May 27, 2022
GreenBiz recently posted insight coauthored by Andrew King, Professor in Management, Strategy, and Innovation, discussing recent controversial comments on ESG (Environmental, Social, Governance) investing by HSBC executive Stuart Kirk.
Kirk revived a longstanding debate on this issue when he argued that, though many financial institutions promise to reduce their carbon footprint, they act in ways contrary to that goal. Many investors are solely focused on returns despite public proclamations that climate concerns factor into their decision-making process. Andrew and his co-author concluded that,
“The easy response is to blame Kirk and other corporate executives. They are, however, only responding to the system structure and incentives. The harder but more effective response is to learn from what he said, and act.”
Though many people want to believe ESG investing is the solution to addressing climate change, Andrew holds that Kirk revealed the unpleasant truth that most investors still consider climate factors to be too uncertain to allow them to meaningfully impact their investing choices. He and his co-author believe that it’s important to act on Kirk’s thoughts, and elect leaders to improve regulation and fight inflation rather than arguing these claims.
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