Bank to support projects aimed at reducing carbon emissions
HSBC has promised $100bn of finance for low-carbon technology and sustainable development by 2025 as part of a package of measures to strengthen its commitment to tackling climate change and other “green” goals.
The UK-based bank will also reduce support for coal-fired power generation and increase disclosure of “climate risks” in its lending book under new policies announced on Monday.
HSBC said the $100bn would be aimed at projects that contributed to reducing carbon emissions or meeting the UN’s sustainable development goals, which cover a range of social and environmental challenges.
It follows a similar commitment from JPMorgan Chase in July to facilitate $200bn of finance for clean energy projects by 2025 and highlights a widening push by the world’s biggest banks to promote “green” investment.
Daniel Klier, HSBC’s head of strategy, said he believed his bank’s pledge was the biggest of its kind by a European or Asian lender and would be made in the form of bond issuance, loans and investment.
Also in Monday’s announcement was a commitment for all electricity used by HSBC to come from renewable sources by 2030, up from 24 per cent today. The bank said it would achieve this via direct investment in green power projects or through power purchase agreements to help finance their development.
HSBC said it would become more transparent about risks to its business — and to those of its clients — from climate change by adopting recommendations made by the Task Force on Climate-Related Financial Disclosures. That body was set up by Mark Carney, governor of the Bank of England, and Michael Bloomberg, the media owner, to establish voluntary standards for reporting financial risks created by changes to the climate.
Mr Carney has warned that investors face “potentially huge” losses on fossil-fuel assets that could become “literally unburnable” as the world steps up action to reduce carbon emissions.
“We will disclose our carbon footprint and stress test our lending book against carbon pricing,” said Mr Klier, referring to the levying of charges on carbon emissions, seen as one of the main policy tools for tackling climate change.
HSBC said it would stop financing new coal mines or new customers dependent on coal mining, and it would not fund new coal-fired power stations in developed countries.
By leaving open the option of supporting new coal-fired plants in developing countries, HSBC has not gone as far as rivals including ING and Deutsche Bank, which have adopted a worldwide ban. Mr Klier said HSBC’s greater exposure to Asia, where coal usage remains highest, made such a step harder for his bank.
“For now, coal is such a fundamental part of power generation in many developing countries where we operate that we do not think it is the right thing, from a social or economic perspective, to withdraw,” he said. “What we want to do is work with clients to make sure that, when they build new plants, they are the cleanest possible and to work with investors in those markets to develop renewable resources.”
HSBC’s strength in Asia puts it on the frontline of the battle to reduce greenhouse gas emissions from China, by far the world’s biggest carbon dioxide emitter, as well as other big polluters such as India and Indonesia.
Mr Klier said HSBC wanted to help make London and Hong Kong — the bank’s strongholds — the leading global centres for green finance.