HSBC pledges $100bn to sustainable finance

HSBC claimed that it will increase its support for clean energy and low-carbon technologies, while also pledging to support projects that align to the United Nation’s Sustainable Development Goals (SDGs).

“For more than a decade, HSBC has helped clients break new ground in the green bond markets in Europe and Asia, and to finance some of the biggest climate-friendly infrastructure projects in the world,” HSBC’s chief executive Stuart Gulliver said.

“The $100bn commitment that we are announcing today acknowledges the scale of the challenge in making a transition to a low-carbon future. We are committed to being a leading global partner to the public and private sectors as they make that transition.”

A report from Boston Common Asset Management (BCAM) earlier this year found that 28 global banks, including HSBC, had made steps to improve disclosure and stress test methods in relation to climate impact, but that these methods were failing to bring about tangible change.

But as part of new pledges announced this week, HSBC will provide $100bn in climate finance, alongside a goal to source 100% renewable electricity by 2030 – with an interim target of 90% by 2025.

HSBC has also pledged to actively manage a low-carbon transition path for high-carbon sectors, including discontinuing financing of new coal capacity. The bank will also adopt the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) to improve transparency. Finally, HSBC has vowed to “lead and shape” the debate on sustainable finance, through developing industry-wide definitions and standards.

In February 2017, HSBC launched a zero-deforestation policy following a Greenpeace investigation which linked the banking corporation to organisations that have been destroying Indonesia’s rainforests.

Market gap

HSBC’s £100bn pledge is a timely introduction, with new BNEF analysis warning that countries rich and poor are falling short on promises made as part of the Paris Agreement to boost clean energy investments.

BNEF’s annual Climatescope project found that new clean energy investment in non-OECD countries fell by $40bn to $111.4bn in 2016, with China accounting for around three quarters of the decline. In fact, the number of non-OECD nations that have reached clean energy asset finance of more than $100m annually has flatlined at around 27 since 2010.

The world’s wealthiest nations have pledged to make $100bn available annually to help less developed nations address climate impacts. But BNEF analysis notes that funds specifically from the wealthiest nations to support clean energy fell by $3.5bn in 2016 to $10bn.

“The figures highlight the gap between talk and action when it comes to addressing climate and supporting clean energy,” BNEF’s Ethan Zindler said. “Wealthier countries have been slower to ramp investment than might have been expected, given the promises made eight years ago at Copenhagen. But poorer nations have in many cases not built the policy frameworks needed to build investor confidence and attract clean energy investment.”

Regarding the $100bn yearly pledge, the UNFCCC Standing Committee estimated that non-clean energy climate-related investment reached $60.5bn in 2016. BNEF stated that unless all other forms of climate investment have increased sharply in this time frame – an unlikely feat considered the $3.5bn fall in pledges from wealthy nations – the goal appears “far from reach”.

Matt Mace