The Stuart Kirk affair
Available on Spotify.
It’s now the world’s most watched PowerPoint presentation: the pitch by HSBC’s head of responsible investing to a conference on green finance in which he suggested the climate crisis was overstated and we should get on building more sea walls instead. We talk to Roger Pielke Jr, the US academic and political scientist about what Kirk was trying to say (or should have said) and his own experience with climate controversies.
Presented by Jonathan Ford and Neil Collins.
With Roger Pielke Jr.
Produced and edited by Nick Hilton for Podot.
Sponsored by Briefcase.News
Jonathan Ford 00:06 Hello and welcome to a long time in finance with Jonathan Ford and Neil Collins, in partnership with briefcase dot news, the service that brings intelligent curation and analysis to your media monitoring.
It was a highly provocative speech on climate change that led to HSBC suspending an executive, and one that has split the asset management industry. “Who cares if Miami is six feet underwater in 100 years?” asks Stuart Kirk, head of responsible investing at HSBC Asset Management during a Financial Times conference on green investment. Amsterdam has been under six metres of water for ages and it’s a really nice place. We’ll cope with it.
This and other flippered zingers led to the International Bank suspending the fund manager. His speech can be found on YouTube and must be one of the most watched PowerPoint presentations ever. The bank’s CEO Noel Quinn said he didn’t agree, not at all, with his employee’s comments and the firm has suspended Kirk. Climate activists have demanded his dismissal turning the whole affair in some eyes into a free speech issue with Kirk playing the JK Rowling role of being cancelled for
daring to offer and honestly held view. His real crime, some say is to call out the bloated money-making scheme that is ESG investment.
Neil Collins: ESG?
Jonathan Ford: Oh, environmental, social and governance investment. Roger Pielke Jr. is somebody who knows what it’s like to be a Stewart Kirk, he lost his job writing for the US pollster, Nate Silver’s 538 blog in 2014, after writing a piece arguing demographics were as much to blame for the rising cost of weather disasters of climate change. He’s also the professor in the environmental studies programme at the University of Colorado. Welcome, Roger. Very nice to have you.
Roger Pielke Jr.: Thanks, Jonathan. Great to be here.
Jonathan Ford: Great. Well, before we come to Stuart Kirk and his speech, could you tell us a little bit about your own experience? And do you think you were cancelled in any way by the academic community after your work for 538?
Roger Pielke Jr. 02:12 Let me just say one thing, in the United States context, in particular, if you’re a professor with academic tenure, it’s pretty hard to be cancelled. I can come and go at different writing outlets and different jobs and people can yell at me on Twitter, but my job is pretty secure, which provides a very strong base for calling things like I see them. So no, I haven’t been cancelled. In
fact, you know, I’m still out there doing what I do. And you know, the fact I’m talking with you kind of indicates, you know, my experiences are, in short, in 2014, I was invited by Nate Silver, who’s famous for his election forecasts. I was asked to join his writing staff to write about science issues focused on climate. So my first piece that he invited me to write was basically to summarise work I had done basically over the previous 20 years, that was consensus science of the IPCC. For me, it was nothing new, nothing particularly earth shattering. I summarised the consensus which exists today, that if you’re interested in economic losses from extreme weather events, the most important factor is what we build, how we build, and what we put in those structures. And as we get more accumulating wealth, obviously, we have more losses.
Neil Collins 03:24 which seems absolutely self evident. But that’s close to heresy in the eyes of the climate doomsters.
Roger Pielke Jr. 03:32 Yeah. Well, you know, part of it is that economic losses have definitely increased from extreme weather events. There’s no doubt about that. But there has been this tendency to misuse that data to say, look, costs are going up. So we can use that to show trends in weather patterns or extreme events. And you just can’t do that. So I pointed that out. And there was an eruption there was an early Twitter mob outrage, a lot of pressure was put on Nate Silver, he was asked about it in the late night talk shows. Paul Krugman came after me, The New York Times economist. And you know, the most interesting thing for me was how many journalists decided to campaign for me to be fired from that position. And ultimately, I was let go very quickly thereafter, for writing for Nate Silver. I continue to write in a lot of prominent outlets. So looking at how Nate Silver’s career has gone since then, and how mine has gone like I can’t say it was a necessarily a bad outcome for me.
