HSBC targeted by its shareholders on fossil fuel financing

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HSBC is under fire for funding the fossil fuel industry after a group of investors, including Amundi and Man Group, filed a climate resolution ahead of the bank’s annual meeting in April.

The lender announced in October that it would become a ‘net zero’ carbon emissions bank by 2050, but some of the biggest European investors involved in the resolution said it was not taking climate change seriously , having made no specific commitment to reduce the financing of fossil fuels. fuels.

The resolution – which was filed by 15 institutional investors with $ 2.4 billion in assets and 117 individual shareholders – called on HSBC to publish a strategy and targets to reduce its exposure to fossil fuel assets.

ShareAction, a responsible investment charity that brought shareholders together, said the bank was Europe’s second-largest fossil fuel donor after Barclays.

“The message of the resolution is clear: the net zero ambitions of major fossil fuel financiers simply are not credible if they are not backed up by plans to phase out fossil fuels,” said Jeanne Martin, director. senior campaign campaigner at ShareAction.

Investors are increasingly targeting banks on their role in financing carbon-intensive projects and industries. Last year, shareholders tabled a landmark climate resolution at Barclays’ AGM, which received support from a quarter of shareholders and forced the lender to tighten policies.

Caroline Le Meaux, head of ESG research, voting and engagement at Amundi, one of HSBC’s 25 largest shareholders, said climate change was a “systemic risk”.

“The financial sector has a key role to play in supporting the shift to a low-carbon economy and alignment with the Paris Agreement,” she added.

In response, HSBC said it was “strongly committed to tackling climate change, in line with our clear ambition to bring our funded emissions across our entire business portfolio into net zero” and would continue to “engage positively” with customers, shareholders and ShareAction.

The bank has pledged up to $ 1 billion in aid over the next decade to help its customers become more environmentally friendly. It also cut its oil sands funding from $ 1.3 billion in 2017 to $ 231 million in 2019, leaving it only the ninth-largest bank in the industry, according to data from the Rainforest Action Network.

However, RAN said the bank had provided a total of $ 87 billion to some of the world’s largest fossil fuel companies since the 2016 Paris climate agreement, which aims to combat rising temperatures.

ShareAction said HSBC provided an additional $ 1.8 billion to fossil fuel companies in the four months before its net zero announcement, including projects to build coal and oil sands infrastructure.

Investors said they hoped the bank’s board would recommend shareholders vote in favor of the proposal.

Barclays was the first major UK lender to target net zero issuance by 2050, after pressure from shareholders and activists. But critics still argued that the policy was a watered-down version of the more robust resolution proposed by investors.

HSBC is also debating whether to come up with its own motion on the matter and is considering giving shareholders an annual vote on climate change policy, according to a person familiar with the internal discussions.

Other banks have taken more decisive action, including UniCredit, which recently announced that it would phase out its exposure to coal by 2028.

Regulators are also pressuring banks to change their practices. The Bank of England is planning its first weather stress test for financial institutions in June. This will help examine whether banks’ capital levels are sufficient to absorb potential losses from climate change.

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