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Cancelling Stuart Kirk: ESG and Energy Lysenkoism // ESG Hits a Wall // American Oil Refiners Prepare for Hurricane Season

Cancelling Stuart Kirk: ESG and Energy Lysenkoism

Over the weekend, the bank HSBC "suspended a senior executive pending an internal investigation into a presentation he made [...] according to people with knowledge of the process," reports the Financial Times.

The executive's name is Stuart Kirk. The presentation he gave was titled, "Why investors need not worry about climate risk." He opened by dunking on Deloitte's climate apocalypticism and preceded to make his case: bankers spend too much time trying to "out-hyperbole" one another about climate risks. It's gotten to the point that people are becoming numb to it.

"You barely looked up from your phones at the prospect of 'non-survival,'" he told the audience.

Kirk's argument was simple: humans will adapt, the economy will grow, and there are a lot of people at central banks who juice the stats to make the future look worse than it is. Rather than screaming about the end of the world, investors should focus on making money. Shifting from climate mitigation to climate adaptation and ceasing the regulation ratchet were two of the remedies he suggested. Kirk believes in climate change and carbon reduction. I encourage you to watch the entire presentation.

And yet, Kirk was suspended despite internal agreement about his presentation within HSBC. FT reports, "While the bank and its senior executives have criticised the speech [...] its theme and content had been agreed internally before Kirk spoke on Thursday, according to people with knowledge of the event’s planning."

Why was he suspended? For heresy. Greens were mad, ESG advocates were mad, HSBC was embarrassed by what he said. He violated the terms of what I called, in a recent essay for Compact, Energy Lysenkoism.

"Named after Trofim Lysenko, the Soviet scientist whose ideologically based rejection of modern genetics, fertilizers, and pesticides led to record crop failures and millions dead, Energy Lysenkoism tries, like its namesake, to enforce politics and ideology through science. Lynsenkoists distort the realities of energy to smuggle “degrowth ideology” into public policy, creating a paradigm of energy poverty that imperils the poor and working classes."

Energy Lysenkoism has four main themes (the first three of which were derived by Bertram Wolfe bank in the early eighties):

  • A "general distrust of a society with abundant energy supplies."

  • "[T]hat society should be forced to alter and re-orient itself to minimize energy use.”

  • A "general dissatisfaction with the present social and economic structure of society and the suggestion that energy should be used as a means for societal change not directly connected with energy."

  • The "invocation of 'emergency,' 'crisis,' and the incantation of capital-'s' Science as a mantra to shut down democratic interrogation of green policy aims. Such sloganeering creates conditions in which anyone who questions the anti-ecopocalypse strategy of degrowth can be branded a 'denialist,' irresponsibly keeping the world from converting to 100 percent renewable energy. It is in cutting off debate or discussion of alternatives that this fourth pillar truly puts the 'Lysenkoism' in Energy Lysenkoism."

Kirk violated all three, but especially number four. As I argue in the piece, Energy Lysenkoism is about justifying upward wealth and power transfers. ESG was one of the examples I cited.

Kudos to Mr. Kirk for his candor and bravery. It's a shame his own bank was too weak to stick up for him, especially because they know he's right.

ESG Hits a Wall

Speaking of ESG--how's it going with all that? Its knees are looking wobbly. Energy security and the "hard school of history," as Thucydides called it, seem to have sapped much of the enthusiasm.

Plus, renewables have been hit hard by the energy crisis's escalation after Ukraine. Oilprice.com reports, "The ESG investment momentum has run up against energy supply disruptions since the Russian invasion of Ukraine."

Groups like BlackRock also show flagging commitment to the movement. Formerly heavy hitters in the ESG scene, BR expects "to support fewer shareholder proposals this AGM season compared to 2021 as it finds that climate-related shareholder proposals have become unduly more prescriptive and micromanaging."

"Importantly, in the context of voting on shareholder proposals regarding climate-related risk, companies face particular challenges in the near term, given under-investment in both traditional and renewable energy, exacerbated by current geo-political tensions," BlackRock Internal Stewardship said.

“This set of dynamics will — at least in the short- and medium-term — drive a need for companies that invest in both traditional and renewable sources of energy and we believe the companies that do that effectively will produce attractive returns for our clients.”

But other investors are doubling down despite the grim outlook for renewables. The Financial Times reports, "In the past 12 months, though, “green stocks” have suffered as the deluge of money into climate-friendly companies has eased. For example, shares in the Danish power company Orsted — a leading player in the offshore wind market and one of a few large energy companies that clear the bar for the most climate-conscious investors — rose 80 per cent in 2020, but fell 33 per cent in 2021. The share price has dropped a further 17 per cent so far this year."

Nick Stansbury, head of climate solutions at Legal & General Investment Management, told the FT, “We often see this sort of a hype cycle in new big changes — a period where the market runs ahead of itself and prices in too much change, usually too quickly, with too much optimism, and then there is a period of adaptation and adjustment, and then things rebuild again.”

Maybe so. But, as Stuart Kirk pointed out above, ESG seems to derive a lot of its power from catastrophization. "Adapation, adjusting, and rebuilding" sounds a lot like being patient--not Cassandras' strong suit.

Will the slowdown spawn a legitimacy crisis for ESG?

American Oil Refiners Prepare for Hurricane Season

NOAA warns that this hurricane season will likely be a tough one. It will threaten the Gulf of Mexico's on and offshore oil and gas production and its refining capabilities, along with America's electricity demand and fuel supplies.

SPG reports, "The US National Oceanic and Atmospheric Administration sees a 65% probability of an above-normal season, with:

  • 14-21 named storms;

  • six-10 hurricanes with winds of 74 mph or higher, and

  • three-six major hurricanes with winds 111 mph or higher"

"For the 2022 hurricane season, NOAA is forecasting a likely range of 14 to 21 named storms (winds of 39 mph or higher), of which 6 to 10 could become hurricanes (winds of 74 mph or higher), including 3 to 6 major hurricanes (category 3, 4 or 5; with winds of 111 mph or higher). NOAA provides these ranges with a 70% confidence," the agency said in a press release.

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Word of the Day

Petrochemical feedstocks

Chemical feedstocks derived from refined or partially refined petroleum fraction, principally for use in the manufacturing of chemicals, synthetic rubber, and a variety of plastics. (source)

Crom's Blessing

Hoover Dam angel.