Investors get tough on HSBC over its support of fossil fuels

London — HSBC Holdings set out fresh commitments to align its lending with the goals of the Paris climate agreement and wind down its support for coal, after pressure from a group of investors.

The bank’s proposal, which will face a shareholder vote on May 28, comes after UK non-profit ShareAction and a group of HSBC investors, including Amundi and Man Group, filed their own resolution in January. ShareAction and the investors have agreed to withdraw their motion and instead support the bank’s plan, though they pledged to take further action in 2022 if they feel HSBC hasn’t sufficiently delivered on its promises.

HSBC plans to adopt extra goals along the way to its targets, which were set in 2020, to achieve net-zero emissions in its own operations and supply chain by 2030, and to eliminate the emissions of its client portfolio by 2050. The bank currently ranks among Europe’s largest financiers of fossil-fuel companies.

HSBC said in a statement on Thursday that its resolution “outlines the next phase of the bank’s net-zero strategy, with a particular emphasis on how it will support its customers on their own transition journeys”.

If the resolution is passed, HSBC will be required to disclose short- and medium-term targets to align its lending and underwriting with the goals and timelines of the Paris agreement. The bank also will need to phase out financing for coal-fired power plants and thermal coal mining in the EU and Organisation for Economic Co-operation and Development (OECD) member states by 2030, followed by the rest of the world before 2040.

HSBC will also have to report annually on its progress. Since the Paris climate agreement was signed at the end of 2015, HSBC has helped arrange almost $91bn of bonds and loans for energy companies, excluding solar, wind and other renewable producers, the third most among European lenders, according to data compiled by Bloomberg.

“Net-zero ambitions have to be backed up with time-bound, fossil fuel phase-outs and today HSBC has taken an important step in that direction,” Jeanne Martin, senior campaign manager at ShareAction, said in a statement. “Our focus now turns to ensuring it delivers on these commitments.”

Martin said HSBC’s comment that “the expansion of coal-fired power is incompatible with the goals of the Paris agreement” marked a significant change in tone from the lender.

Bloomberg