- Fossil fuel expansion continues to be permitted under new policy, failing most important acid test for alignment with net-zero by 2050
- Huge loopholes allow emissions targets to be met through creative accounting instead of restricting finance to oil and gas
- HSBC’s recent oil and gas deals include companies like Saudi Aramco, Qatar Petroleum, the Arabian Drilling Company and Pemex
HSBC’s new climate targets are an insult to all who value a stable long-term climate, according to environmental finance organisation Market Forces.
The targets – released today – contain a range of loopholes that undermine their credibility. Chief among those was the qualifier that the policy applies only to “on-balance sheet” emissions, a target that can be met through accounting techniques and selling debt on secondary markets that moves exposure off HSBC’s balance sheet instead of actually restricting financing to the oil and gas sector.
Adam McGibbon, UK Campaign Lead at Market Forces, said: We have to congratulate HSBC for finding a new and innovative way to fudge their emission reduction targets.
This target means HSBC can finance the oil and gas industry to its cold, ashened heart’s content and all it needs to do to meet its target is shift enough of that debt off its balance sheet.
HSBC clearly not only has contempt for the idea of a stable long-term climate and all who want to keep global warming under control, but also its own investors who the bank expects to fall for this con.
Other major loopholes include:
- The policy still allows HSBC to finance new and expanded oil and gas projects and their owners, despite the International Energy Agency (IEA)’s conclusion that meeting a Net Zero by 2050 target means that no new coal mines, plants or oil and gas fields can be permitted as of last year.
- The policy does not apply to the bank’s underwriting of bonds, and simply says in the footnotes that it will “support efforts to establish an industry standard.” This is a huge omission that allows the bank to continue arranging bonds for any oil and gas company it desires. In 2020, almost two-thirds of bank fossil fuel financing came from capital markets.
- The policy defers setting detailed targets for other sectors – including coal – until 2023, further delaying a transition despite the need for a rapid shift away from fossil fuels.
- The policy is “focused on upstream companies, and integrated or diversified energy companies.” This risks omitting oil and gas companies focused on the midstream (e.g. pipelines) and downstream (e.g. refining, storage) sectors.
- Its Power and Utilities emissions target is based on emissions intensity, which is no guarantee of absolute emissions reduction from power plants and their owners.
The IEA’s ‘Net Zero by 2050’ roadmap, lays out a pathway for a fifty-fifty chance of meeting the Net Zero by 2050 goal that HSBC claims to support. HSBC’s new policy utterly fails to meet this benchmark, which is fast becoming the acid test for whether an institution is serious about climate change. Research published last week shows that HSBC is the European bank with the highest financing for the expansion of upstream oil and gas, financing US $5.9 billion from 2016-21.
Adam McGibbon, UK Campaign Lead at Market Forces, said: “HSBC knows what needs to be done, but can’t bring themselves to break their dirty habit. If the bank truly believes in its own ‘Net Zero by 2050’ target, then it must follow the International Energy Agency’s pathway and immediately end its financing for the expansion of the fossil fuel industry”.
Some recent oil and gas deals by HSBC include:
- The Arabian Drilling Company (ADC) – last week HSBC helped this major Saudi Arabian oil and gas company raise US $533 million from capital markets. Refinitiv quoted Mohammed Albensaleh, Head of Debt Capital Markets at HSBC Saudi as saying the bank is “very proud” to be working with ADC.
- Saudi Aramco, the world’s single biggest polluting company. Last month, HSBC acted as a global coordinator for a US$10 billion revolving credit facility to Saudi Aramco, the world’s biggest polluter. Despite claiming to be a climate champion, HSBC has funded Aramco for years. While other financial institutions distanced themselves from the Saudi Kingdom in the wake of the killing of Jamal Kashoggi in 2019, HSBC was the only global bank playing a lead role in arranging Saudi Aramco’s Initial Public Offering (IPO) on the Saudi Stock Exchange. It was the world’s largest IPO at that point, raising $25.6 billion to finance Aramco.
- Pemex, the Mexican oil giant, which HSBC helped to raise a December 2021 $1 billion bond, just weeks after the COP26 United Nations Climate Summit. Pemex is currently expanding its oil refining capacity.
- The Abu Dhabi National Oil Company (ADNOC), one of the world’s largest oil companies, with plans to expand from an output of over 4 million barrels a day in 2021 to 5 million barrels in 2030. In November last year, HSBC participated in a group of banks providing a $3 billion loan to the company.
Notes for editors:
- Data on recent fossil fuel deals from Refinitiv and IJGlobal.
- HSBC’s new targets announcement is here.
- Market Forces campaigns for financial institutions that have custody of our money to protect not damage our environment. www.marketforces.org.uk
- The influential Banking on Climate Chaos report, the most comprehensive overview of bank financing of fossil fuels, shows that since the signing of the Paris Agreement in 2015, HSBC has financed US $110.7 billion to the coal, oil and gas sectors.