In a significant development, Europe’s biggest lender HSBC said, it aims to target net zero carbon emissions across its entire customer base by 2050 at the latest; it will provide financing in the range of $750 billion to $1 trillion to help clients make the transition towards net zero carbon emissions.
HSBC’s CEO outlined the bank’s ambitions to align its activities with the 2015 Paris Climate Agreement.
“COVID has been a wake-up call to us all, including me personally, we have seen how fragile the global economy is to a major event, in this case a health event, and it brings home the reality of what a major climate event could do,” said Quinn.
He went on to add, HSBC aims to achieve net zero carbon emission in its own operations by 2030.
While its peers, including NatWest have already set similar net-zero goals, HSBC’s aim to achieve its net zero carbon emissions across its Asia-focused client base, stands out since it is one of the most significant pledges made by the global lender to date.
The bank is likely to be closely watched on how fully and quickly it can meet its new goals, which essentially are mainly stated as ‘aims’ rather than commitments.
HSBC is also likely to face scrutiny on whether it has allowed itself leeway to continue financing some fossil fuel-linked clients, especially in developing markets. Already it has come under pressure from shareholders, activists, and politicians who opine that it is contributing to climate change by financing fossil fuel and other environmentally harmful projects.
“What we have given the market is an ambition that our total financing by 2050 will be net zero, that is a far bigger prize or goal than picking a sub-segment of our portfolio and saying ‘I am not going to bank you’ because that’s not what the world needs,” said Quinn. “That industry or that customer may then just go to Bank X, Bank Y or Bank Z. They won’t have changed their business model.”
To help stakeholders track its journey to net zero, HSBC said it would use the science-based Paris Agreement Capital Transition Assessment tool (PACTA) and would report on progress regularly. Furthermore, in addition to that, it also said it would work with central banks, peers, and industry bodies to help create “a globally consistent, future-proofed standard” to measure financed emissions and a “functioning carbon offset market”.
According to sources, HSBC also aims to invest $100 million in clean technology, and donate a $100 million towards climate innovation ventures and renewable energy sources.