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A Q&A with climate summit speaker Stuart Kirk

Among the high-powered speakers for the Bermuda Climate Summit next week, Tuesday May 24 at Rosewood Bermuda, will be Stuart Kirk, global head of responsible investments and global head of research and insights at HSBC Asset Management.

A former journalist with The Financial Times, he oversees the Asset Management company’s ESG and sustainable products and strategies as well as its thought-leadership content and publications.

Mr Kirk sits on the management committee of the investment platform and chairs the content council and thematic forum.

He was formerly a Deutsche Bank managing director in numerous roles, including as an adviser to the chief executive, penning his briefing notes, speeches and presentations.

Prior to his ten years with The Financial Times, editing its Lex column and a daily presence on TV and radio, he was a senior consultant at Oliver Wyman.

Working in its highly-regarded financial services practice, he managed projects ranging from strategy reviews for global investment banks to restructuring the world’s largest sovereign wealth funds.

Previously, he spent eight years as a portfolio manager running global equity funds at Morgan Grenfell, where he honed his valuation skills as a stock analyst.

RG: Bermuda is already known as the world’s risk capital. The market includes property cat reinsurers, Insurance-Linked Securities, the leading choice for catastrophe bonds for some time. We have companies and units of global companies that are already pushing the conversation and walking the walk towards carbon neutrality. When you hear the island is now looking to establish itself as a world capital for climate risk finance, what does that mean to you? Small island, 21 square miles. What more can those with a Bermuda corporate profile do?

Stuart Kirk: I would flip your question by wondering what Bermuda would have to do NOT to be a global leader in climate risk in a decade’s time! You have all the expertise and experience required to dominate this space. It’s always seemed ridiculous to me that the sustainability fraternity has remained largely aloof from insurance. People in my world talk about climate risk as if they invented the term … or they moan about a lack of data. What do they think insurers have been doing these last thousand years? Time to lift the lid on your models and share your know how with the world! We would happily pay a lot of money for what you have learnt.

RG: The world’s leading government’s sometimes talk the talk, but is it up to the world’s corporate community to spur political leaders into joining the fight through substantive policy changes that will make a difference, signal a change in direction and engage their citizens?

Stuart Kirk: This question is hotly debated. On one side companies are under increasing pressure from employees and customers to change their behaviour as well as try to influence the world around them. Often this is to be applauded. On the other hand, many issues businesses are being asked to act upon are subjective, ethical, or moral ones – and who is to say what is right in these instances? Unlike governments, companies are not elected to power nor accountable to the citizenry. To many, this seems like overreach.

RG: ESG is the acronym for the latest corporate speak, the latest buzzwords. Did these concepts have to be combined to force inertia on our shared history of unfulfilled environmental and social promise?

Stuart Kirk: The letters E, S, and G are no longer buzz words, having been in widespread use now for at least a decade. But you are completely right that a tipping point has been reached. Only five years ago we were asking ourselves whether sustainability was here to stay. Now, it is the only game in town. Societies tend to move slowly when it comes to important changes, and then whoosh! Suddenly everything shifts superfast. That’s what happened with ESG investing.

RG: There is more environmentally-conscious and diversity-conscious discussion – and in many cases, action – in some parts of the corporate world than ever before. Will it also mean more corporate responsibility, or will we see corporations retreat back to the common denominator of shareholder profit?

Stuart Kirk: It’s an excellent question and hard to say. Most people would answer that responsible investing has now ingrained itself permanently. But this view needs to be tested over much longer cycles. Sceptics say that sustainability is a luxury good we are happy to buy only at the end of a long bull market in equities and after decades of peace since the end of the cold war. If markets collapse and the conflict in Ukraine widens, how much will investors be caring about diversity statistics then? We don’t know, but I hope the progress we’ve made endures.

RG: Can they coexist, or are the two mutually exclusive?

Stuart Kirk: Hundreds of academic papers have tried to answer this and I’m too stupid to understand most of them. Suffice it to say that sometimes being responsible adds to shareholder value, and there are other examples where doing the right thing clearly has a cost.

RG: What are the challenges for companies in achieving the required profit margins and ESG compliance?

Stuart Kirk: As an ex-equity analyst and portfolio manager my own view is that ESG factors are small compared with the major drivers of margins and stock prices such as currencies, competition, product differentiation, regulatory change and so on. So, in that respect I believe companies can have good ESG credentials and make a tidy profit provided they make the right decisions. Or put it another way, concentrating on ESG should be no excuse for poor earnings growth!

RG: The dilution of the media has been accepted. Fewer people read the news, listen to the news, accept the veracity of the news than ever before. Fewer people trust mainstream media. More interpretations of the news exist than ever before. More accept opinions, information with a political bias, or even information of limited value, as “the news”. The media seems more of a tool directed by powerful, partisan interests than that which we can use to understand and shape our own world. Do you see truth in these statements and if so, has the horse bolted the stable? Can we ever get it back?

Stuart Kirk: How long have you got? Can’t we talk about this over lunch? A couple of quick observations. The demand for news and information has never been stronger, but it fluctuates of course. Trump was a godsend for newspaper subscriptions, as are wars and pandemics. Quality journals, such as where I used to work, have fared even better recently as people value news over opinion, and rigorous journalism. Sure we need to be mindful of powerful interests, but if we keep the press free someone else will come along to balance things out. And differences of opinion are healthy for democracies and economic growth.

The Bermuda Climate Summit 2022 is a presentation of Bermuda Business Development Agency, in partnership with the Association of Bermuda Insurers and Reinsurers and KBRA.

Senior policymakers, leading scientists, NGO-heads, and business leaders will all be sharing their unique insights and solutions for the world’s biggest challenge, climate change.

Stuart Kirk, global head of responsible investments and global head of research and insights at HSBC Asset Management (Photo supplied)

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Published May 17, 2022 at 7:49 am (Updated May 17, 2022 at 4:22 pm)

A Q&A with climate summit speaker Stuart Kirk

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