Jonathan Ford 04:24 Okay, so you’ve been through the wars with this sort of thing. Let’s come to Kirk, in a blog post you wrote you likened his situation to that depicted in a film called Jerry Maguire, in which a sports agent played by Tom Cruise writes a memo called things we think but dare not say, basically advocating having fewer clients in a sports management agency and charging them less and his bosses saw the memo and fired him. Is it basically the Kirk situation?
Roger Pielke Jr. 04:52 Yeah, it seems so I mean, Kirk was at an industry conference sponsored by the Financial Times which anyone familiar with these sorts of things, it’s not the sort of place where people go and try to act as brave truth tellers and tell the audience that everything you’re doing is bullshit. It was an odd tact to take. But if he sincerely believes in what he’s saying, which I think is, you know, probably the case, he secured global attention for his ideas
and thoughts. So I guess from that perspective, it was an enormously successful intervention.
Neil Collins 05:23 You know, that’s a very fair point. And I think that that sort of parallels with your experience. The thing that puzzles me always about these things, is how come they just produce this sort of visceral response that these people must be drummed out of the brownies and cast into the outer darkness for holding a view, which is not universally shared.
Jonathan Ford: The brownies are like the Eagle Scouts, but for girls.
Roger Pielke Jr. 05:51 yeah, I have a sense that for some in the community of research and analysis, and I include, you know, financial analysts and people who work on catastrophe models, and so on, that some people expect our role as analysts is not to just call things like we see them, but to help create work that stimulates political action outside our communities. So if I say, well, actually, the
increase in cost of disasters is not due to climate change but due overwhelmingly to more people, more population. That’s not a helpful political message for people who are trying to use that data to compel political action. So very quickly, I get put in the bin of the bad guys, Kirk as well, when he says, hey, you know, climate change is not a big factor in financial decisions if you’re lending over six years. He said this, you know, year seven doesn’t matter. Empirically, that’s just a true factual statement. It’s just not helpful in the larger Politics of Climate Change, and politicised issues, whether it’s COVID, or climate change, being able to signal which side you’re on is an important part of the public discourse.
Jonathan Ford 06:56 Yeah, I suppose the way I look at it, you know, obviously, people have focused a lot on HSBC’s response to what he said. I suppose if I was Noel Quinn, I would say, “hang on, you’re the head of responsible investing, you go to a conference where everyone else is wearing a badge saying head of Responsible Investing, and you announce we’re all wasting our time and this is a completely pointless activity.” If I was Noel Quinn, I might say, “why did you not point this out to me when I made you head of responsible investing if you think it’s a bunch of bullshit?”
Neil Collins 07:29 I take that point. But if you are head of responsible investing, surely you have a responsibility to try and put the challenges and problems in front of you into some sort of order. And if you think that being a responsible investor says well actually there are other things which matter significantly more than our obsession with climate change, that’s a responsible thing to do in that role.
Jonathan Ford 07:57 Well, we talked about I want to get Rogers view on telling because you’ve touched on an important point, which is, and I think it’s a criticism that’s generally been made of Stuart Kirk’s PowerPoint, is that it’s absolutely right, that you should call it as you see it. But there’s not a lot in the speech, which actually advocates very much. It’s not saying there’s a radically different way of doing this, or we should do these different things. Instead, it’s just sort of saying, this is all a bit of a waste of time, six years is all I care about. I’m not bothered, or is that unfair?
Roger Pielke Jr. 08:27 No, I think that is fair. And I think I’m not the only one who’s who’s made this observation, but the flippant tone, the jokes, which probably didn’t come off particularly well, obscured … he made some important points about the substance and what it means to be a responsible investor, that are largely overshadowed because of the way he seemingly dismissed the entire issue. It’s perfectly fair to critique approaches to managing climate risk and climate stress testing, and so on. And I’ve done that plenty myself. But if you do it at the expense of your message, then you know, it’s very easy to lose sight of the more important details because of the tone and how it was received.
Neil Collins 09:05 Yeah, I agree.
