HSBC Ends Financing for New Oil and Gas Projects
Global banking and financial services company HSBC will no longer provide financing for new oil and gas projects or for new metallurgical coal mines, according to its new Energy Policy released today, and the bank will require energy sector clients to provide transition plans consistent with its climate targets in order to continue receiving financing.
The new policy builds on HSBC’s recent climate-related finance announcements, including the introduction earlier this year of financed emissions reduction targets for the Oil & Gas and Power & Utilities sectors, and its commitment from December 2021 to phase out financing of coal-fired power and thermal coal mining. In March 2022, HSBC committed to phase down fossil fuel financing and to require clients to provide transition plans, as well as to review and update its financing and investment policies.
In a statement announcing the new policy HSBC outlined the key objectives of the policy, including driving down greenhouse gas emissions, enabling an orderly transition that builds long-term resilience, and supporting a just and affordable transition.
While the policy will see the bank end financing for new oil and gas projects and related infrastructure, the bank said that it will continue to provide financing and advisory services to energy sector clients at the corporate level, if they provide transition plans consistent with HSBC’s 2030 financed emissions and 2050 net zero targets.
The bank stated:
“If a transition plan is not produced or if, after repeated engagement, is not consistent with our targets and commitments, we won’t provide new finance, and may withdraw existing financing if appropriate.”
Under the new policy, HSBC said that it will support clients taking an active role in the transition, including engaging on transition plans, and helping to finance related technologies and infrastructure. The bank also pledged to accelerate its activities in renewable energy and clean infrastructure.
Responsible investing NGO ShareAction, who led a campaign last year to drive a deeper commitment to climate action from HSBC, and has been engaging with the bank over the past several months on its new policy, applauded the announcement, while calling for additional action from HSBC. In a statement following the release of the policy, ShareAction’s Head of Banking Programme, Jeanne Martin, said that the announcement “sets a new minimum level of ambition for all banks committed to net zero,” and urged additional banks such as Barclays and BNP Paribas to follow suit.
“However, HSBC’s announcement only applies to asset financing, and doesn’t deal with the much larger proportion of finance it still provides to companies that have oil and gas expansion plans. We expect to see HSBC come forward with new proposals that will address this as soon as possible.”
Click here to access HSBC’s new energy policy.