HSBC UK launches £500m green fund for SMEs

UK banking giant has launched a new £500m green funding initiative to help small and medium-sized businesses decarbonise and invest in green initiatives.

HSBC UK launches £500m green fund for SMEs

HSBC UK's chief executive unveiled the new loan offering at COP26

HSBC UK has today (5 November) launched a £500m Green SME Fund. The new funding is available for businesses with a turnover of less than £25m and offers 1% cashback on loans, starting at £1,000. The bank wants SMEs to invest in green solutions and initiatives.

Speaking from COP26 today, HSBC UK’s chief executive Ian Stuart said: “I am delighted to announce to the launch of HSBC UK’s £500m Green SME Fund. “Companies of all sizes and sectors have a role to play in the journey to net-zero, however the sustainable finance market has been predominately focused on larger corporations. It’s critical that access to funds isn’t a barrier for small and medium-sized businesses working to achieve lower carbon emissions.

“We want to help businesses seize the opportunities and growth potential that environmental sustainability offers and the fund, along with our new and expanding suite of tools and resources, will make it easier for small businesses to take practical steps to cut their emissions and help their customers to cut theirs too.”

To qualify for the cashback, eligible SMEs must provide evidence that the use of the loan would meet HSBC’s Eligible Criteria for Green Activities, which have been independently reviewed by Sustainalytics.

It builds into HSBC’s global commitment to offer between $750bn and $1trn of financing and investment support to its customers over a ten-year period.

Net-zero banking

The financial giant committed last October to reach net-zero financed emissions by 2050 and outlined plans to finance at least $750bn of low-carbon activities within a decade. However, ShareAction claims that in that HSBC funnelled $1.8bn into fossil fuel companies in the build-up to the announcement.

Since then, shareholders have voted to pass a resolution requiring HSBC Holdings to phase out finance for the coal industry by 2030 in the OECD and by 2040 worldwide.

Last month, HSBC’s pension fund set a 2050 net-zero financed emissions targets, with an interim aim to halve emissions by 2030. The commitment from the HSBC Bank UK Pension Scheme covers its entire £36bn portfolio of defined benefit and defined contribution assets.

A 2019 baseline year has been set for the 2030 target and, for both the 2030 and 2050 milestones, the scheme will be following the Net-Zero Investment framework developed by the Institutional Investors Group on Climate Change (IIGCC) – a coalition of dozens of major investors, including the pension scheme and collectively managing more than $11trn of assets.

The framework was first trialled in real-world scenarios in the second half of 2020, on portfolios totalling $1.3trn. It is designed to help investors assess how and when to divest from high-emitting companies without credible decarbonisation plans; engage with companies that are developing such plans, and invest in more projects and companies providing climate solutions on the road to net-zero. Trials were scaled up to $8trn of assets this spring.

SME Climate Hub 

In related news, the SME Climate Hub has this week launched a new suite of tools designed to help SMEs – which it estimates account for 90% of the total number of businesses globally – make strategic and impactful emissions reductions, track their progress and demonstrate climate leadership.

Included in the toolbox is a new carbon calculator from Normative, which is free to use and due for a formal launch in early 2022. SMEs are being invited to test the calculator in the meantime, to get an up-to-date baseline of their direct and indirect emissions. 

Later this month, CDP will launch its SME Climate Disclosure Framework in partnership with the Exponential Roadmap Initiative and Normative. The calculator can help businesses to participate in this voluntary initiative. 

CDP’s global head of value chains and regional director of corporations Sonya Bhonsle said: “SMEs play a major role in economies around the world; micro-enterprises alone account for 70% to 90% of all firms. Without them, we cannot transition to a 1.5C future.”

Also launching are free, self-paced educational models developed in partnership with the We Mean Business Coalition. The modules are accessible online, including video and written content and tasks. They provide practical support with low-carbon operations and supply chains, sustainable product design, policy advocacy and community collaboration. 

CISL and BSR are also supporting the SME Climate Hub with the toolbox. 

Matt Mace

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