‘Profoundly irresponsible’: HSBC updates climate transition plan with looser sector-specific targets

HSBC has updated its climate transition plan and shifted from fixed goals to target ranges for sector-specific financed emissions targets – a move seen as a backtrack by climate-conscious investors.

The bank published its first net zero transition plan in January 2024, at a time of accelerating climate commitment from the financial sector. But since then, HSBC along with most global banks have left the Net Zero Banking Alliance (NZBA), leading it to stop operations, and many have revised their targets downwards – including HSBC itself.

Now, HSBC says it is setting out “an evolved, commercially grounded approach to helping customers succeed as the world moves towards a net zero economy” with its transition plan update.

While reaffirming its ambition to achieve net zero emissions by 2050, the bank has changed interim sector-specific financed emissions targets from fixed targets to target ranges: 14% to 30% for oil and gas, for example.

“Our updated Net Zero Transition Plan is driven by greater clarity about our customers’ specific transition needs and the significant, growing commercial opportunities the transition affords them, our shareholders and the economies we serve,” said Georges Elhedery, our Group CEO.

Banks ‘dragging their feet’ on climate

But for activist investor group ShareAction, this update is “an egregious example of backtracking on climate that responsible investors will not tolerate.”

“While HSBC presented this update as business-as-usual with some added flexibility, the reality is quite different with changes across its coal, oil and gas policies amounting to a significant step back on climate. This raises important questions about the level of trust that investors and the wider market can have in the bank’s commitment to the energy transition.

“This is profoundly irresponsible behaviour from one of the largest banks in the world at a time when extreme heat, droughts and floods exacerbated by climate change are destroying lives and wreaking havoc on economies around the world,” commented Louise Marfany, Director of Financial Sector Standards at ShareAction.  

HSBC exploring fossil-to-clean energy financing ratio

As part of its update, HSBC has published a new sustainability risk policies framework providing a single, clearer overview of how it identifies, evaluates and manages risks related to the delivery of its climate plans. The bank says it is also exploring additional new metrics, including “a method calculating the ratio of financing for low-carbon energy supply relative to fossil fuels”. 

This is something that NGOs have been requesting for years, with the argument that sustainable finance goals and performance are misleading if they are not compared with the amount of capital invested in fossil fuels. 

However, it’s unclear whether HSBC will be disclosing this ratio, as the statement only mentions a calculation method.