ESG round-up: HSBC AM distances itself from Kirk’s climate risk comments

The latest developments in sustainable finance: Wells Fargo criticised in New York Times investigation; Say on Pay votes receive lowest level of median investor support at S&P 500.

HSBC Asset Management’s global head of responsible investing, Stuart Kirk sparked controversy by claiming that “climate change is not a financial risk we need to worry about” at the Financial Times Moral Money event on Thursday. During a speech entitled “Why investors need not worry about climate risk”, Kirk lambasted those who have sounded the alarm on climate crisis, including ex-governor of the Bank of England Mark Carney, whom he quoted on a slide entitled Unsubstantiated, shrill, partisan, self-serving, apocalyptic warnings are ALWAYS wrong. He added: “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.”

Nicolas Moreau, CEO of HSBC Asset Management, told Responsible Investor: “The remarks made today… 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.”

Wells Fargo has been accused of interviewing black and female candidates even though the decision had already been made to give the job to another candidate, a New York Times investigation has claimed after speaking to current and former employees.

In response to the investigation, a spokesperson for the bank provided Responsible Investor with its media statement, which stated: “Wells Fargo believes its implementation of diverse candidate slates is a best practice and has contributed to meaningful increases in diverse hiring. The company researched all the specific hiring practice allegations the New York Times reporter shared prior to the story’s publication and could not corroborate these allegations as factual.”

Say on Pay votes have so far this year received the lowest level of median investor support at S&P 500 companies since votes became mandatory in 2011, according to an analysis by ISS Corporate Solutions (ICS). “These results potentially suggest a continued growing disconnect between board determinations of CEO compensation opportunities and shareholders’ support for the pay packages,” said Brian Johnson, ICS executive director.  

There is still a lack of transparency surrounding both the methodologies used by rating agencies to incorporate climate risk factors and how these factors contribute to the final rating, according to a report by the Network for Greening the Financial System (NGFS). In addition, Credit Ratings and Climate Change – Challenges for Central Bank Operations noted that “credit ratings are forward-looking assessments of the creditworthiness of issuers over horizons that are typically shorter than those that are considered relevant for the implications of climate change”. 

The global green economy remains large, diversified and is expanding rapidly, according to an annual update by FTSE Russell. Among its findings was that over the last 12 years the green economy has recorded a compound annual growth rate of around 14 percent.