Global banking and financial services company HSBC announced today new financed emissions reduction targets for the carbon intensive Oil & Gas and Power & Utilities sectors, initiating the next step on its stated strategy to align its financing activities with the goals of the Paris Agreement and move to net zero by 2050.
“The science is clear that global emissions must significantly reduce this decade to limit global warming to 1.5 degrees. Our interim targets for these high emissions sectors will be embedded into business decision-making. The targets are science-based and highlight to our customers the level of decarbonisation we need to see across our portfolio by 2030. Active dialogue around a company’s transition plan will now be at the centre of our engagement with customers. We want to support those who take an active role in the energy transition; this is where we can have the greatest impact in making net zero a reality.”
HSBC’s new target for the oil and gas sector is a reduction of 34% in absolute on-balance sheet financed emissions by 2030. For power and utilities, the bank is aiming for a 75% reduction of on-balance sheet financed emissions intensity by 2030. The financed emissions reduction targets encompass scopes 1, 2 and 3 emissions. HSBC stated that its target setting methodology aligns with guidance from the Net Zero Banking Alliance (NZBA) and the Financial Services Task Force (FSTF).
Both targets are based on a 2019 baseline. Along with today’s announcement, HSBC unveiled its financed emissions for the sectors for the first time, fulfilling a commitment the bank made last year by joining the Partnership for Carbon Accounting Financials (PCAF), a global partnership of over 220 financial institutions, representing over $63 trillion in total assets, with a mission to develop and implement a harmonized approach to assess and disclose the greenhouse gas (GHG) emissions associated with loans and investments. HSBC’s financed emissions for the oil and gas sector in 2019 were 35.8 million tonnes of carbon dioxide equivalent, and financed emissions intensity for the power and utilities sectors were 0.55 million tonnes of carbon dioxide equivalent per terawatt hour.
The new goals marks the latest step in HSBC’s financed emissions reduction strategy, launched as part of the commitments announced by the bank in its climate change resolution which was passed at the HSBC AGM in May 2021. In December, HSBC announced a plan to phase out its financing of coal-fired power and thermal coal mining by 2030 in EU and OECD markets and by 2040 worldwide. The bank has also pledged to disclose targets for other emissions-intensive sectors such as mining, aluminum, cement, iron and steel, and transport, including automotive, aviation and shipping. HSBC said that it will work with clients to develop science-based transition plans, predicated on science relevant to each individual sector.
HSBC Group Chief Executive Noel Quinn said:
“Partnering and engaging with customers in the transition to net zero is at the heart of our approach. We are supporting clients to evolve their business models and replace old technology with new, greener alternatives. We will request and review science based client transition plans and use them as the basis for further engagement.”