Exclusive-HSBC says customers need to have coal exit plan by Reuters by the end of 2023

By Lawrence White and Simon Jessop

LONDON (Reuters) – HSBC, Europe’s largest corporate bank in Asia, explained its long-awaited policy of financing thermal coal on Tuesday, saying it hoped all customers would have a plan to get rid of fossil fuels. 2023.

Coal is a controversial issue for governments across Asia, which is cheap and widely used but wants to move away from a carbon-intensive energy source to help meet its global commitment to reduce emissions in the fight against climate change.

Under its plan, HSBC will reduce its exposure to thermal coal financing by at least 25% by 2025 and 50% by 2030, even if non-EU or OECD customers can be funded by 2040 until its global phase-out is achieved. the head told Reuters.

Building on its existing commitment not to fund new coal-fired power plants or coal-fired thermal mines, HSBC said the policy will help phase out the use of coal according to the science of climate change and review it annually.

“We have to deal with some tough issues. Coal is one of the biggest problems. It causes 25% of greenhouse gas emissions,” said Celine Herweijer, HSBC Group’s Director General of Sustainability.

“It’s not enough to have a policy on the absence of new coal. We need to focus on the urgent removal of coal along with scientific deadlines.”

As one of the largest banks in Europe and exposed to industry in emerging markets in Asia and elsewhere, HSBC has come under pressure from investors and activists to reduce its funding for coal-fired fossil fuels.

THE MAIN ACTOR OF GLOBAL WARMING

In the last round of climate talks in Scotland last month, https://www.reuters.com/article/climate-un-idCNL1N2S405F Including China, they would only accept a “reduction” in coal-fired energy.

While HSBC, along with its peers, has committed to a high level of zero carbon emissions across its entire customer base by 2050, activists have criticized the strength and detail of its policies.

This backed some of the investors ’planned shareholder vote on the issue at the company’s annual meeting, even removing the threat after the company pledged to release details of the coal by the end of the year.

In the campaigners ’victory, HSBC said its new policy would apply to all sections of its business, including the $ 621 billion branch of asset management, and would cover all aspects of financing, including refinancing and advisory services.

The bank said next year it will announce a science-based target for coal-fired energy to reduce global warming by 1.5 degrees Celsius (2.7 Fahrenheit) above pre-industrial averages, with progress to reduce funding for thermal coal to be published annually.

The bank said it would cut off services to any customer who wants to increase thermal coal production from January 1, 2021, and would not finance thermal coal in the EU / OECD markets more than 40% of revenue, or 30% by 2025, money explicitly for clean technology or infrastructure. if not used.

Although Standard Chartered (OTC 🙂 and Natwest have set tougher targets for internal members, HSBC is reaching out to energy-addicted customers who are heavily dependent on coal and says it needs to work with them to help them switch to greener energy.

“It simply came to our notice then that our ability to reach this goal of 1.5 degrees was the key to achieving this goal.

“We need to write a policy for our energy-winning customers so that they have the capacity and time to transition over the next 18 years to become uninterrupted coal.”

Continuous coal is called coal that is burned without being trapped.

For non-EU and non-OECD customers, HSBC said it would evaluate their transition plans before deciding whether or not to offer funding, acknowledging the infrastructure, policy and resource barriers of many compared to developed market pairs.

HSBC said customers expect to publish their transition plans, although campaigners, including ShareAction, said the language would leave HSBC too mobile.

The “spirit of the policy” would also cover the mediators and the parent group of any customers who are excluded from the policy, and HSBC would ask for a commitment that would not provide funding to that entity, Herweijer said.

“We don’t expect all customers to have a credible transition plan … in which case we need to move away from those relationships,” Herweijer said.