HSBC publishes net-zero transition plan, insists climate approach is ‘science-based’

The 21-page document details interim, sector-specific targets for financed emissions in support of the 2050 headline goal.

Some of these goals require absolute reductions in financed emissions, such as a 34% reduction target for oil and gas between 2019 and 2030. Most are intensity-based, meaning portfolios in sectors such as aviation, automotive and power and utilities could grow their absolute emissions footprint so long as they improve efficiency.

HSBC has also included policies for forestry and agriculture in the plan, given how nature degradation and destruction in these industries can significantly impact existing carbon sinks and the future potential for carbon sequestration and climate adaptation.

These goals and policies are not new. Rather, the plan sets them out alongside fuller strategic priorities for delivering net-zero by 2050 for the first time.

HSBC’s group chief sustainability officer Celine Herweijer said in a LinkedIn post that the bank has “a portfolio today with a heavy financed emissions footprint weighted towards the sectors and regions that matter the most in terms of emissions and with the greatest financing need.

She elaborated: “This means the Bank faces a complex transition, with markets and actors at different starting points and moving at different speeds. But this also provides us with an opportunity to make an impact in both the emissions challenge and the financing challenge.”

In particular, HSBC is a significant historic financier of fossil fuels. It is believed to have provided $87bn in financing to fossil fuel companies between the start of 2015 and the end of 2021.

This involvement in high-carbon sectors, particularly in emerging economies, means HSBC is well-positioned to support industrial decarbonisation and the transition in global supply chains. The transition plan states that $155trn will be needed to finance the net-zero transition in the markets HSBC serves, of which at least $39trn should be provided this decade.

Phase-out, phase-down, science-based?

As 2021 came to a close, HSBC confirmed plans to end the financing of coal-fired power generation and thermal coal mining by 2030 in OECD markets and 2040 elsewhere, such as China.

Then, in 2022, HSBC implemented a more immediate change, stating that it would longer be providing lending or capital markets finance specifically for activities relating to the development of new oil and gas fields.

The Bureau of Investigative Journalism this week argued that this plan must have loopholes, posting evidence that it had helped to raise £37bn+ for firms involved indirectly in oil and gas exploration and expansion plans, through activities such as share sales and bond issuances.

HSBC stated in response to the Bureau that it wants to “finance actions that decarbonise today’s fossil-based energy system while scaling the clean energy system tomorrow”. It also maintained that its policies “allow for financing” that is aligned with a “science-based net-zero transition”.

Its definition of science-based and, indeed, much of the new transition plan, is based on the International Energy Agency’s (IEA) 2050 net-zero pathway published in 2021. This is aligned with the Paris Agreement’s 1.5C temperature pathway with limited overshoot.

The IEA recently updated this pathway, so time will tell whether HSBC shifts its approach in turn.

Herweijer said she and her team expect to update the transition plan “periodically” due to changes in science and data and as the trajectory of decarbonisation in certain geographies and sectors becomes clearer. Transition plans provided by corporate customers will help with the latter.

Regulation and legislation will also play a role in the rate of updates. The UK is mulling mandatory transition plans for certain large businesses in high-carbon sectors, plus their financiers. A mandate was initially floated for 2023 but a post-2025 date is now in the works. The requirements would be aligned with the ‘gold standard’ from the Transition Plan Taskforce.

It bears noting that HSBC does not have science-based emissions goals verified by the Science-Based Targets Initiative (SBTi). In setting a net-zero target in 2020 it did state an intention to gain this verification within two years. In late 2023 it was reported that the bank had shelved this plan, along with Standard Chartered, Societe Generale and ABN Amro Bank.

Related feature: Why corporate net-zero transition plans should be transformational, not tick-box

Comments (1)

  1. Andy Kadir-Buxton says:

    Due to the amount of money that traditional banks invest in fossil fuels if you have £1 million stashed in these banks you can do more for your carbon footprint by moving it into an environmental bank such as Triodos than doing other things such as fitting solar panels and heat pumps. And when you transfer your assets let your old bank know why you are leaving, it may make them think about what they are doing. At the moment the 744,500 customers of Triodos in five European countries are providing £9.4 billion of loans to projects across Europe, benefiting both people and planet. Meanwhile, Barclays bank alone financed £4.1bn for new fossil fuel projects from January 2021 to the eve of the UN climate summit, COP 27, Market Forces found, despite growing international warnings that any new fossil developments would destroy any chance of avoiding a catastrophic climate breakdown.

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