HSBC aims to cut oil and gas clients' emissions by a third by 2030

HSBC today unveiled a fresh target to slash emissions from its oil and gas financing portfolio by more than a third by the end of the decade, as the banking stepped up its efforts to align both its business and balance sheet with a 1.5C aligned pathway to delivering net zero emissions by 2050.

Publishing its annual report for 2021 today, HSBC said it was targeting a 34 per cent reduction in absolute "on balance sheet" financed emissions by 2030 for the oil and gas sector against 2019 levels, which it said was in line with the net zero scenario assessments made by the International Energy Agency (IEA).

Having assessed its portfolio of financing and investments of energy companies, HSBC said its financed emissions for oil and gas stood at 35.8 million tonnes of CO2 equivalent in 2019, marking the first time it has disclosed its financed emissions.

It follows the bank's pledge in December to phase out the financing of coal-fired power and thermal coal mining assets from its activities by the end of the decade in the EU and OECD markets, before then phasing out such investments in the rest of the world by 2040.

In addition, the bank announced today that it has set a new target to reduce its financed emissions intensity to 0.14 million tonnes of CO2 per terawatt hour by 2030 for the power and utilities sector, which it said would constitute a 75 per cent reduction from its 2019 baseline. The new target covers upstream industries such as power generation, including Scopes 1 and 2 direct emissions, as HSBC said it "believes that power generation is where the majority of sector emissions occur through the use of fossil fuels as a source of energy".

The latest announcements form part of HSBC's climate plan to become a net zero bank across its financial activities and core business by 2050, as part of which it said it was committed to working with clients "to develop valid, science-based transition plans" in line with the Paris Agreement.

"The science is clear that global emissions must significantly reduce this decade to limit global warming to 1.5 degrees," said HSBC's group chief sustainability officer Dr Celine Herweijer. "Our interim targets for these high emissions sectors will be embedded into business decision-making. The targets are science-based and highlight to our customers the level of decarbonisation we need to see across our portfolio by 2030."

She also stressed that "active dialogue around a company's transition plan will now be at the centre of our engagement with customers".

"We want to support those who take an active role in the energy transition; this is where we can have the greatest impact in making net zero a reality," she added.

The bank has also previously promised to scale up its investment and financing for renewable and low carbon energy sources, in addition to pledging $100m to support technologies such as carbon capture and storage, clean hydrogen, and sustainable aviation fuels.

However, despite joining the UN-convened Net Zero Banking Alliance last year ahead of the COP26 Climate Summit alongside a host of other global financial institutions, HSBC has continued to face significant criticism from climate campaigners over its continued financial support for fossil fuel firms.

A recent report by the NGO ShareAction found that even since joining the Net Zero Bank Alliance last year, HSBC was among several major banks continuing to collectively provide tens of billions of dollars of financial support for fossil fuel projects.

Responding to HSBC's announcements today, Adam McGibbon, UK campaigning lead at the Market Forces activist group, accused the bank of adopting climate goals that contained a host of loopholes that would enable continued investment in polluting assets.

By having its emissions reduction targets only apply to "on balance sheet" emissions, he claimed the bank would be able to achieve its goal through accounting techniques that shifted its exposure to high carbon assets off HSBC's balance sheet, rather than fully restricting financing to oil and gas.

"We have to congratulate HSBC for finding a new and innovative way to fudge their emission reduction targets," he said. "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."