In response to a shareholder resolution coordinated by ShareAction, HSBC, Europe’s largest bank and one of the biggest backers of fossil fuels, has announced it will table its own resolution on plans to phase out financing for coal-fired power and thermal coal mining across the EU and OECD by 2030, and across the world by 2040. This is a welcome move and testament to increasing investor and community pressure pushing the world’s biggest banks out of fossil fuel finance. 

But, we’re concerned there could be a loophole in the new policy they are working on—one that would allow them to support the controversial Adani Carmichael coal mining project in Australia. If built, it would be one of the coal biggest mines in the world, adding billions of tonnes of carbon dioxide to our atmosphere just when scientists are telling us we need to rapidly reduce emissions. 

Adani's Abbot Point coal port near the Great Barrier Reef. Credit: Dean Sewell

Despite ruling out direct support for the Adani mine in 2015, HSBC is a shareholder and bondholder in Adani Ports, which owns the company setting up coal haulage for the Adani-Carmichael project. HSBC’s role in managing bonds for the State Bank of India (SBI) could also link it to this disastrous project. The State Bank of India is the only bank in the world which is still open to lending to Adani for the controversial coal project and is reportedly considering a AU$1 billion loan to fund the coal project. HSBC has said nothing on SBI’s potential funding of Adani Carmichael, even while investors dump SBI’s green bonds in protest.

HSBC’s coal policy will have a loophole the size of Australia unless it commits to no further financing for, or investment in, Adani Group companies. HSBC’s new policy must also commit the bank to cutting ties with the SBI if it lends to Adani.

The bank’s announcement means it has acknowledged that expansion of coal is incompatible with the goals of the Paris Agreement. HSBC needs to make sure its coal exit policy will mean divestment from the Adani Group, and a willingness to end its partnership with the State Bank of India.

Financial analysts have said that HSBC’s silence over the SBI’s potential funding of the Carmichael project undermines the bank’s green bond work. If HSBC’s resolution does not include a plan to end its relationship with Adani Ports and SBI, the bank will face the reputational damage that comes with supporting a project opening up one of the world’s largest untapped thermal coal basins amidst the climate crisis.