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HSBC to phase out coal financing

Source: HSBC

We are committing to phase out thermal coal financing, in a net zero aligned timeline, in a way which enables HSBC to help finance a just transition in emerging markets.

This policy fulfils our commitment, approved by shareholders at the 2021 Annual General Meeting (AGM), to phase-out thermal coal financing in the EU and OECD by 2030, and to global phase-out by 2040.

Every year we commit to review our policy and targets - and take into account evolving science and internationally recognised guidance.

Effective immediately:

HSBC will:

phase out the financing1 of coal-fired power and thermal coal mining by 2030 in markets in the EU and OECD, and by 2040 in other markets
engage with relevant clients2 on their transition plans and agree financing phase-out timelines
seek to withdraw any financing and advisory services with a client that makes a new commitment to, or proceeds with, thermal coal expansion after 1 January 2021 (unless such expansion was contractually committed or under construction before that date)3
review the policy and report on progress annually

HSBC intends to reduce thermal coal financing exposure by at least 25 per cent by 2025; and aims to reduce financing exposure by 50 per cent by 2030, using its 2020 Task Force on Climate-Related Financial Disclosures (TCFD) as its baseline.

Additionally, unless in conflict with fiduciary or other regulatory obligations, all relevant HSBC entities, products and businesses, including asset management, will seek to implement policies that support the transition from coal-fired power and thermal coal mining within HSBC’s 2030/40 timelines.
How we’re enabling the transition from coal to clean

Our coal policy will facilitate a just transition to net zero for developed and developing countries.
Read more

HSBC will not:

Provide new finance to any client for the specific purposes of activities that HSBC considers incompatible with HSBC’s Net Zero by 2050 target. These would include new thermal coal infrastructure, and, for EU and OECD markets only, where the client’s thermal coal related revenues are greater than 40 per cent of total revenues (or 30 per cent of total revenues by 2025)4
Provide any new financing to any client where the client declines to engage sufficiently on its transition plan or HSBC determines that the plan is not compatible with HSBC’s Net Zero by 2050 target
Start new relationships with prospective clients with significant thermal coal power capacity, mining production or revenues, except for the purposes of materially reducing greenhouse gas emissions

HSBC expects clients to:

Formulate and publish transition plans that are compatible with HSBC’s Net Zero by 2050 target. HSBC expects to complete transition plan assessments relating to clients operating within EU and OECD markets by the end of 2022, and clients in all other markets by the end of 20235
Provide regular (usually annual) detailed disclosures to HSBC regarding the implementation of their transition plans

Our assessments will be based on factors including: level of ambition to reduce greenhouse gas emissions; clarity and credibility of transition strategy, including any proposed abatement technologies and consideration of a just transition.

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