Jonathan Ford: I think that’s exactly right. But let’s not fall into the Stewart Kirk trap here. Let’s let’s focus on the points of substance that he did make, because you’ve highlighted a few, including basically, well, one is quite negative, which is sort of the hyperbole with which kind of financial leaders people like Hank Paulson, Mark Carney have spoken about climate change risks. And also, I suppose the question of mitigation. And his argument, I think, if I understood it correctly, was that we spent far too much time on mitigation and not not enough thinking about the question of adaption, what we should change to cope with whatever stresses are coming down the pipe.
Roger Pielke Jr. 09:48 The climate issue, the public discourse around climate, it can be characterised as a Apocalypse auction, and everyone is trying to up the ante on how extreme how bad how terrible, how apocalyptic the future is going to be to secure public attention and so on. And there’s been a lot of debate and a lot of writing on whether scaring people or apocalyptic scenarios are in fact, good motivators of policy action. They may or may not be. But let’s let’s take a look at the science. If you actually read the Intergovernmental Panel on Climate Change, the IPCC reports, the word apocalypse doesn’t appear in there, the word catastrophe doesn’t appear in there. Climate change is a serious, significant risk to the future. But it is not the end of the earth. It’s not the end of life on Earth. So each of the claims by Mark Carney or the others that Stuart Kirk put on his his PowerPoint slides that were examples of hyperbole, I think it’s perfectly fair to identify them as hyperbole. Where he didn’t go and where he might have gone was to say, well, here’s why separating out empirical research science from hyperbole is important. And we in responsible investing have an obligation to our clients to make that distinction.
Neil Collins 11:03 Now, this is the speech he should have made, I agree entirely. And I think that the key here is to say, well, it may be a problem, and some of the things we’re doing may help. But there are other ways to look at it. Rather than trying to stop climate change, we might spend more effort in trying to adapt to it. Because, you know, the human species is highly adaptable. It has adapted to much worse things over over longer periods. That sort of analysis doesn’t seem to feature at all, in the debate.
Roger Pielke Jr. 11:42 Adaptation, and mitigation of climate change are not substitutes for one another, they’re complements to each other. There’s a lot of reasons why we might want to decarbonize the economy. Right now looking at the consequences of Russia’s invasion of Ukraine, Europe’s dependency on fossil fuels from an unstable vicious state tells us that Europe probably wouldn’t be better off depending on domestic, non fossil sources. It has nothing to do with climate
change. Adaptation makes sense regardless of how good or bad you think the extreme events of the future are going to be better adapting to extreme weather is one of the great science and policy success stories of the last 100 years. It is remarkable. We know how to do that pretty well. There are many places around the world that don’t have equitable access to the technologies of weather forecasting of protection. And so you know, the message is not: is it mitigation, or adaptation? (And this is another place where Kirk could have been more precise).. it’s adaptation and mitigation. They operate on different timescales, what we do on adaptation for hurricanes, or floods or heat waves, that’s gonna pay dividends tomorrow. And next week, in terms of the climate, what we do in terms of reducing emissions, that’s not going to affect tomorrow’s weather, or next week’s weather. So it’s a much different sort of a policy issue.
Jonathan Ford 12:57 And it’s interesting what you say about fear and public policy and its effectiveness. As you know, I spent a lot of time looking at the history of nuclear power, as listeners to this podcast will know. And basically at the end of the Second World War, when a group called the Union of Concerned Scientists who had essentially participated in making the bomb decided they’d done a terrible
thing. They all went around basically writing articles and giving speeches saying the world will literally end tomorrow, there will inevitably be a nuclear war tomorrow. One of them explained, when asked why this incredible alarmist tone, they said, well, because just nothing else will work. If you don’t scare the pants off people with the precise quote, they just glaze over and think about something else.
Neil Collins 13:39 It’s hardly a scientific approach, isn’t it?
Roger Pielke Jr. 13:41 I have a book called The honest broker in I analysed the decision to go to war in Iraq and the use of weapons of mass destruction, rhetoric as a tool to scare people into supporting the US and the UK intervention in Iraq. From that case, we understand that you can scare people in the short term, but what you risk is your long term credibility and the trust that people will have in
you. And for people who care about climate change. The first thing to understand is this is not a past one set of laws or one set of policies and be done with it. This is a century long challenge.
