A group of HSBC shareholders is disappointed that the bank isn’t taking urgent steps to end financing for fossil fuel companies. So they’ve introduced a new resolution to be voted on at the upcoming AGM, one that will force HSBC to publish a plan explaining how it will clean up its books.
The resolution is being backed by major financial companies, including Europe’s largest money manager, as well as over 100 individual shareholders and is being coordinated by campaign group ShareAction. If it passes during April’s meeting, HSBC will be required to develop a strategy showing how it will extricate itself from the fossil fuel industry, starting with coal.
Despite making some vague promises about becoming net zero, HSBC is still one of the world’s biggest financiers of coal, oil and gas. So this resolution is a much-needed kick up the backside for a bank that claims to be a leader in sustainable finance.
If HSBC really does want to be a green banking leader, it should support the resolution. That will send a signal to other shareholders to vote in favour and commit the bank to stronger action. And it will be a smart move for HSBC’s reputation as well. Here’s why.
1. HSBC can make its net-zero plan actually mean something
In October 2020, HSBC released what it described as ‘an ambitious plan’ to reach net zero emissions within its financing and investment portfolio by 2050. Other banks (including Barclays) have also sketched out similar plans, and a cynic might say that, with COP26 planned for November in Glasgow, they’re trying to get ahead of the game and make the appearance of giving a damn.
But HSBC’s plan also follows the trend of sounding good on paper but amounting to very little in the real world. The glaring hole is that it makes no mention of ending finance for the fossil fuel industry – without this, any net-zero plan simply won’t work. So backing this resolution will show that HSBC really will stick to its stated ambitions.
2. HSBC will have to set deadlines for getting out of fossil fuels
Any good plan needs to have targets and deadlines. HSBC’s net-zero plan has none of these, so it’s not a very good plan. The resolution will require HSBC to put dates on its commitments, including the phasing out of fossil fuel finance, which are in line with the Paris agreement, something HSBC says it adheres to.
Doing so can only be a good thing for the bank’s reputation. HSBC will show that it really is taking the climate crisis seriously, and that these commitments won’t be for some undefined future time.
HSBC’s addiction to fossil fuels is pathological. Since 2016, it has provided $87bn to fossil fuel companies. It also has serious financial interests in the exploitation of precious lands in the Amazon. Amazon Watch research revealed that as of 2019, HSBC’s total contribution to Amazon crude oil extraction was over $1.2 billion
3. HSBC actually will be a leader in sustainable finance
HSBC likes to talk the talk when it comes to sustainable finance and has said it wants to help build a net-zero economy. And, according to ShareAction, HSBC doesn’t rate too badly on some areas such as financing low carbon projects.
But, as we’ve seen above, it isn’t so good at walking the walk when it comes to getting rid of fossil fuels. Because while the bank continues to finance the extraction of yet more coal, oil and gas, there’s no way it can be considered a leader in anything other than accelerating the breakdown of the climate and the natural world.
For example, the bank is currently embroiled in a bit of a mess, as it’s just helped one of its major clients – India’s state bank – to raise money so that it can finance a huge and controversial coal mine.
Other banking groups – such as Unicredit, Natwest, Crédit Agricole and BNP Paribas – have made much more ambitious commitments to get out of the fossil fuel game. These banks have set deadlines by which they will no longer be involved in coal or oil, and told their clients to produce plans showing how they will transition away from fossil fuels.
Given the scale of its exposure to the sector, HSBC is in an excellent position to set the pace for decarbonising the finance industry. Backing the resolution will show that HSBC really does intend to steer its business towards net zero. Anything less will be a betrayal of its own commitments and our future.