Investors call for HSBC to publish strategy for fossil-fuel exposure reduction

In what it describes as ‘a sign of the growing appeal of climate resolutions for mainstream investors’, responsible investment NGO ShareAction says its latest resolution – calling for HSBC to publish a strategy and targets to reduce its exposure to fossil fuels – has gained the support of investors with $2.4 tn in assets under management.

Fifteen institutional investors, including Amundi, Europe’s largest asset manager, Man Group, the world’s largest publicly traded hedge fund company and asset managers and owners from the UK, Denmark, France and Sweden – alongside 117 individual investors – have put their weight behind a resolution co-ordinated by ShareAction. It calls on HSBC to publish a strategy and targets to reduce its exposure to fossil fuel assets, starting with coal, on a timeline consistent with the Paris climate goals.

ShareAction says that, according to the Rainforest Action Network (RAN), the banking giant is Europe’s second-largest financier of fossil fuels, after Barclays. RAN found that between 2016 – when the Paris Agreement was signed – and 2019, HSBC provided $87 bn to some of the world’s largest fossil fuel companies.

ShareAction adds that while HSBC has revealed plans to become a ‘net zero’ bank by 2050 at the latest, its October 2020 announcement makes no mention of its funding to fossil fuel companies. In what it describes as findings that ‘cast serious doubt over the credibility of HSBC’s climate commitments’, ShareAction research shows ‘that in the four months leading up to its [net zero] announcement, the bank pumped an additional $1.8 bn into fossil fuel companies, including those constructing new infrastructure for coal and tar sands.’

‘HSBC is strongly committed to addressing climate change, in line with our clear ambition to align our financed emissions of our entire business portfolio to net zero by 2050 or sooner,’ a spokesperson tells IR Magazine. ‘We are a leader in sustainable finance and expect to provide between $750 bn and $1 tn in finance by 2030 to support our customers in all sectors to progressively decarbonize. As we work to set out the detail of our roadmap to net zero, we continue to positively engage with our customers, shareholders and ShareAction.’

The resolution is the culmination of four years of shareholder engagement with the bank, continues ShareAction in a statement, highlighting an investor letter it sent to the bank in 2019 on the issue, with signatories including Schroders, Hermes EOS and EdenTree Investment Management.

‘As Europe’s largest bank and the second-largest provider of fossil-fuel financing, HSBC has the unique opportunity to help lead the financial services sector toward Paris-aligned commitments rather than mere ambitions,’ says Jason Mitchell, co-head of responsible investment at Man Group, in a press release from ShareAction. ‘As shareholders supporting this resolution, we recognize the imperative and urgency for establishing targets and a timeline toward emissions reductions.’

Highlighting the wide-ranging support for the resolution, the release also includes a comment from the Jesuits in Britain organization. ‘Jesuits in Britain has banked with HSBC for many years and it’s about time the multinational joined the growing social movement to safeguard the future of our younger generations,’ says Stephen Power, trustee of Jesuits in Britain. ‘Echoing Pope Francis’ appeal to companies to move from fossil fuels to renewable energy, we are simply asking HSBC to encourage the companies it supports financially to move toward a low-carbon economy.’