Responsible investment NGO ShareAction is leading a campaign with a group of institutional investors representing $2.4 trillion in assets under management, alongside other individual investors, targeting HSBC for more action on climate change. The group announced the filing of a resolution at HSBC, calling on the global banking and financial services company to publish a strategy and targets to reduce its exposure to fossil fuel assets.

The campaign sends a strong message to companies that simply setting climate goals won’t be enough, unless backed up with concrete plans for action and change.

esg playbook

In October 2020, HSBC announced a series of sustainability commitments, including aligning its financing activities with the goals of the Paris Agreement, pledging that the carbon emissions of clients and projects financed by HSBC will be net zero by 2050 or sooner. The company also stated that it will increasingly prioritise financing and investment that contributes to the low carbon transition and will apply a climate lens to financing decisions, including a new goal to support customers with between $750 billion and $1 trillion of finance and investment by 2030 to help with their transition. ShareAction noted, however, that HSBC is Europe’s second largest financier of fossil fuels, and that its new goals do not include a commitment to reduce funding for fossil fuels, and coal in particular, which has risen each year since 2016.

Jeanne Martin, Senior Campaign Manager at ShareAction, said:

“The message from the resolution is clear: net zero ambitions by top fossil fuel financiers are simply not credible if they fail to be backed up by fossil fuel phase out plans. Five years after the Paris agreement was signed, HSBC continues to pour billions into the coal sector, a behaviour that is at odds with limiting global warming to 1.5°C. If HSBC is serious about its net zero ambition, it will support this resolution.”

The resolution calls on HSBC to set and publish a strategy, along with short-, medium- and long-term targets, to reduce its exposure to fossil fuel assets on a timeline aligned with the goals of the Paris agreement, starting with coal. It also encourages HSBC to consider the ‘Just Transition,’ encompassing the social dimension of the transition to a low-carbon economy when developing its strategy, and encourages the bank to use climate scenarios that do not rely excessively on Negative Emissions Technologies when developing its targets.

ShareAction stated that the resolution is culmination of a four-year engagement with the HSBC, which included a campaign in March 2019 with a group of investors representing US$1 trillion in assets urging the bank to restrict its financing of the coal industry. It also follows similar engagement by ShareAction last year with Barclays, Europe’s largest fossil fuel financier, in the first ever climate resolution backed by institutional investors at a major European bank. According to ShareAction, Barclays responded to that resolution by tabling its own and becoming the first mainstream bank to commit to net zero by 2050 at the latest.

Institutional investors backing the campaign include French asset manager Amundi, Swedish insurance company Folksam as well as UK-based asset manager Sarasin & Partners and pension pool Brunel Pension Partnership.

Caroline Le Meaux, Head of ESG Research, Engagement and Voting at Amundi, said:

“Climate change represents a systemic risk. The financial sector has a key role to play in supporting the switch to a low carbon economy and the alignment with the Paris Agreement. Engaging with companies on the energy transition and decarbonisation of their activities is one of our key priorities.

“Phase out from coal is paramount to achieve this goal, and we believe that the adoption of climate strategies by companies is a critical factor of investment of which shareholders should be fully informed. Amundi thus fully backs this resolution, as part of our more global commitment to banks on their energy transition policy in general and their coal policy in particular.”

Natasha Landell-Mills, Head of Stewardship at Sarasin & Partners, said:

“In October, HSBC’s Board announced an important ambition: to ensure its financing activities support efforts to limit Global Warming to 1.5C. Attention must now turn to implementation. In light of the urgency of the climate crisis, we have decided to co-file this Shareholder Resolution to seek a clear timetable for emission reductions from HSBC’s financing activities.

“In the end, increasing financing for green activities only gets us halfway; the Board must be clear on its intent to withdraw financing of harmful emissions. The sooner the Board sets out its strategy for delivering this, the less disruptive the transition. And – above all – the greater the chances that HSBC helps to build, not destroy, our collective capital.”