The British multinational investment bank HSBC will phase out its support for the coal industry in the developed world by 2030 and in the developing countries by 2040, coming under high investor pressure to tighten its stand on fossil fuel financing.
The investors of HSBC who manage about $2.4 trillion in assets had filed a resolution earlier this year to oblige the bank to make stronger commitments but have withdrawn the proposal in an agreement they have reached into a compromise with Europe’s biggest bank.
Apart from phasing out financing for the coal industry in the European Union and Organisation for Economic Cooperation and Development markets by 2030 and the rest of the world by 2040, the new goals of HSBC also include short and medium-term targets on aligning its financing with the objectives of the landmark Paris agreement on climate change.
HSBC’s announcement clearly shows how the world’s biggest financial firms are bowing in front of public and political pressure to join the battle against climate change, by reducing their financing for fossil fuel companies and encouraging clients in other sectors to cut emissions.
As a result, campaign group ShareAction has withdrawn its motion to be voted on at HSBC’s annual shareholder meeting to be held in May, and the lender will instead submit its own resolution with the backing of ShareAction and its co-filers, a group of 15 major investors including Amundi and Man Group.
“Today’s announcement shows that robust shareholder engagement can deliver concrete results and sets an important precedent for the banking industry,” said Jeanne Martin, senior campaign manager at ShareAction.
Last year, HSBC revealed its plans to achieve net-zero emissions in its own operations and supply chain by 2030, and to eliminate the emissions of its client portfolio by 2050 and the new commitments are remarked as beyond it. The bank currently ranks among Europe’s largest financiers of fossil-fuel companies.
Meanwhile, ShareAction has stated that it had won a significant concession from HSBC in that the bank now explicitly states the expansion of coal-fired power is incompatible with the goals of the Paris agreement, earlier it had been more equivocal on the need for clients to divest coal assets.
ShareAction targeted the British financial services company, Barclays with a similar motion last May, which was defeated but earned 24 percent of votes cast.