Is There Persistence in the Financial Industry's Commitment to Sustainability (ESG) as We Approach 2025?

The Financial Sector's Shaky Commitment to Sustainability Under Scrutiny

Mar 27 2025 By Evelyn, Effin' FinanceShit Talkin' Blogger0 Comments

In a no-holds-barred article, financial sector critic and columnist Stuart Kirk calls bullshit on the financial sector's supposed commitment to sustainability and ESG. He accuses banks and asset managers of abandoning their environmental pledges, citing increased regulatory pressure and a shift in market demand.

Whether you're into green energy or not, Kirk's take on the declining climate ambitions of the financial sector is worth considering. After all, he's been in the financial game for over two decades, rising through the ranks at HSBC, Deutsche Bank, and DWS Group to become a leading voice in investment strategy.

Kirk's article comes on the heels of major U.S. banks, like Morgan Stanley, Citigroup, and Bank of America, bailing out of the Net-Zero Banking Alliance (NZBA). The Net Zero Asset Managers Initiative (NZAM) also took a nosedive last month after BlackRock jumped ship. The common denominator? Good ol' US Regulatory pressure.

But it's not just about fleeing commitments; it's also about the numbers. Sustainable fund inflows reached a whopping $645 billion globally in 2021, but dwindled to a mere $36 billion out of $1.5 trillion overall in 2024. Morningstar data suggests an even sharper decline, with outflows amounting to $19.6 billion. Europe continues to be the green investing hub, while the U.S. faces outflows due to political backlash, possibly fueled by Trump's influence.

The Once-Enthusiastic Skeptic

Kirk is no stranger to questioning the financial sector's initial enthusiasm for ESG and sustainability promises. He argues that net zero targets and ESG were never marketed as profit-maximizing opportunities, but as essential beliefs. He's left wondering if it was all a lie, pointing out how quickly banks abandoned these "core values" when demand waned. If they never truly believed in sustainability from the get-go, we've all been taken for a ride, he warns, alluding to trust issues and potential mis-selling claims.

A New Path Forward: Engage, Don't Divest

But Kirk doesn't just complain; he offers a solution: a chance to correct the course. He sees the current backlash as an opportunity to axe the misguided practices and focus on the good parts – preaching the message that finance can be a force for good. Kirk advocates engagement over divestment: rather than cutting ties with fossil fuel companies, he suggests working with them to transition towards renewable energy sources and foster the economic growth needed for widespread renewable investments.

Re-evaluating Divestment and ESG

According to Kirk, the sheer act of buying or selling shares in a secondary market doesn't make a dent; to influence a company, you need to own its shares so you can vote. He encourages focusing on primary markets – venture capital, private equity – where real money is given or withdrawn. On ESG, he remains supportive but calls for clarity and a single score per company, no arguments.

The Debate Rages On

The argument over financing sustainability isn't going away. On one hand, divestment supporters argue that getting rid of investments in fossil fuels undermines their legitimacy. On the other hand, engagement proponents, like Kirk, believe that collaboration with these companies can lead to meaningful change from within. Political shifts, especially in the U.S., add complexity, with banks citing legal pressures for their retreats. Kirk emphasizes the importance of trust: excessive realism, honesty, and pragmatism are crucial if sustainable finance is to have a chance.

Whether the financial sector is genuinely committed to sustainability remains an open question. But, according to Kirk, it's high time for the sector to put its money where its mouth is. That's if we want to stop fucking shit up for future generations, of course.

Stuart Kirk, a veteran finance strategist, questions the sincerity of the financial sector's commitment to sustainability and ESG, citing increased regulatory pressure and declining market demand as reasons for abandoning environmental pledges.
With sizable inflows into sustainable funds reaching $645 billion in 2021, only to dwindle drastically to $36 billion out of $1.5 trillion overall in 2024, Kirk's concerns about the sector's climatic ambitions are raised.
The withdrawal of major U.S. banks like Morgan Stanley, Citigroup, and Bank of America from the Net-Zero Banking Alliance (NZBA) and BlackRock exiting the Net Zero Asset Managers Initiative (NZAM) echo Kirk's assertions about the sector's waning dedication to sustainability.
Kirk calls for a shift from divesting to engaging with fossil fuel companies, proposing collaboration to facilitate their transition to renewable energy sources, fostering economic growth, and driving widespread renewable investments.
In the context of the debate on financing sustainability, Kirk emphasizes the importance of clarity, honesty, and pragmatism, suggesting a focus on primary markets to have substantial impact, and sporting a skeptical view towards the legitimacy of ESG as a marketable profit-maximizing opportunity.