- HSBC will cut funding for the fossil fuel industry, starting with coal-fired power and mining.
- Activist investors withdraw their own motions and say they support HSBC’s decision.
- Pressure has been on HSBC to cut funding to carbon-intensive sectors of the economy.
- See more stories on Insider’s business page.
HSBC said on Thursday it plans to end funding for coal-fired power and thermal coal mining projects by 2030 in developed economies by 2030 and worldwide by 2040, in response to pressure from investors.
Non-profit shareholder ShareAction had previously deemed HSBC’s climate change statement of ambition unconvincing and proposed their own motions for the upcoming annual general meeting at Europe’s largest bank.
HSBC said ShareAction had retracted their resolutions and support its own proposals, according to a statement issued by the bank and comments from the non-profit organization itself. HSBC agreed to several demands issued by the group, including annual progress reports and using coal investments as a starting point for taking specific action around funding.
The bank has narrowly avoided shareholder revolt at its AGM as experienced last year by Barclays – who had not adjusted their resolutions, despite pressure led by ShareAction. HSBC is currently one of the largest funders of the fossil fuel industry in Europe.
“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 as we have shaped the detail of our plans to support the direct financing requirements of our corporate clients in the low carbon transition,” HSBC group chief executive Neil Quinn said in a statement.
“This represents an unprecedented level of co-operation between a bank, shareholders, and NGOs on a critical issue, with a positive outcome for all,” he said.
As part of HSBC’s net-zero strategy, which was announced in 2020, the bank has committed to instating a policy that will see fossil-fuel funding in the European Union and other developed markets end by 2030 and by 2040 in other markets, which rely more heavily on coal as an energy source.
Further, the bank said it will analyze the impact of its oil and gas and power and utilities investment sectors this year and develop strategies to reduce their impact in line with the Paris Climate Agreement.
Signatories to the Paris agreement agree to taking action to keep the increase in global average temperature to well below 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, with a view to limiting this increase to 1.5 degrees Celsius.
“Today’s announcement shows that robust shareholder engagement can deliver concrete results and sets an important precedent for the banking industry. Net zero ambitions have to be backed up with time-bound fossil fuel phase-outs and today HSBC has taken an important step in that direction,” ShareAction Senior Campaign Manager Jeanne Martin said.