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Exclusive-HSBC says customers must plan to exit coal by end of 2023

The HSBC bank logo is seen at their office in the Canary Wharf financial district in London
FILE PHOTO: The HSBC bank logo is seen in the Canary Wharf financial district in London, Britain, March 3, 2016. REUTERS/Reinhard Krause // File Photo

December 14, 2021

By Lawrence White and Simon Jessop

LONDON (Reuters) – HSBC, Europe’s top banker to the Asian conglomerate, launched its long-awaited policy on thermal coal funding on Tuesday and said it looked forward to all Its client plans to move away from fossil fuels by the end of 2023.

Coal is controversial for governments across Asia as they want to phase out cheap and widely used, but carbon-intensive energy to help meet their global commitment to cut emissions. fight against climate change.

Under its plan, HSBC will cut its thermal coal funding rate by at least 25% by 2025 and 50% by 2030, although non-EU or non-OECD clients may be able to get funding until eliminated globally by 2040, its sustainability chief told Reuters.

Building on its current commitment not to fund new coal-fired power plants or coal-fired power plants, HSBC says the policy will help phase out the use of existing coal in line with climate change science. and is reviewed annually.

“We need to solve some of the difficult problems we are facing. Coal is one of the big problems. It contributes 25% of global greenhouse gas emissions,” said HSBC Group Sustainability Director Celine Herweijer.

“It wouldn’t be good enough if there was a new no coal policy. We need to turn our attention to coal’s emergency phase along with scientific timelines.”

As one of Europe’s largest banks and with potentially industry exposure in emerging markets in Asia and elsewhere, HSBC has faced pressure from investors and activists alike. in cutting funding for banks that use coal, the dirtiest fossil fuel.

MAJOR DRIVE OF GLOBAL WAR

At the most recent round of global climate talks https://www.reuters.com/article/climate-un-idCNL1N2S405F in Scotland last month, governments acknowledged for the first time that fossil fuels are the primary resource. the main cause of global warming, although coal-dependent countries, including India and China, will only agree to “gradually reduce” coal-fired power.

While HSBC, along with colleagues, has previously set out a high-level pledge to achieve net carbon emissions on its customer base by 2050, activists have criticized the strength and detail of the Bank’s policies.

That has led some investors to favor a tentative shareholder vote on the issue at the company’s annual meeting this year, though they backed off the threat after the company committed Coal details will be announced later this year.

To win campaigners, HSBC says its new policy will apply to all business divisions, including its $621 billion wealth management arm, and cover all aspects of its business. financial aspects, including refinancing and consulting services.

The bank said it would publish a science-based target for coal-fired power that aligns with a global warming limit of 1.5 degrees Celsius (2.7 degrees Fahrenheit) above the previous average. industry, with the progress of thermal coal financial cuts to be published annually.

The bank said it would withdraw services from any customers wishing to expand thermal coal production after January 1, 2021, and would not fund customers in the EU/OECD markets, where thermal coal accounts for more than 40% of revenue, or 30% from 2025, unless the money is explicitly used for clean technology or infrastructure.

While peers including Standard Chartered and Natwest have set tougher targets, HSBC is more exposed to coal-reliant energy customers and says it needs to work with them to help they switch to greener energy.

“What will make or break the world’s ability to achieve this 1.5 degree target is… (so) the energy transition in Asia happens at the speed and scale it needs to happen. , and we need to be at the center of influencing that.

“We have to write policy in such a way that for our customers who are energy champions, they have the ability and time to transition over the next 18 years to achieve unabated coal levels. .”

Undiluted coal refers to coal that is burned without producing carbon emissions.

For clients outside the EU and OECD, HSBC said it would evaluate their transition plans before deciding whether to provide financing, acknowledging the obstacles to infrastructure, policy and resources that many people encounter compared to other developed markets.

HSBC said it expected customers to announce their own transformation plans, although campaigners, including ShareAction, have previously said such language would leave HSBC too much room.

The “spirit of the policy” will also include intermediaries and the parent group of any customers not covered by the policy, and HSBC will require an undertaking that no financial resources will flow into that entity, Herweijer said. .

“We don’t expect every customer to have a reliable transition plan… in those cases, we would have to move away from those relationships,” Herweijer said.

(Reporting by Lawrence White and Simon Jessop; editing by Barbara Lewis)

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Bobby Allyn

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