HSBC’s £500m green SME fund officially launches

HSBC has confirmed that a £500m fund to help small and medium-sized businesses (SMEs) improve on sustainability that was first discussed at COP26 has officially launched today (17 January).

HSBC’s £500m green SME fund officially launches

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

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.

The fund was originally announced during COP26 in November last year, with HSBC claiming that the fund would 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.

The financial has committed to reaching 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.

More recently, Market Forces released research claiming that HSBC financed $5.3bn in fossil fuels from January 2021 up to COP26.

HSBC’s pension fund has also 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.

Empowering SMEs

The launch of the fund comes as new research suggests that more SMEs are feeling empowered to set out their own efforts to decarbonise.

A survey of 500 senior managers representing UK SMEs found that 71% have started measuring their carbon footprint with a view to decarbonising, with two companies claiming to have reached net-zero emissions already.

The survey from Eight Associates found that more than half of SMEs have reported improved reputations with customers as a result of their net-zero aspirations and one-third have reported greater sales revenues.

“It’s an exciting time for SMEs. They have the power to take the lead on credible and robust sustainability practices that influence all their stakeholders,” Eight Associates’ director Chris Hocknell said.

“SMEs are often characterised by their flexibility and passion for their products and services, they are in a fantastic position to enact change and be recognised accordingly.”

More than 40% of SMEs claimed that customers are demanding more from them on sustainability, with almost two-thirds claiming that they felt they might lose out on business if they didn’t act. However, SMEs did also cite barriers to action – notably resources (45%), budget (43%) and the confusion around government and industry guidance on sustainability (48%).

Matt Mace

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