HSBC bows to pressure and makes vow on climate change
BANKING GIANT HSBC has bowed to investor pressure and pledged to ramp up its climate change plans with a shareholder vote on the proposals.
A 2.4 trillion US dollar (£1.7 trillion) coalition of 15 investment group and pension funds had lodged a special resolution at its upcoming annual shareholder meeting on May 28, calling for the bank to overhaul its financing of fossil fuels.
But HSBC said the group, led by campaign group ShareAction, had agreed to withdraw their resolution and back the bank’s own plans.
It comes after months of talks between the bank and the investors, while ShareAction has been pressing HSBC for action for about four years before tabling the resolution in January.
The move sees HSBC commit to science-based targets to align its financing of companies with the Paris Agreement goals.
It will start with the oil and gas, power and utilities sectors in 2021, before widening this to other sectors next year.
The lender will also look to phase out the financing of coalfired power and thermal coalmining by 2030 in the EU and Organisation for Economic Cooperation and Development countries, with other global markets to follow by 2040. And it will report on progress against its targets each year, starting from next year’s 2021 annual report and accounts.
HSBC will also offer between 750 billion US dollars (£537bn) and 2 trillion US dollars (£1.4 trillion) in financing to support customers to “progressively decarbonise and help realise the opportunity for long-term, sustainable growth”.
The shareholder vote will be binding on the bank, if it gains the approval of 75 per cent of investors.
Noel Quinn, chief executive of HSBC, said it marked the “next phase” of its net-zero strategy.
He said: “We are pleased that ShareAction and a group of shareholders have agreed to support the resolution and would like to thank them for their positive ongoing engagement and constructive challenge and input.
“This represents an unprecedented level of co-operation between a bank, shareholders, and NGOs (non-governmental organisations) on a critical issue, with a positive outcome for all.”
The bank’s plans go much further than its proposals laid out last October, which pledged to see it reduce its carbon footprint.
TRANSPORT FIRM Go-Ahead Group has defended its multimillion-pound rail profits despite the Government’s £10bn bailout of the industry.
Chief executive David Brown said its services are “an absolute bargain” for taxpayers, insisting “you will not get that cheaper through a nationalised industry”.
The Newcastle-based company, which runs Govia Thameslink Railway and Southeastern, recorded a rail operating profit for the six months to January 2 of £6.5m, before exceptional charges relating to its operations in Germany.
It also announced it intends to pay a dividend to shareholders this year “at an appropriate level”.
The Government took over the financial liabilities of franchised operators in March 2020 to keep services running amid the collapse in demand caused by the coronavirus pandemic. Private firms are paid a management fee of up to 1.5 per cent of the cost base of the franchise before the pandemic began. The package is expected to cost taxpayers around £10bn by mid-2021.
Mr Brown said he can “quite easily” defend Go-Ahead’s profits.
“We’re running (services) on behalf of Government to a schedule that they want us to run… and managing the whole of the resource and process that goes into that for an absolutely miniscule margin, and we’re getting paid to run that contract,” he said.
“Why would we do it otherwise? You will not get that cheaper through a nationalised industry. This is an absolute bargain.
“They’re paying us to be an efficient operator, and to run a service according to their specification for which we receive a management fee.”
But Mick Cash, general secretary of the Rail, Maritime and Transport union, described the system as “clearly a nonsense”.
He said: “It’s beyond belief that despite the pandemic these private train companies are still extracting fat profits and dividends out of the rail network, while staff at the front line are confronted with threats of a pay freeze and attacks on jobs, pensions and conditions.
“The Government have effectively nationalised all of the risks on our railways but profits and dividends remain privatised.”