ETF strategies, including the HSBC World ESG Biodiversity Screened Equity UCITS ETF (HBDV) launched last month.