Page 7 - AsiaElec Week 50 2021

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Asia to feel the deepest impact of

HSBC’s coal phase out

GLOBAL HSBC has announced ambitious plans to phase information on what would constitute a weak
out the financing of coal-fired power and ther- plan.
mal coal mining by 2030 in the EU and OECD Overall, she dubbed the policy an “impor-
markets and worldwide by 2040. tant step forward” but “out of step with investors’
The bank said it would now phase out any expectations”.
lending to clients whose own transition plans are A science-based financed emissions target
not compatible with HSBC’s target of net zero will be published in 2022 to reduce emissions
by 2050. from coal-fired power in line with a 1.5°C
This new policy goes far further than the pathway.
bank’s existing position, which prohibits finance HSBC also intends to reduce its exposure to
for new coal-fired power plants and new thermal thermal coal financing by at least 25% by 2025
coal mines. The bank will now end support for and aims to reduce such exposure by 50% by
coal projects already in operation. 2030, using its 2020 Task Force on Climate-Re-
The bank said it would review every year its lated Financial Disclosures (TCFD) reporting as
thermal coal phase-out policy, benchmarking it its baseline.
against international best practice and the evolv- Any thermal coal financing remaining after
ing science. 2030 will only relate to clients with thermal coal
Asia is set to be a key focus of the phase out assets in non EU/OECD markets, and will be
policy, and the bank said that the region’s heavy completely phased out by 2040.
reliance on coal and its rapidly growing energy Group Chief Executive, Noel Quinn, said:
demand meant that the bank aimed to play a ”We want to be at the heart of financing the
critical role in helping to finance the region’s energy transition, particularly in Asia. This is
energy transition from coal to clean energy. where we can have the biggest impact to help the
Group Chief Sustainability Officer, Dr world achieve its target of limiting global warm-
Celine Herweijer, added: “Asia’s ability to tran- ing to 1.5°C. We have a long history and strong
sition to clean energy in time will make or break presence in many emerging markets that are
the world’s ability to avoid dangerous climate heavily reliant on coal for power generation. We
change. Whilst our coal phase out dates and are committed to using our deep relationships
interim targets are driven by the science, we need to partner with clients in those markets to help
an approach that recognises the realities on the them transition to cleaner, safer and cheaper
ground in Asia today. The transition will only be energy alternatives in the coming decades.
successful if development needs are addressed Tackling climate change is a strategic priority for
hand-in hand with decarbonisation goals. Our HSBC, our investors and our stakeholders.”
clients in Asia are at different starting points to In October 2020, the published its commit-
their EU/OECD counterparts, with more infra- ment to align its financed emissions – the green-
structure, resource, and policy obstacles, but house gas emissions of its portfolio of clients – to
many have declared a strong interest and ambi- net zero by 2050 or sooner.
tion to invest in the transition and diversify their The bank said that is clients would now have
businesses. The good news is that zero-margin- until the end of 2023 to ensure that their transi-
al-cost renewables, rising carbon prices and a tion plans are compatible with HSBC’s net zero
terminal contraction in coal demand are factors by 2050 target.
helping them diversify.” The bank further added that new finance for
ShareAction’s senior campaign manager clients in EU/OECD markets would be declined
Jeanne Martin has pointed out that the new pol- where thermal coal makes up more than 40%
icy only applies at the client level, meaning it may of a client’s total revenues (or more than 30%
indirectly keep supporting corporate groups of total revenues by 2025), unless the finance is
developing new coal capacity or extending pro- explicitly for the purpose of clean technology
duction post-2030 or post-2040. The policy also and infrastructure.
excludes mergers and acquisitions because of At COP26, HSBC joined the Powering Past
this client-level approach, Edie reported. Coal Alliance, a global coalition of more than
Martin has also expressed disappointment 150 governments, utilities, financial institutions,
that there is no time-bound commitment to NGOs and others working to advance the tran-
divest from companies with no transition sition from unabated coal power generation to
plans or poor-quality plans, nor any public clean energy.™

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