And so the expert community needs to maintain public support public legitimacy and trust over a very long time. And from where I said, trying to scare people by overhyping, science is not a recipe for securing long term trust.
Neil Collins 14:27 But it’s the way it’s being done. You know, wherever you look, as you said, the forecasts of Apocalypse tomorrow, almost universal. There are very few dissenting voices who are saying well, we’ve actually got to look at this more carefully. Why have we got to this point?
Roger Pielke Jr. 14:45 Yeah, it’s interesting, because if you take a look at the actual scientific consensus, and by scientific consensus, I mean, the summaries of the Intergovernmental Panel on Climate Change, and you read them and it’s important understand a consensus statement is not a single view that everyone shares. A consensus statement is an agreement by a group of experts as to what a broad literature says. And sometimes, literatures are conflicting. Sometimes they are uncertain. Sometimes we have understandings that are not particularly strong. And if you take a look at the scientific consensus on climate change the actual real consensus, it is not what you hear from Mark Carney or the United Nations or read in the guardian or the New York Times. It is a caricature of that. And so the climate issue has been for a long time, and I characterise it as a Manichean debate. There’s good guys and bad guys. Nuance, incrementalism and pragmatism often gets lost. And everyone then Vaclav Smil, who’s the great energy polymath recently complained in a New York Times interview about being pushed into either the sceptic corner or the alarmist corner. He said, “Why do I have to pick between those two things are complicated”. So I do think, you know, it’s polarised nature of some of the issues that we deal with today creates incentives, and particularly for journalists to try to characterise good guys and bad guys. And I think this is the trap Kirk fell into. He presented a message that was very readily characterised as being on one side of the debate rather than offering something nuanced, and complicated. It may not have gone viral. But it certainly would have been more faithful too.
Neil Collins: It would have kept his job.
Jonathan Ford 16:21 It sounds to me as if he didn’t necessarily want to. Anyway, but I want to talk to you about something else, because Neil can go on all night about this sort of stuff.
Neil Collins: thanks, Jonathan.
Jonathan Ford: I want to come back to ESG. Because obviously, the context of these remarks was in this responsible investing forum. And I’m interested in ESG, because it’s one of our subjects we’d come sometimes talk about on this podcast, because it is such a big industry, and its 2.8 trillion under management. One of the questions I have for you is do you think that ESG, and the way it has been formulated, is actually helpful in pushing forward? answers to this issue? Or do you think it’s actually unhelpful?
Roger Pielke Jr. 17:07 I’m going to reject the, you know, is it helpful or not the yes or no framing? And say, Yes, okay. I said, No, I mean, in some contexts, ESG includes everything from, you know, more board I said, No, I mean, in some contexts, ESG includes everything from, you know, more board representation of women in boards, more opportunity for underrepresented groups to
participate in governance, more transparent governance standards, and then, you know, it has the environmental aspect. And obviously, investment business has a huge role to play in outcomes we see in society.
So yes, I think ESG is really important. And I applaud the efforts to try to bring these considerations more into boardroom decision making. At the same time, you know, there is such a thing as greenwashing, the idea that it’s a symbolic effort. ESG is an industry ESG has spawned a multi trillion dollar industry. So yes, people are going to be scrambling trying to get pieces of that pie. But this raises, I think, you know, again, going back to some very important questions, if we’re going to be doing climate stress testing, for example, then okay, let’s do it well, let’s do it right Let’s base it on actual empirical science evidence, and not just use it as a facade for making money or presenting you know, how virtuous a company wants to be seen to be, but not in practice? For me, it just makes it it’s like any other institution, you’ll find. There’s good parts and bad parts. And I see, you know, the job of journalists and academics is to shine some light, what are the practices that are working? And what are the ones that we should truly be cynical about? And that’s obviously not something that people in the community particularly welcome all the time.
Neil Collins 18:37 I am much more sceptical about ESG. And I do think it is essentially greenwashing.
