Some of HSBC’s largest shareholders are calling on Europe’s biggest bank to toughen its commitment to cut lending linked to fossil fuels and to turn its climate “ambitions” into targets.
Investors collectively managing some $2.4 trillion in assets have filed the resolution to be voted on at HSBC’s annual general meeting, after the bank in October stated its ambition to get to net-zero carbon emissions by 2050.
That pledge was criticised by campaigners for not directly addressing HSBC’s lending to fossil fuel firms, including a relatively large share of clients involved in the coal sector.
“HSBC is strongly committed to addressing climate change, in line with our clear ambition to align our financed emissions of our entire business portfolio to net-zero by 2050 or sooner,” a spokesperson for the bank told the Reuters news agency.
But after a four-year period of engagement with HSBC, the investors coordinated by responsible investment group ShareAction and including Europe’s largest asset manager Amundi said they wanted to see the bank go further.
“As Europe’s largest bank and the second-largest provider of fossil fuel financing, HSBC has the unique opportunity to help lead the financial services sector towards Paris-aligned commitments rather than mere ambitions,” said Jason Mitchell, Co-Head of Responsible Investment at British hedge fund Man Group.
The investors want HSBC to set short and medium-term targets that are in line with the goals of the Paris climate agreement, which aims to limit global warming to 1.5 degrees Celsius above pre-industrial norms by mid-century.
Banks are big contributors to global warming via their financing and lending activities, providing the world’s biggest polluters with funding for extraction and drilling, environmental groups say.
Since the Paris climate agreement was signed at the end of 2015, HSBC has helped arrange $89.1bn of bonds and loans for energy companies, excluding solar, wind and other renewable producers, the third-most among European lenders, according to data compiled by the Bloomberg news agency. That includes $20.4bn in 2020 for clients including BP Plc and Saudi Aramco.
“For a long time, banks remained out of the spotlight and all the focus was on the actual carbon emitters, but it’s becoming more obvious that banks are part of the problem too,” said Jeanne Martin, a senior campaign manager at ShareAction. “There’s now increased interest among investors on the role of finance firms in facilitating emissions and in decarbonisation.”
Among those supporting the resolution are Man Group, Swedish insurance company Folksam and British pension scheme investor Brunel Pension Partnership, alongside 117 individual shareholders.
The spokesperson said HSBC will continue to engage with shareholders and ShareAction over the details of its plans.
The HSBC resolution, the second such action taken against a leading British lender, will need to receive backing from 75 percent of the votes cast at its meeting in April to pass.
ShareAction went after Barclays with a similar motion in May, which was defeated but garnered 24 percent of votes cast.