Global banking and financial services company HSBC announced today the publication of its policy to phase out its financing of coal-fired power and thermal coal mining, targeting exits by 2030 in EU and OECD markets and by 2040 worldwide. HSBC stated that it is phasing out finance to clients whose transition plans are not compatible with its net zero by 2050 target.

Thermal coal is the highest carbon emitting source of energy in the global fuel mix, yet it makes up nearly 40% of the world’s energy supply.

In a statement outlining HSBC’s efforts to enable the transition to cleaner energy, Celine Herweijer, Group Chief Sustainability Officer, HSBC, said:

“liminating coal-fired power emissions is the most symbolic and important milestone along the road to net zero. Coal-fired power stations contribute roughly a fifth of global carbon emissions output, and the science very clearly tells us they can have no part of a net zero world. No new coal is no longer good enough: our attention has to turn to urgent phase-out of existing coal-fired power.”

The publication of the policy fulfils a commitment made by the company in a resolution filed at its AGM in May 2021. The climate change resolution, containing an expansion of HSBC’s climate policies, followed a campaign led by responsible investment NGO ShareAction for a deeper commitment to climate action from the bank.

As part of its new policy, HSBC will expect impacted clients to publish transition plans by the end of 2023, and that the bank will assess plans annually, with consideration given to the level of ambition to reduce emissions, clarity and credibility of the transition strategy, adequacy of disclosure, and consideration of ‘just transition.’ HSBC stated that it will decline to provide new financing, refinancing and advisory services to clients that are assessed as failing to engage sufficiently on the transition plan, or where the bank views the plans as inconsistent with its 2050 net zero target.

The new policy includes interim targets to reach the phase out goals, including reductions in thermal coal financing exposure by at least 25% by 2025, and 50% by 2030, with financing of thermal coal only for clients outside EU/OECD markets by the latter date. HSBC also said that it will publish a science-based financed emissions target in 2022, and has committed to report annually on progress in reducing thermal coal financing.

Group Chief Executive, Noel Quinn, said:

”We want to be at the heart of financing the energy transition, particularly in Asia. This is where we can have the biggest impact to help the world achieve its target of limiting global warming to 1.5°C. We have a long history and strong presence in many emerging markets that are heavily reliant on coal for power generation. We are committed to using our deep relationships to partner with clients in those markets to help them transition to cleaner, safer and cheaper energy alternatives in the coming decades. Tackling climate change is a strategic priority for HSBC, our investors and our stakeholders.”

The post HSBC Unveils Policy to Exit Financing of Coal-Fired Power, Thermal Coal Mining appeared first on ESG Today.