HSBC to ‘stop new oil and gas funding’
The banking giant’s move will send ‘shockwaves’ through the fossil fuel industry and put the spotlight on other financial institutions.
HSBC is to stop funding new oil and gas fields and will put more pressure on its energy clients to develop credible transition plans.
The UK-headquartered global bank has updated its energy policy to confirm that it will no longer support oil and gas projects that received final approval after the end of 2021.
According to the new policy: “[HSBC] will no longer provide new lending or capital markets finance for the specific purpose of projects pertaining to new oil and gas fields and related infrastructure when the primary use is in conjunction with new fields.”
It added that engagement on transition plans would be a “vital part” of the approach – to encourage clients to decarbonise and diversify their energy supply, production and business models.
“If a transition plan is not produced or if, after repeated engagement, is not consistent with our targets and commitments, we won’t provide new finance, and may withdraw existing financing if appropriate,” the policy states.
A spokesperson for HSBC added: “Our aim is to reduce emissions in line with a 1.5°C pathway, promote energy security and ensure energy affordability and access. We are working with our energy clients to support them to implement their transition plans and finance the transformation of the energy sector towards a clean and secure future.”
HSBC’s approach was recommended by the International Energy Agency’s Net Zero by 2050 report to enable the attainment of net-zero emissions by 2050.
Pressure on Barclays and BNP Paribas
Jeanne Martin, head of the banking programme at responsible investment pressure group ShareAction, said that the move “sends shockwaves to fossil fuel giants and governments”, and she called on other major banks, such as Barclays and BNP Paribas, to follow suit.
“HSBC’s announcement sends a strong signal to fossil fuel giants and governments that banks’ appetite for financing new oil and gas fields is diminishing. It sets a new minimum level of ambition for all banks committed to net zero,” she said.
“However, HSBC’s announcement only applies to asset financing, and doesn’t deal with the much larger proportion of finance it still provides to companies that have oil and gas expansion plans.”
HSBC’s energy policy confirms that it will continue to finance energy companies at the corporate level “where clients’ transition plans are consistent with our 2030 portfolio-level targets and net zero by 2050 commitment”.
Martin called on HSBC to come forward with new plans to address this area of the policy as soon as possible.
Today’s announcement followed a shareholder resolution in February 2022 asking HSBC to update its oil and gas policy. The following month, HSBC agreed to phase down its financing of fossil fuels in line with limiting the global temperature rise to 1.5°C, as well as updating its oil, gas and thermal coal policies by the end of 2022.