Background on HSBC and its Climate Goals
HSBC, one of the world’s largest banks, has recently adjusted its short-term climate targets for polluting sectors like oil and gas. This move comes in response to the slower-than-expected transition in the real economy.
Previous Commitments and Recent Changes
Earlier this year, HSBC announced a revision of its climate goals. The bank abandoned its objective to achieve net-zero carbon emissions in its own operations by 2030. However, HSBC still aims for its financed operations to produce net-zero emissions by 2050.
This goal aligns with other banks that have set similar climate objectives, aiming to assist clients in transitioning towards low-emission business models.
Initial Basis for HSBC’s Climate Targets
HSBC initially based its climate targets on the 2021 International Energy Agency (IEA) analysis required to meet the global goal of limiting mid-century temperature rise to 1.5°C. Since then, the analysis has been updated to reflect slower progress than anticipated.
Updated Policy and Emissions Targets
On Thursday, HSBC announced an updated policy that establishes its financed emissions targets for high-emission sectors, such as oil and gas, as a range instead of a single metric.
The lower limit of each range is aligned with the IEA’s net-zero emissions scenario by 2024, consistent with a 1.5°C warming trajectory. The upper limit corresponds to a 1.7°C warming pathway.
For oil and gas clients, HSBC aims for a 14% to 30% reduction in financed emissions by 2030, compared to a 2019 baseline, in line with the IEA’s two scenarios.
Implications for HSBC and its Clients
The update to HSBC’s transition plans, Europe’s largest lender, demonstrates how financial institutions are softening some of their own commitments to aid clients in reducing emissions amid broader setbacks in the fight against climate change.
Key Questions and Answers
- What are HSBC’s updated climate targets? HSBC has softened its short-term emissions targets for polluting sectors, setting them as a range instead of a single metric. The lower limit aligns with the IEA’s net-zero emissions scenario by 2024, while the upper limit corresponds to a 1.7°C warming pathway.
- Which sectors are affected by these changes? The updated targets primarily affect high-emission sectors, such as oil and gas.
- What is HSBC’s long-term goal regarding financed emissions? HSBC still aims for its financed operations to produce net-zero emissions by 2050.
- How do these changes reflect the progress in combating climate change? The adjustments show that financial institutions are adapting to the slower-than-expected transition in the real economy and climate change efforts.
