HSBC Faces Calls to End Fossil Fuel Funding

HSBC, one of the world's biggest banks, is facing calls from some of its shareholders to map out a strategy for phasing out fossil fuels.

Some 15 institutional investors with a combined $2.4 trillion in assets under management have filed a resolution at HSBC that will be voted on at the bank's next annual general meeting scheduled for April, the NGO co-ordinating the effort, ShareAction, said in a statement on January 11. The resolution calls for 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."

Environmentalists have ratcheted up pressure on European financiers in recent years to end their support for oil, gas and coal. These lobbying efforts have had some success, with the European Investment Bank pledging in November 2019 to stop all financing for hydrocarbons by the end of this year.

HSBC is Europe's second biggest financier of fossil fuels after Barclays, which faced a similar resolution last year that was also orchestrated by ShareAction. Only 24% of Barclays backed the resolution, although the shareholder pressure did prompt Barclays to publish a new policy to ensure its lending complies with 2015 Paris Accord goals.

HSBC set out its "ambition" in October last year to become a net-zero emissions bank by 2050, although campaigners want the bank to go further. According to the Rainforest Action Network, HSBC invested $87bn in oil, gas and coal companies between 2016 and 2019. 

"The message from the resolution is clear: net zero ambitions by top fossil fuel financiers are simply not credible if they fail to be backed up by fossil fuel phase out plans," ShareAction said. "Five years after the Paris agreement was signed, HSBC continues to pour billions into the coal sector, a behaviour that is at odds with limiting global warming to 1.5°C. If HSBC is serious about its net zero ambition, it will support this resolution."

Shareholders backing the resolution include Europe's largest asset manager Amundi, the world's biggest publicly-traded hedge fund Man Group, and asset managers and owners from the UK, Denmark, France and Sweden. One such manager is UK-based Sarasin & Partners, which in July 2019 offloaded 20% of its shares in Shell, citing the oil and gas major's failure to adequately address climate change.

The resolution at HSBC will need the support of investors representing at least 75% of the bank's shares to be successful. In addition to climate goals, it also calls on the bank to "consider the social dimension of the transition to a low-carbon economy." HSBC is yet to comment on the matter.