HSBC caves in to pressure to stop financing fossil fuels

HSBC has caved into calls to improve its climate change commitments ahead of its annual shareholder meeting in May.

Major investors had threatened to table their own resolution at the meeting, urging the bank to cut back its financing of fossil fuels.

The threat was enough to force the Asia-focused financial giant into action.

HSBC has pledged to phase out its financing of coal by 2030 in the European Union and the 36 countries of the Organisation for Economic Co-operation and Development (OECD), and by 2040 in other markets.

The bank will also develop a ‘science-based strategy’ to make sure HSBC’s business aligns with the goals of the Paris Agreement, which aims to keep global warming to a minimum. 

HSBC is to put this proposal forward at May’s annual meeting, and will be bound to it as long as 75 per cent of shareholders vote in favour.

The concessions from HSBC follow months of negotiations with shareholders, after a group of institutions managing £1.7 trillion threatened to intervene at the bank’s annual meeting.

The group, consisting of 15 institutional investors such as Amundi and Man Group as well as 117 individual shareholders, had filed their own resolution which was set to be voted on at the meeting.

It called on HSBC to publish a climate change strategy and targets while reducing its exposure to fossil fuels.

But they have now agreed to withdraw their proposal and back HSBC’s.

Katrin Ganswindt, finance campaigner at environmental group Urgewald, said: ‘HSBC is the European bank with the biggest exposure to coal on the Asian market. The fact that they are defining an end-date for their coal financing is a long overdue step.

‘It remains to be seen if they will implement stringent thresholds to flesh out their coal exit. The next step should be clear: coal developers have to go immediately.’

Lenders such as Barclays and Standard Chartered are still under pressure over their commitments to coal.