Investors expect more from HSBC net zero carbon pledge

On the 10/09/20 at 3:12PM


Adrien Paredes-Vanheule

Responsible investors welcome the global financial group's move but point out some details of HSBC's net zero carbon plan are lacking.

Global financial group HSBC on Friday unveiled plans to achieve carbon neutrality wihtin its customer portfolio by 2050 or sooner. Furthermore, the bank committed to be net zero in its operations and supply chain by 2030. HSBC said it will give priority to financing and investments linked to the low carbon transition and that it will apply a climate lens to financing decisions. It intends to plug $750bn and $1trn of finance and investment by 2030 to help with the transition of its clients. The group's net zero carbon plan includes the setup of a unit dedicated to the financing of CleanTech innovation companies with a $100m CleanTech investment target through the firm's technology venture debt fund. Lastly, HSBC will donate $100m “to scale climate innovation ventures, renewable energy, and nature-based solutions between now and 2025” through a philanthropic programme.

However, investors, which have regularly castigated HSBC for its reluctance to drop fossil fuel financing, remain skeptical as to the announcement, expecting more details from the group. Nina Roth, director, responsible investment at BMO Global Asset Management, said: “Such announcements are great to indicate the direction of travel. But there is a clear need for more substance in their implementation. Whilst HSBC’s announcement is detailed when it comes to pledges to provide Paris aligned finance to clients, we still need more information on what they won’t do anymore. I’m particularly thinking of their coal portfolio. With HSBC’s large presence in Asia, it will be most interesting to see what it means for the regional extractives’ portfolio.”

Esmé van Herwijnen, SRI analyst at Edentree Investment Management, added: “I think this is a big move forward, but lacks some details. A net-zero target for a global bank like HSBC is a positive, but any net zero target should start with focusing on ceasing financing of fossil fuel projects and other environmentally destructive industries, thus avoiding and reducing emissions rather than merely seeking to compensate or offset financed emissions. It is not yet clear which option HSBC will favour and whether avoiding fossil fuel financing will be a key part of this commitment. The statement today still leaves many questions unanswered.”

Jeanne Martin, senior campaign manager, ShareAction, recalled that as Europe’s second largest financier of fossil fuels, HSBC shall commit to a global coal phase out and take immediate steps to curb its fossil fuel financing. “This would leave no doubt of the bank’s commitment to net zero by 2050 – and give the world a chance to avert the worst consequences of climate change.”