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Kirk’s Inconvenient Truth About ESG Investing

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.

Andrew King

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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.

Professor Andrew A. King is a leading authority on environmental performance and innovation. His research established whether and when firms can find ways to profitably reduce their impact on the environment. His empirical tests of the efficacy of industry self-regulation helped change both private and public policy. His research now explores open source innovation and knowledge sharing. Andy was an early advocate of a scholarship on what is now called “sustainability”, and his findings and methods have influenced scholars in many disciplines. With students and colleagues, he helped found some of the most important research institutions in the field, culminating in the Alliance for Research on Corporate Sustainability. Andy has been a Marvin Bower Fellow at the Harvard Business School, an Aspen Institute Faculty Pioneer, and an Academy of Management Journal Best Paper Award winner His thesis won the Massachusetts Institute of Technology’s Zannetos Prize. Andy holds a BA from Brown University, an MS from the University of California, Berkeley, and a PhD from the Massachusetts Institute of Technology.