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HSBC commits nearly $1 trillion to achieve net zero emissions by 2050

With a portfolio of Asian clients that rely on fossil fuel investments, HSBC will be in a difficult position to realize its commitment to zero emissions by 2050.
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HSBC has committed to prioritize financing and investment that supports the transition to a net-zero global economy, The bank said it will align its financial commitments to the Paris Agreement goal to achieve net zero by 2050 or sooner.

HSBC said it will apply a climate lens to financing decisions. Its ambition is to support customers with between $750 billion and $1 trillion of finance and investment by 2030 to help with their transition to zero emission technologies.

HSBC said it will strive to get its portfolio of clients to invest in energy efficient companies and opportunities. The bank also aims to be net zero in its operations and supply chain by 2030.

To achieve this ambition, HSBC has listed out certain commitments, including a net zero emission goal by 2050 and to abide by business decisions that align to the Paris Agreement of keeping emissions below 1.5 to 2 degree C of the pre-industrial levels.

It aims to build advisories for clients to make the transition to low carbon and provide financial support in the journey.

The financial institution aims to unlock new climate solutions by creating one of the world’s leading natural capital managers, floating a $100m venture debt fund for CleanTech innovation, and launching a philanthropic program to donate $100m to bring new solutions to viability and scale.

It also plans to work with organizations already in the field to build solutions and fund similar efforts with governments too.

In 2017, the bank committed $100bn of sustainable finance by 2025. Group Chief Executive Noel Quinn said:

“HSBC has long been committed to opening up opportunities for our customers and the communities we serve. As we enter a pivotal decade of change, we have a landmark opportunity to accelerate our efforts to build a healthier, more resilient, and more sustainable future. Our net-zero ambition represents a material step-up in our support for customers as we collectively work towards building a thriving low carbon economy.

The bank intends to use its Paris Agreement Capital Transition Assessment Tool (PACTA) to develop clear, measurable pathways to net zero.

It will be continually tracking its progress and making TCFD-aligned disclosures. It will also strive to work with other banks and central banks and industry bodies to mobilize the financial system to form a future-proofed standard to measure financed emissions and a functioning carbon offset market.

The bank has created the HSBC Pollination Climate Asset Management tool that will build one of the world’s leading natural capital managers and invest in activities that preserve, protect, and enhance nature over the long-term.

It wants to create a pipeline of bankable projects, leading the FAST-Infra initiative together with the OECD and the World Bank.

COVID has been a wake-up call to us all, including me personally, we have seen how fragile the global economy is to a major event, in this case, a health event, and it brings home the reality of what a major climate event could do,” Quinn told Reuters in a video interview.

However, its commitments will be closely watched by industry experts. They will be watching if it has allowed itself some leeway to continue funding fossil-fuel-based industries in the developing world.

HSBC has many Asian clients directly connected to or reliant on the coal sector – from which emissions are a leading contributor to global warming, hence it will be interesting to watch how HSBC manages to traverse this position.

HSBC has come under criticism for financing some environmentally harmful projects. Critics have said HSBC lagged peers in responding to the climate challenge and risked losing out to rivals such as BNP Paribas.

This week, JPMorgan became the latest bank to expand investment in clean energy and work towards net zero emissions by 2050, in line with the Paris climate pact.

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