HSBC Asset Management global head of responsible investing Stuart Kirk has questioned the risk climate change plays for financial markets, arguing that it is not one investors should worry about.
Speaking at a Financial Times Moral Money event yesterday (19 May), Kirk compared the climate crisis to the Y2K bug, bemoaning that throughout his financial career there has always been "some nutjob telling me about the end of the world".
"What bothers me about this one is the amount of work these people make me do," he said.
Presenting a speech entitled Why investors need not worry about climate risk, Kirk asked: "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."
He went on to add that he does not "doubt the science at all" and acknowledged "there will be fires" but argued this should be solved through adaption.
"One of the tragedies of this whole debate, which we obsess about at HSBC, is that we spend way too much on mitigation and financing and not enough on adaption financing."
Kirk also questioned the motive behind those who have raised the alarm on the climate crisis within the financial industry, including ex-governor of the Bank of England Mark Carney, who he quoted on a slide entitled Unsubstantiated, shrill, partisan, self-serving, apocalyptic warnings are ALWAYS wrong.
Carney's quote read: "Climate change will dwarf cost of living pain."
Kirk said: "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."
He raised further issue with central banks themselves, suggesting their climate-related financial models are skewed to get the result they are after.
"What they have done is [factor] a gigantic interest rate shock on all the Bank of England and central bank scenarios to get a nasty number," Kirk said.
"Even with a carbon tax, even hitting growth, they could not make climate risk move the needle, so they had to get their clever wonks in the backroom to put a gigantic interest rate shock through their models in order to make headlines."
Kirk also questioned the importance of the impact of climate change for HSBC, suggesting the possible devastating effects are irrelevant to the running of its business.
"At a big bank like ours, what do people think the average loan length is?" he asked. "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."
He concluded: "Let's get back to making money out of the transition."
After the speech was shown to HSBC Asset Management yesterday, 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," they said.
"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."