It has been described as a classic case of saying the quiet bit out loud, but jaws dropped when a senior banker (and former FT financial journalist) let his guard down and shared with his audience everything we’ve feared about the deeply sociopathic nature of banking in particular and economics more generally. As a footnote, Kirk finally quit HSBC in July, blaming “cancel culture” rather than his own odious remarks for the decision. Kirk, in his own words, “only ever tried to do the best for my clients and readers in a 27-year unblemished record in finance, journalism and consulting”. Quite. I filed the article below for the Business Post at the end of May.
THEY SAY THAT everyone gets their 15 minutes of fame, and for Stuart Kirk, global head of ‘responsible investing’ at British multinational bank, HSBC. It came, appropriately enough, after his 15-minute presentation to a recent Financial Times conference in London.
Kirk, who previously worked as a financial journalist with the FT, stunned his audience by explaining how everything they thought they knew about climate risk was simply wrong. “Who cares if Miami is under six metres of water”, he said. After all, “Amsterdam has been six metres under water for ages, and that’s a nice place, we’ll cope with it”.Amsterdam is two metres below sea level, not six. There is a massive difference. Also, the Dutch have fought for centuries to protect their country from the sea. In January 1953, for instance, over 2,500 people drowned as their sea defences were breached. And all their battles to date have been against the backdrop of sea level that was stable, not rising fast.
That schoolboy error by Kirk in a public forum was indicative of a presentation long on ideology but painfully short on facts. It did, however, get worse. Climate change, he explained, “is not a financial risk we need to worry about”, adding that in his years in journalism and finance, “there’s always some nut job telling me about the end of the world”.
Noting that risk assets have increased in value at the very time that warnings about a pending climate catastrophe have been growing ever louder, Kirk concluded that in reality, climate risk must be negligible. After all, the alternative – that the investment community, made up of people like Kirk, is completely wrong – is clearly ridiculous.
Just because the entire financial sector was too busy making money to spot or acknowledge the massive speculative bubble that led to the disastrous global crash of 2008, there is surely no reason to think it could be making yet another catastrophic error, only this time with the future of life on earth at stake?
Kirk’s bosses at HSBC were quick to distance themselves from his remarks, which they described as “an individual’s comments completely unaligned with the company”. It is hard not to conclude that Kirk’s biggest crime is in saying the quiet bit out loud. After all, in the seven years since the 2015 Paris Agreement on climate was signed, HSBC has poured over $110 billion into financing fossil fuel investments that scientists say help lock us onto a pathway towards disaster this century.
His blithe dismissal of climate risk, based on a fundamentally flawed understanding of the science, is in fact widespread in both the financial community and, I would suggest, in financial journalism.
No sooner had he been suspended by his employers and denounced by climate activists, the inevitable backlash began. The editorial writers at the Wall Street Journal (owned by arch climate villain Rupert Murdoch) applauded Kirk for “exposing the hubris of the regulatory climate emperors, even as his superiors shrink in fear”.
While he may be smug, misinformed and complacent, in truth Kirk has done some service in cutting through the financial sector’s carefully worded PR guff about “net zero by 2050” while continuing its lucrative core business of financing the destruction of the living planet.
It is the worst kept secret on Wall Street and in other financial service centres across the world that nodding towards climate action is just an elaborate charade that companies feel compelled to undertake to protect their social licence to continue their sociopathic but lucrative lending practices.
Yes, the World Bank’s report on a likely 4ºC rise in global temperatures this century described this as a “doomsday scenario”. Yes, the World Economic Forum has confirmed that two billion people will face lethal 60ºC temperatures for up to two months a year by mid-century. And yes, the Bank of England has just warned of imminent “apocalyptic” food shortages and prices rises, but none of these trifles make the slightest impression on your average banker.
Kirk’s bullet-proof optimism about the long term future comes from the most unlikely source, the Intergovernmental Panel on Climate Change (IPCC). This body is best known for assessing scientific evidence, on which governments then make decisions. However, it also involves non-scientists, namely economists making projections. These can be, to say the least, problematic.
In his presentation, Kirk noted that the IPCC estimates the likely impact of climate change on global GDP at around five per cent by 2100. “What they fail to tell you is that between now and 2100, the world is going to get between 500-1,000 per cent richer. Lop five per cent off that and you wouldn’t even notice”.
Sounds good, but the problem with this Pollyanna view of the future is that is based on a profound misunderstanding of physical science by economists, who are social scientists with no training or expertise in physics, chemistry or other crucial Earth system sciences. Yet these are the people our politicians and media turn to for guidance.
A world where temperatures have risen by 4ºC or more is a world of collapsed ecosystems, economic and political chaos, forced migration and hunger and death on a global scale. The likely impact on GDP will be far closer to 100 per cent than the risible amount being suggested.
When assessing climate risk, senior economists routinely conflate weather variability with climate, and somehow fail to grasp the rock-solid scientific consensus on the lethal consequences of Earth’s core temperature rising rapidly.
Having absolutely failed to recognise the accumulation of systemic risk that led to the 2008 financial crash in an area in which economists have actual expertise, we should hardly be surprised at the inability of mainstream economics to grasp existential climate risk either.
“Fossil fuel companies may well have fired the guns in the war against climate action, but economists were the ones who supplied them with the bullets”, observed Prof Steve Keen of University College London. With decision-makers of the calibre of Stuart Kirk occupying positions of influence, we are all now truly in the firing line.