HSBC shareholders urge bank to cut exposure to fossil fuels

Investors file resolution calling on bank to publish strategy and targets

Some of Europe’s biggest pension funds and asset managers have filed a shareholder vote urging HSBC to cut its lending linked to fossil fuels.

Fifteen institutional investors with a combined $2.4trn in assets under management, along with 117 individual shareholders, have filed a climate change resolution demanding HSBC publishes a strategy and targets to reduce its exposure to fossil fuels, starting with coal.

HSBC said in October that it planned to become a net-zero carbon emissions bank by 2050, but investors and campaigners have criticised the bank for failing to make a firm commitment to reduce funding for fossil fuels.

The bank is Europe’s second largest financier of fossil fuels after Barclays, and provided $87bn to some of the world’s largest fossil fuel companies over the last four years, according to the Rainforest Action Network.

Analysis by ShareAction, the campaign group that filed the resolution, showed that in the four months leading up to its announcement, the bank lent an additional $1.8bn to fossil fuel companies, including those constructing new infrastructure for coal and tar sands.

The investors want the bank to publish short, medium, and long-term targets on a timeline aligned with the goals of the Paris agreement, which aims to limit global warming by 1.5 degrees Celsius above pre-industrial levels.

The resolution will be passed if it receives more than 75% of the votes at HSBC’s annual general meeting in April.

HSBC would not confirm whether it would support the resolution, but said it was “strongly committed to addressing climate change”.

An HSBC spokesperson said in a statement: “We are a leader in sustainable finance and expect to provide between $750bn and $1trn in finance by 2030 to support our customers in all sectors to progressively decarbonise. As we work to set out the detail of our roadmap to net zero, we continue to positively engage with our customers, shareholders and ShareAction.”

The resolution has been supported by firms including Amundi, Man Group, Sarasin & Partners and Rathbone Investment Management.

Investors are increasingly using annual general meetings as a way to pressure companies to get tough on climate change.

Last year, ShareAction tabled a similar resolution at Barclays, which was defeated but received 24% of the vote.

Caroline Le Meaux, head of ESG research, engagement and voting at Amundi, said: “The financial sector has a key role to play in supporting the switch to a low carbon economy and the alignment with the Paris agreement. Engaging with companies on the energy transition and decarbonisation of their activities is one of our key priorities.

“[Phasing] 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.”

Last Updated: 12 January 2021
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