HSBC unveils its first transition plan amid push to decarbonise
HSBC Holdings has released its first ever so-called transition plan, laying out a path to slashing financed emissions from its books amid a wider industry recalibration.
The 101-page document released on Thursday (Jan 25) does not include any new climate commitments, instead it describes how HSBC plans to lower its emissions and its expectations for the “key changes” required to decarbonise the heavy-emitting industries it finances.
“The radical change in the shape of many industries required by net zero cannot be achieved by any one organisation or part of the financial system alone,” chief executive officer Noel Quinn said in the report published on Thursday.
“Our own ability to become a net zero bank by 2050 is dependant on the pace of decarbonisation in the real economy and on our customers’ ability to transition their business models.”
As pressure mounts on banks and asset managers to address the climate risk of their capital allocations, industry executives are increasingly at pains to establish a list of caveats and conditions. These include ensuring the process is profitable and that clients, regulators and governments provide the necessary backing.
“Our ability to transition relies on decarbonisation in the real economy – both the supply and demand side – happening at the necessary pace,” HSBC said.
Even so, the finance industry is increasingly adapting its business models to a world in which high-carbon clients will be too risky to keep on their books. Many are responding by revamping their investment and corporate banking units to create teams dedicated to transition clients, with Barclays among recent examples. BNP Paribas and Citigroup have also taken similar steps.
Quinn said that HSBC sees “significant commercial opportunities in helping to finance the new economy, transition to a new type of sustainable economic growth, and create a more secure and resilient planet.”
HSBC is one of the first major banks to publish a transition plan, which Quinn said represent a “key mechanism” for driving decarbonisation. The bank will update its plan – and its level of ambition – over time as climate science and methodologies for measuring progress evolve, he also said. BLOOMBERG
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