HSBC tables company vote on phasing out financing of coal
HSBC has bowed to investor pressure by ramping up its climate commitments and tabling a shareholder vote on plans to phase out coal financing by 2040.
Fifteen pension and investment funds, led by the campaign group ShareAction, have agreed to withdraw their own environment resolution ahead of HSBC’s annual general meeting on 28 May.
The investor group – which included Europe’s largest asset manager, Amundi, and Man Group, one of the world’s biggest publicly-listed hedge funds – put pressure on the bank HSBC to reduce those loans and underwriting services offered to clients that relied heavily on fossil fuels. The timeline for action was to be consistent with Paris climate goals.
HSBC’s vote will be binding if it gains the approval of 75% of shareholders. The bank is Europe’s second largest financier of fossil fuels after Barclays, according to the Rainforest Action Network (RAN).
While HSBC recently pledged to shrink its carbon footprint to net zero by 2050, the plan stopped short of a blanket ban on financing coal power.
The new special resolution put forward by its board will commit HSBC to phasing out financing for coal-fired power and thermal coal mining across the EU and OECD by 2030, and across the world by 2040.
A full policy will be published at the end of the year and progress reports will be released annually, including details of the bank’s methodology. HSBC is promising to use climate scenarios that do not project reduced emissions achieved by technologies that claim to remove carbon from the atmosphere.
HSBC would be the first mainstream bank to exclude these socalled negative emissions technologies from its calculations. The UN Intergovernmental Panel on Climate Change has said the technologies are unproven and has warned that “reliance on such technology is a major risk in the ability to limit warming to 1.5C”.
The bank’s chief executive, Noel Quinn, said he was pleased that campaigners had agreed to support the vote. “This represents an unprecedented level of cooperation between a bank, shareholders and NGOs on a critical issue.”
HSBC’s decision to file its own vote follows similar moves by Barclays, which was targeted by the first ever climate vote against a UK bank last year. However, activists did not withdraw their own proposals at Barclays’ AGM in 2020.
“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. “Our focus now turns to ensuring it delivers on these commitments.”