But bank's commitment to decarbonising its financing by mid-century, on top of its supply chain and operations by 2030, is slammed by campaigners as "empty" and an "attempt to buy time" due to its failure to commit to divest from coal and oil and gas
HSBC has become the latest bank to commit to achieving net zero financed emissions, announcing this morning that it intends to align its portfolio of investments and debt financing with global climate targets by mid-century.
The bank, which is currently Europe's second largest financier of fossil fuels, has committed to reaching net zero across its supply chain and operations by 2030, berore reaching net zero across its customer portfolio 20 years later.
The pledge does not include any firm commitments to phasing out support of fossil fuel companies, but confirms the bank's plans to channel between $75bn and $1tr of financing and investment over the next 10 years to support its customers' transition towards net zero emissions.
In an open letter to its clients, chief executive Noel Quinn said the bank had been motivated to ramp up its environmental ambition by customer concern about climate change.
"We know this is an issue that many of our 40 million customers care deeply about, particularly in our retail and private banking businesses," Quinn wrote. "They care as citizens, consumers, and business owners. We are committed to developing products that allow them to invest or participate in efforts to bring about a more sustainable global economy."
While the pledge provides limited detail on the measures it will take to slash the carbon emissions of its portfolio or operations, the bank said it would establish "clear, measurable pathways" to net zero using the Paris Agreement's Capital Transition Assessment Tool (PACTA).
HSBC said it would "apply a climate lens" to all its financing decisions, and disclose its climate risk in line with the recommendations of the Taskforce on Climate-related Financial Disclosure (TCFD). It also said it would work with the broader finance sector to create a standard to measure financed emissions and support a functioning carbon offset market.
Ben Caldecott, director of the Oxford sustainable finance programme and COP26 strategy advisor for finance, hailed the announcement as a "big deal", noting that HSBC faced particular challenges due to it being more exposed to emerging markets than many of its peers.
However, elsewhere the news elicited a more luke warm response, with a number of environmental campaigners slamming the commitment as "empty" due to its lack of a phase out timeline for its support of fossil fuel companies and businesses responsible for deforestation.
"HSBC's net-zero commitment is a bit like saying you'll give up smoking by 2050, but continuing to buy a pack a week, or even smoking more," said Becky Jarvis, coordinator of campaign group network Fund Our Future UK. "Any further financing of oil, gas, and coal expansion today is utterly at odds with a net-zero commitment by 2050. That's just science, not finance."
And Adam McGibbon, energy finance campaigner at Market Forces, said the proposals represented "zero ambition, not net zero ambition".
"If you want to know what HSBC's stance on climate change really is, look at what they fund, not their fluffy marketing," he added. "This is a bank that owns stakes in companies seeking to build enough coal power plants to emit carbon emissions equivalent to 37 years of the UK's annual emissions."
HSBC, which provided $87bn in financing to top fossil fuel companies since the Paris Agreement and nearly $8bn in loans and underwriting to 29 companies developing coal plants between 2017 and Q3 2019, has faced growing pressure from shareholders to cease financing companies that are heavily dependent on fossil fuels. In May, 24 per cent of shareholders voted in favour for an independent resolution that called for clear phase-out targets and in 2019 a group of investors, including Schroders, EdenTree and Hermes EOS wrote a letter to the bank's then-CEO urging him to end support of companies dependent on coal mining or coal power.
Today's announcement is the latest in a growing wave of pledges from across the financial sector from banks and investment firms that are now looking to fully decarbonise not just their operations but also their portfolios. In the past month alone Morgan Stanley and JPMorgan Chase have made similar pledges, while earlier this year Barclays and Natwest promised to move their investment activities into line with the Paris Agreement.
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But bank's commitment to decarbonising its financing by mid-century, on top of its supply chain and operations by 2030, is slammed by campaigners as "empty" and an "attempt to buy time" due to its failure to commit to divest from coal and oil and gas...