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Investors pressure HSBC to ditch coal

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·3 min read
A HSBC branch in Geneva, Switzerland. Photo: Fabrice Coffrini/AFP via Getty Images
A HSBC branch in Geneva, Switzerland. Photo: Fabrice Coffrini/AFP via Getty Images

HSBC (HSBA.L) is facing pressure from investors to stop lending to fossil fuel companies, starting with those in the highly polluting coal sector.

Fifteen institutional investors and 117 individual investors have backed a shareholder resolution calling for HSBC to set clear targets on reducing financing for fossil fuel companies and projects. The resolution, which was coordinated by climate change activist group ShareAction, calls on the bank to set out a clear strategy in-line with the international Paris climate agreement.

Signatories of the HSBC resolution include Amundi, Europe’s largest asset manager, and Man Group (EMG.L), the world’s biggest publicly traded hedge fund. The institutions backing the resolution manage a collective $2.4tn (£1.7tn), according to Share Action.

READ MORE: HSBC pledges to go carbon neutral by 2050

“Engaging with companies on the energy transition and decarbonisation of their activities is one of our key priorities,” said Caroline Le Meaux, head of ESG research, voting and engagement at Amundi.

“Phase out from coal is paramount to achieve this goal, and we believe that the adoption of climate strategies by companies is a critical factor of investment of which shareholders should be fully informed.”

HSBC investors will get the chance to vote on the resolution at April’s AGM. It requires 75% of investors to back it to force change at the company.

“Investors have come to realise that we need rather urgent action,” Anders Schelde, chief investment officer of AkademikerPension, told Yahoo Finance UK.

READ MORE: COVID-19 pushes HSBC to do 17 years-worth of business loans

AkademikerPension manages the retirement funds of Denmark’s higher education teachers and has around DNKr 137bn (£16.6bn, $19bn) in assets under management. The fund has about £2m invested in HSBC and is one of the signatories to the ShareAction resolution.

“For us the climate crisis is very high up the agenda,” Schelde said. “The burning issue is we need an urgent phase down of coal.”

Last October, HSBC publicly committed to reaching net zero emissions by 2050. However, climate groups have said the timescale is too long and criticised the bank for continuing to fund companies and projects contributing to climate change.

READ MORE: HSBC axes 6,000 jobs so far this year as cost cutting accelerates

In a report last year, the Rainforest Action Network (RAN) found HSBC was the second biggest fossil fuel financier behind Barclays (BARC.L). HSBC has provided $87bn to fossil fuel companies since the signing of the Paris Agreement in 2016.

“The message from the resolution is clear: net zero ambitions by top fossil fuel financiers are simply not credible if they fail to be backed up by fossil fuel phase out plans,” said Jeanne Martin, a senior campaign manager at ShareAction.

“Five years after the Paris agreement was signed, HSBC continues to pour billions into the coal sector, a behaviour that is at odds with limiting global warming to 1.5°C.”

READ MORE: HSBC plans 'conservative' dividend after better-than-expected quarter

The focus on HSBC comes after ShareAction led a successful pressure campaign against Barclays last year. The bank committed to going net carbon neutral by 2050 shortly after ShareAction organised a similar shareholder resolution pushing Barclays to ditch fossil fuel lending.

HSBC did not respond to a request for comment.

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