HSBC will stop funding new oil and gas fields and expect more information from energy clients over their plans to cut carbon emissions, the banking giant said on Wednesday, as part of a wider update of its sector policy.
Activist groups that have been critical of HSBC in recent years mostly hailed the move by one of the biggest lenders to energy companies in the world as a keenly awaited update that will drive companies towards a cleaner future.
“HSBC’s announcement sets a new minimum level of ambition for all banks committed to net-zero,” said Jeanne Martin, a campaigner at Share Action.
HSBC is among the biggest banks to confirm it would not support oil and gas projects that received final approval after the end of 2021, a move the International Energy Agency has said is needed for the world to reach net-zero emissions by 2050.
Others to have committed to this include Britain’s biggest domestic bank Lloyds.
HSBC said it would continue to finance energy companies at the corporate level to help them overhaul their businesses and drive development of cleaner energy sources, and would assess their strategic plans annually.
Covering everything from biomass projects to hydrogen, nuclear and thermal coal, the policy was aimed at driving progress across regions with different energy systems, Celine Herweijer, HSBC’s Chief Sustainability Officer, told Reuters.
Amid Russia’s invasion of Ukraine, and a resultant surge in energy costs, the policy was also “pragmatic” she said, and the bank would continue to finance existing oil and gas fields to ensure supply fell over time with demand.
“It’s not no new fossil fuel investment as of tomorrow. The existing fossil fuel energy system needs to exist hand-in-hand with the growing clean energy system,” Herweijer said.
To ensure oil and gas companies are on-track, the bank would now ask for new information, including production levels beyond 2030, she added.
Also on Wednesday, Barclays said it had increased its sustainable and transition finance target to $1 trillion by 2030 and would pump more of its own money into energy startups.