HSBC Holdings Plc will no longer finance new oil and gas fields or related infrastructure in a move that climate activists say puts it ahead of many peers in addressing global warming.
The London-based bank announced the move on Wednesday as part of an update to its energy policy, which it said had been informed by “scientific and international bodies” and analysis of pathways that will limit the global temperature rise to 1.5C. The new policy covers both loans and debt underwriting, the bank said.
HSBC is among the biggest financiers of fossil fuels companies, providing $111 billion of debt since the Paris climate agreement was signed in late 2015, the second highest among European lenders, according to data compiled by Bloomberg. As a result the firm has been slammed by climate activists, with its Canary Wharf headquarters the target of frequent protests. It’s also faced a shareholder vote on its support of the fossil-fuel industry.
The new policy announced on Wednesday “shows the way for other banks,” especially those that “claim that they are climate leaders but which continue to finance oil and gas companies,” said Lucie Pinson, director of environmental nonprofit Reclaim Finance. While Pinson said HSBC should clarify whether or when financing for oil and gas developers will be stopped, other banks should follow its lead and “stand strong behind 1.5C.”
HSBC said it will continue to provide corporate finance and advisory services to energy sector clients, referring to an International Energy Agency report that said financing and investment in existing oil and gas fields will still be required in an orderly net zero transition. Those companies must have transition plans that are consistent with the bank’s 2030 financed emissions targets and its commitment to net zero by 2050.
HSBC also said if a company’s plans were not consistent with the bank’s targets and commitments, HSBC won’t provide new finance and may even withdraw existing support.