HSBC Holdings has announced a detailed policy to phase out the financing of coal-fired power and thermal coal mining by 2030 in EU and OECD markets, and worldwide by 2040.
The policy will see HSBC phasing out finance to clients whose transition plans are not compatible with HSBC’s net-zero by 2050 target.
It builds on current HSBC policy that prohibits finance for new coal-fired power plants and new thermal coal mines; broadening the approach to drive the phase-out of existing thermal coal.
The thermal coal phase-out policy will be reviewed annually and forms a key part of executing the bank’s October 2020 ambition to align its financed emissions – the greenhouse gas emissions of its portfolio of clients – to net-zero by 2050 or sooner.
The bank will work with impacted clients and will expect them to formulate and publish transition plans by the end of 2024 that are compatible with HSBC’s net-zero by 2050 target.
Client transition plans will be assessed annually, based on a range of factors including: level of ambition to reduce greenhouse gas emissions; clarity and credibility of transition strategy including any proposed abatement technologies; adequacy of disclosure and consideration of the principles of ‘just transition’.
If no transition plans are produced, HSBC will need to assess whether to continue to provide financing for that client, as there will be no basis on which to assess alignment with HSBC’s commitment to phase out coal financing.
HSBC will decline to provide new financing (including refinancing) and advisory services to any client that, in the view of the bank, fails to engage sufficiently on its transition plan, or where plans are not compatible with HSBC’s net zero by 2050 target.
In addition, HSBC will seek to withdraw any financing or advisory services with any client that makes a commitment to, or proceeds with, thermal coal expansion after 1 January 2021.
Given the bank’s substantial footprint across Asia, with the region’s heavy reliance on coal today and its rapidly growing energy demand, HSBC recognises it has a critical role to play in helping to finance the region’s energy transition from coal to clean.