Jonathan Ford 18:44 I will come back to Stuart Kirk. What do you think the future holds for him stand up comedy? presumanly not judging by the laughs he got at the talk, which weren’t very many. Sounds to me like he’s more likely to become one of those journalists who’s casting light — sort of controversial columnist is where he’s heading?
Roger Pielke Jr. 19:01 Yeah, I don’t know, Stuart, I didn’t know of him, actually, you know, prior to his talk. But I will say as an outside, you know, distant observer, he’s really made it difficult for himself to continue to participate in this industry. And depending on on, you know, how he wants to go forward, it is perfectly reasonable for him to to actually revert to a more substantive critique. And there are obviously think tanks and places in governments where his views and his willingness to offer those views would be viewed as an asset. As a head of responsible investing for a major bank, probably not, because this is going to go with him going forward. Yeah, he might be out of the business, but not out of the game.
Jonathan Ford 19:40 Do you think looking at this reaction to all of this, somebody who maybe there’s somebody giving a PowerPoint presentation right now, who is offering a similar critique of this industry, but without all the kinds of asides and jibes that the ESG industry this great behemoth, which now exists is capable of absorbing those criticisms and saying let’s work with them, or do you think this whole thing is highly past dependent, and it’s a bit like some of the things you described in your own life? You know, there’s a kind of Twitter pitchfork kind of mob waiting on every street corner to respond to any heresies that threatened the fees from these 2.8 trillion of assets.
Roger Pielke Jr. 20:23 If we look narrowly at the issue of climate risk, you know, there’s a fascinating battle going on behind the scenes deep in the weeds in industry between people who are I will call them legacy, catastrophe, modellers. These are people who have worked primarily with insurance and reinsurance. And they construct significantly complex models based on data to assess economic risks from hurricanes, floods, fires, and so on. They’ve been around forever. There’s a new industry that’s grown up called Climate analytics, that is largely focused on being long term forward looking based on scenarios that is taking over large parts of that consultancy flow. So there is in this industry, some really important battles, debates behind the scenes over the science of the issue. And as an outside observer, some of the questions Kirk raises for example, the IPCC projects, everyone’s going to be much richer under every single scenario that it has in 80 years, but at the same time it summarises research that says, some of these regions that are going to be richer are going to be uninhabitable. So how do we reconcile that? And so I do think there are some really science-based empirical issues that are behind the Twitter outrage, as you call it and efforts to come out with the pitchforks that are taking place. And we don’t often see them, but they are important, and they’re out of the public eye.
Neil Collins 21:50 I was just going to say one of the things which sort of supports what Kirk said is the capital markets really do not believe that climate change is anything like as serious a problem as all the doom mongers claim, either the market have really got the pricing of a huge swathe of businesses completely wrong, because they are much more vulnerable than they think. Or perhaps the future is not as ghastly, as some of these people would like us to believe.
Roger Pielke Jr. 22:24 Well, this gets to into, you know, people really need to understand what the scientific consensus actually says. You know, I’ll give you one example, Swiss reinsurance recently put out a report talking about massive decreases in global GDP 15%-20%-25% over coming decades, as a company Swiss reinsurance is not acting as if the world is going to go into reverse on GDP
growth. So there are analyses studies and statements that are made out there that serve I would say, an entirely promotional purpose, to try to motivate people to act on climate. Exactly. They’re not being used to guide investment decisions in equities or assets or whatever it happens to be. And understanding that difference, I think, is really important, particularly for our community that calls itself responsible investing. You know, the scientific community finds itself at a in a difficult spot right now, because a lot of the scenarios of climate future are outdated, and some of the more extreme scenarios are simply implausible. So it’s very easy for someone like Stuart Kirk, to be confused about being what’s represented and hearing very apocalyptic claims, and hearing claims that are more measured. And so I do think opening up the responsible investment community to what I would call independent outside voices can offer a service to that community. But as we’ve seen with Stuart Kirk’s experience, if those messages are are resisted or shouted down, it’s going to be really hard to achieve the goals of responsible investing.
Neil Collins 23:57 That was a long time in finance with Jonathan Ford and Neil Collins, editing and production is by Nick Hilton, and our sponsorship partner is briefcase dot news. Join us again next week.