Is it possible to challenge the orthodoxy of ESG without getting cancelled?

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Stuart Kirk is a financial executive who either erred by making an ill-advised departure from his employer’s messaging on climate change, or played devil’s advocate and became a victim of corporate cancel culture.

Mr. Kirk, the top executive in charge of responsible investing at HSBC’s asset-management arm, went off the British bank’s script at a public forum last month by criticizing those who make dire predictions about climate change and play up the finance industry’s responsibilities for combatting it. He has been sidelined as a result.

His smackdown raises important questions: How much latitude do iconoclasts have in the world of climate finance at a time when it is easy to assert that there are more immediate problems? Also, must you adopt and stick to your employer’s messaging on the topic? It’s certainly shown how skittish the corporate world is when it comes to messaging on climate change.

The episode adds fuel to an already-heated global debate about the effectiveness of corporate environmental, social and governance, which pits its devoted adherents against those that decry it as a left-wing plot against business.

Amid the polarized environment, there should be a role for skeptics to question the orthodoxy. But how public? Here’s where it gets uncomfortable.

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At the podium during the Financial Times’ Moral Money Summit, Mr. Kirk launched into territory that would make any chief sustainability officer gasp. He said the financial risk stemming from climate change is overblown, and that over 25 years in the finance industry he was always hearing from “some nut job” warning of end times. Humans, meanwhile, are very good at adaptation.

In his remarks, which are posted on YouTube, he took aim at former Bank of England and Bank of Canada governor Mark Carney, a driving force behind global climate finance initiatives including the Glasgow Financial Alliance for Net Zero (GFANZ). HSBC is a member of that group, which seeks to align investment decisions with the goals of the Paris Agreement.

“I completely get that at the end of your central-bank career there are still many, many years to fill in. You’ve got to say something, you’ve got to fly around the world to conferences, you’ve got to out-hyperbole the next guy,” he said.

Mr. Kirk went on to lament the requirements of dealing with the decades-out problem of climate-related risk, when HSBC is struggling today with the move to cryptocurrencies, rising interest rates, inflation, a housing crisis and “the China problem.”

For the top brass at the bank, where ESG performance is being played up alongside financial results, that all came off about as well as you would expect.

“I do not agree – at all – with the remarks made at last week’s FT Moral Money Summit,” the bank’s chief executive officer, Noel Quinn, said in a statement. “They are inconsistent with HSBC’s strategy and do not reflect the views of the senior leadership of HSBC or HSBC Asset Management. Our ambition is to be the leading bank supporting the global economy in the transition to net zero.”

Mr. Kirk has since been suspended from his role, and is being held up as a hero for a large and increasingly vocal contingency of ESG antagonists. In their eyes, he’s a truth-speaking victim of corporate cancel culture – an ESG version of comedians Dave Chappelle and Ricky Gervais, who are being pilloried for objectionable humour.

That would all be valid, were it not for the fact that the executive is the public face of a global financial institution with a very clear message that it wants to send to the world, and, in fact, a signatory of Mr. Carney’s GFANZ group. It expects its top people to toe that line for audiences.

Indeed, as corporate resources flow into ESG, the field is under attack. Notables from Tesla CEO Elon Musk to former U.S. vice-president Mike Pence have decried its role in business lately. Some financial institutions have not helped the case.

On Tuesday, police raided the Frankfurt offices of Deutsche Bank AG’s asset-management division DWS to conduct a search in connection with accusations of investment fraud related to greenwashing. The group has been the subject of investigations in Germany and the United States.

The legal troubles follow allegations by the unit’s former chief sustainability officer that DWS’ assertions that hundreds of billions of dollars of assets under management were “ESG-integrated” were misleading, according to Bloomberg. The CEO of DWS, Asoka Woehrmann, resigned on Wednesday.

Expect more scrutiny of ESG declarations by both investors and regulators, especially if financial returns lag past performance amid all of the economic and political turmoil swirling. As a reality check, this may be the time to pay some attention to the ESG skeptics. The call could be coming from inside the house.

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at jeffjones@globeandmail.com.

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