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HSBC to take three steps to achieve its zero carbon goal
HSBC Holdings plc (‘HSBC’) has announced plans to continue its leadership on climate change and outlined three steps to be taken to turn its net zero ambition for its portfolio of clients into business transformation across the bank.
The bank’s plans will only be achieved in partnership with its clients, by financing the change to their business models and technologies in order to lower their greenhouse gas emissions. In doing so, the bank will then lower the financed emissions of its portfolio to help meet its Net Zero by 2050 goal.
Given its global presence and relationships with clients across industries and client groups, HSBC recognizes the role it can play in helping to catalyze change. Partnering with its clients, unlocking finance for clean technology, infrastructure and skills, and being clear on its science-based expectations for the transition, will enable its clients to play their part in helping the world reach a net zero future.
The three steps:
Under the three steps, HSBC will publish a bank-wide Climate Transition Plan in 2023. The Plan will explain for the first time, in one place, how HSBC will implement its net zero ambition and the changes underway across the bank. This plan will bring together HSBC’s climate strategy, and 2030 and 2050 science-based targets, with how we plan to embed this into the bank’s strategy, processes, policies and governance. We will report annually on progress against the Plan in our Annual Report and Accounts.
The three steps also include Science-aligned phase down of fossil fuel finance. The bank is committed to phase down its financing of fossil fuels to what is required to limit the global temperature rise to 1.5°C. This commitment builds upon recent announcements, including our new thermal coal financing phase-out policy which is now being implemented, and the publication last month of science-based targets for on-balance sheet financed emissions from the Oil and Gas, and Power and Utilities sectors.
The bank will also continue to support clients in the energy sector who take an active role in the energy transition and who apply good industry practices around environmental, social, and governance issues.
Financing the transition is the bank’s primary objective. Doing so will require client-specific plans, and it will engage with its clients to understand and review their transition plans. If no transition plans are produced, or if after continued engagement a client transition plan is not compatible with HSBC’s net zero 2050 target, the bank will formally assess whether it continues to provide financing for that client.
The bank expects to publish financed emissions targets to capture capital markets activities for the Oil and Gas and Power and Utilities sectors in the fourth quarter of 2022, once the Partnership for Carbon Accounting Financials (PCAF) accounting standard for capital markets is published.
In 2022 we will undertake a review of and update its wider financing and investment policies critical to achieving net zero by 2050. In consultation with leading independent scientific, international and other bodies, the bank will assess how its policies can be updated to best reflect emerging science, international guidance, and good industry practice. This will include a wider energy policy encompassing conventional and unconventional oil and gas, methane emissions, and environmentally critical areas such as the Arctic, Amazon, and UNESCO World Heritage sites.
HSBC’s announcement of these commitments has been supported by constructive engagement with its investors and ShareAction who, along with HSBC, are focused on the scale and urgency of change needed to reach a net zero global economy by 2050, or sooner.
Group Chief Sustainability Officer, Dr Celine Herweijer, said: “HSBC understands that the sudden energy crisis that the world finds itself in will necessitate actions in the short-term around energy security. Our clients, like us, are operating in this new reality, but the longer-term imperative over the coming decades to transform business models for a net zero future remains unchanged. If anything, the current crisis should galvanise the need to supercharge investment into the clean energy transition.”
Celine continued: “We believe we can have the biggest impact on climate action by actively engaging our clients on their transition, focusing on the need for robust and credible transition plans, and by providing the financing and advisory solutions that help unlock the investments needed. We know we need to transform the bank to achieve this, and we want to demonstrate the actions we are taking to make this happen.”
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