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Does ESG matter?

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Two years ago Stuart Kirk, the then head of responsible investing for HSBC, delivered a mic dropping speech at the FT Moral Money conference. What did he say? Here’s a few quotes:

“Who cares if Miami is six metres underwater in 100 years? Amsterdam has been six metres underwater for ages, and that’s a really nice place.”

“The average loan length in a big bank like ours, HSBC, is six years. What happens to the planet in year seven is irrelevant.”

“There's always some nut job telling me about the end of the world.”

It wasn’t long before his departure from HSBC. But is he wrong? I said he was at the time but now, contributing regular columns to The Financial Times, he has a voice and outlet once more. In his latest column (January 27), he claims that we are all hypocrites about corporate governance. It’s an interesting column, claiming that being good guys doesn’t make money.

“Academic studies of governance and shareholder returns struggle to find a definitive positive relationship — let alone causation. Indeed, a Journal of Corporate Finance paper in 2022 showed that poor governance stocks have actually outperformed good ones since 2008.” He adds that “the most comprehensive long-run analysis I’ve seen of ESG scores versus returns — by Rómulo Alves, Philipp Krüger and Mathijs van Dijk — shows no relationship at all”.

Hmmmm … as  I read this, I was agreeing with the analysis and commentary. But then, on reflection, I completely disagree with it. The reason being that ESG and all of its implications, is meant to drive companies and leaders to do better for the world. It’s not just about environment, but the relationship with society and staff. Some people may not like the word staff, so let’s call them associates, colleagues, team members or slaves.

Anyhow, the gist of Stuart’s column made me think that companies who focus upon doing good do not outperform companies that do bad.

But what does that statement mean? It means that the financial system is geared towards incentivising and motivating leaders, governments and management to act in a way that does bad. Is this true?

According to the articles Stuart cites,  the answer is yes. For example, from the paper by Alves, Krüger and van Dijk:

We aim to provide the most comprehensive analysis to date of the relation between ESG ratings and stock returns, using 16,000+ stocks in 48 countries and seven different ESG rating providers. We find very little evidence that ESG ratings are related to global stock returns over 2001-2020.

In other words, returns on investment are greater in companies that act badly, rather than those that act better. That’s my take on this anyway, and is well illustrated by the man used as the picture on Stuart’s article: Elon Musk.

Elon is admired worldwide and became the richest man in the world through his co-creations of Tesla and SpaceX. But, when it comes to ESG, he fails. The best way to illustrate this is the spat he’s had with Standard & Poor’s after they created the ESG Index. His score? 37 out of 100. The reason? His companies treat their people badly (read more here).

But then the same can be said of Jeff Bezos – Amazon has a ruthless work ethic – and Steve Jobs, the founder and CEO of Apple, was renowned for his adversarial work management style.

In other words, be an asshole and make money or be a good guy and lose … or that’s one way to see the world. Unfortunately, there may not be a world based on that ethic but, thanks to Elon, we can go and live on another one.


“I don’t know who the good guys are anymore. But I do know what the enemy is. It’s the compromise of principles. You lose the war when you lose your principles. And the first principle is to look out for your comrades.” Karen Traviss, Author


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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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