HSBC pledges to deliver $100bn of green finance through to 2025

HSBC has become the latest banking giant to unveil sweeping new green investment plans, confirming today that it intends to deliver $100bn of low carbon and sustainable finance through to 2025.

The company used the first day of the UN’s annual climate summit in Bonn to set a raft of green goals, including the commitment to mobilise $100bn of finance for projects that either cut carbon emissions or contribute to the UN’s Sustainable Development Goals (SDGs).

Group chief executive Stuart Gulliver said the commitment would help the bank further strengthen its position in the fast expanding green bonds market.

“For more than a decade, HSBC has helped clients break new ground in the green bond markets in Europe and Asia, and to finance some of the biggest climate-friendly infrastructure projects in the world,” he said in a statement. “The $100bn commitment that we are announcing today acknowledges the scale of the challenge in making a transition to a low-carbon future. We are committed to being a leading global partner to the public and private sectors as they make that transition.”

The green bonds market is tipped to top $100bn for the first time this year after a host of big name financial firms upped their interest in the sector.

In addition to its investment goal, HSBC said it would source 100 per cent renewable power by 2030 and reach an interim target of 90 per cent by 2025, up from 24 per cent currently. “By signing long-term agreements with suppliers, HSBC aims to support the development of new renewable power facilities,” the company said in a statement.

It also pledged to formally adopt the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and provide more detailed information on climate-related risks and opportunities in its upcoming annual reports.

The TCFD has called for all listed firms to publish detailed information on the risks and opportunities they face as a result of climate change and the low carbon transition, including insight into how they would respond to different warming and decarbonisation scenarios.

One of the main concerns for investors is that without a full understanding of climate-related risks they could invest in high carbon assets that lose value as a result of the emergence of new climate policies and clean technologies – a phenomenon referred to as the ‘carbon bubble’.

HSBC acknowledged such concerns in its new package of green measures, declaring it would “reduce its exposure to thermal coal and actively manage the transition path for other high-carbon sectors”.

Specifically, the company said it would discontinue financing of new coal-fired power plants in developed markets and of thermal coal mines worldwide.

However, it stopped short of imposing a moratorium on all coal-related investments.

Speaking to the FT, Daniel Klier, head of strategy at the bank, said its strong presence in Asia made it difficult to completely halt coal investment. “For now, coal is such a fundamental part of power generation in many developing countries where we operate that we do not think it is the right thing, from a social or economic perspective, to withdraw,” he told the paper. “What we want to do is work with clients to make sure that, when they build new plants, they are the cleanest possible and to work with investors in those markets to develop renewable resources.”

The new pledges featured in HSBC’s environmental, social and governance report, where it also confirmed that over the past year it has cut water usage nine per cent, carbon emissions nine per cent and energy consumption 13 per cent.

Credit: Business Green