HSBC to cut coal financing by half by 2030 as it eyes 2050 net zero carbon emission goal
- HSBC plans to slash lending to coal projects by at least 25 per cent by 2025 and will increase it to 50 per cent by 2030 from last year’s level
- The UK-based lender said in March it would phase out financing for coal related projects in the EU and OECD by 2030, and the rest of the world by 2040
The London-based bank on Tuesday said it plans to reduce its exposure to coal mining and coal-fired power plants by at least a quarter by 2025 and halve it by 2030 from last year’s level.
The latest announcement represents interim targets to phase out coal financing in the European Union and 38 Organisation for Economic Cooperation and Development (OECD) nations by 2030, and the rest of the world a decade later.
These goals were announced in March following pressure from investors, and were approved by shareholders in May.
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“In recognition of the rapid decline in coal emissions required for any viable pathway to 1.5 degrees Celsius, the policy will mean HSBC phasing out finance to clients whose transition plans are not compatible with HSBC’s net zero by 2050 target,” Europe’s biggest bank by assets said in a statement.
The policy will be reviewed annually based on “evolving science and internationally recognised guidance”, HSBC said, adding it will publish next year a “science-based” emissions target for projects that it finances to be compatible with the 1.5 degrees decarbonisation pathway.
The average global temperature last year was already 1.2 degrees above pre-industrial levels, according to the World Meteorological Organisation.
The COP26 conference urged greater efforts to reduce the use of coal power and phase out fossil fuel subsidies.
HSBC has stopped financing new coal-fired power plants and coal mines.
Net zero can be achieved by making investments to reduce one’s carbon emissions and offsetting any residual amount by buying credits to fund other parties’ carbon reduction projects. Carbon neutrality, while similar, can be achieved solely through offsets without reducing one’s own carbon footprint.
When financial institutions like HSBC say they want to reach net zero, they are referring to the net emissions of their clients.
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Other multinational banks have also announced interim targets to reach net zero by 2050.
By 2030, it will only provide financial services to firms that derive less than 5 per cent of their revenues from coal used in power stations.
It also wants its steel and metallurgical coal mining clients cut their greenhouse gas emission per dollar of revenue by a third by 2030, and by 30 per cent for oil and gas clients.
“By the end of 2022 we expect all clients in the power generation, mining and metals, and oil and gas sectors to have a strategy to transition their business in line with the goals of the Paris Agreement,” Standard Chartered said.
