HSBC targets 34% cut to emissions from oil and gas clients by 2030

London, Feb. 22 (BUS) – The bank’s head of sustainability said HSBC aims to cut emissions linked to loans to its oil and gas customers by 34% this decade, the first time the UK’s largest bank has committed to this goal. .

More than 100 banks have pledged to reach net zero emissions by 2050 and are under pressure to provide details of the deep, short-term cuts to “funded emissions” needed if the banks have any chance of achieving their goal.

“This is reshaping the way we make financing and investment decisions going forward,” said Céline Herweger, group head of sustainability, of HSBC’s 2030 goals.

HSBC is a major lender to corporate clients across Asia and some of the world’s largest oil and gas companies, and its plan is expected to set the tone for other banks in the region, most of which have yet to release their targets.

HSBC said its oil and gas target was based on “absolute” cuts rather than “carbon intensity,” which measures emissions per unit of energy or barrel of oil and gas produced, and so could see emissions actually increase, Reuters reported.

Climate activists say density-based targets don’t go far enough if the world is to prevent global warming beyond 1.5°C above pre-industrial levels, which scientists consider essential to prevent catastrophic climate change.

“There is no way you can go to a zero-economy by 2050 if you have density-based metrics in the energy sector,” Herweger said.

Among the world’s largest banks, few have committed to absolute targets, despite Citigroup’s pledge last month to cut absolute emissions from the energy sector by 29% by 2030.

HSBC’s new targets also include a plan to reduce the emissions intensity funded by 75% for energy and utility customers.

This goal was based on intensity, not absolute, Herweger said, because electricity consumption globally would need to rise during the transition to a low-carbon economy.

The bank’s goals are aligned with the IEA’s 2050 net-zero emissions scenario, which Herweiger said was difficult to achieve but “doable.”

HSBC said on Tuesday that targets for the coal, aluminium, cement, iron and steel and transportation sectors will be followed in 2023.

About 100 large, integrated companies are responsible for 90% of emissions financed from HSBC’s oil and gas sector, and the bank has given them a 2022 deadline to make plans on how they intend to decarbonise.

The goals will cover so-called Scope 1 and 2 emissions, those associated with the company’s own operations, and Scope 3 that is produced when customers use their products and which Hervere said is responsible for 80% of their emissions.

While Herwiger focused on helping customers plan, those who didn’t risk losing access to financing, adding that the main challenge is the discrepancy in emissions disclosure.

“There is a great deal of diversity in how and how much different companies measure and report, if any, on Scope 3,” she said.

Like most banks, HSBC’s targets exclude capital market activity such as underwriting and equity deposits, although this will change when standard accounting for “soft emissions” becomes available.

While that may not happen until later this year, Herwiger said HSBC was not “ignoring the capital markets” and for future deals it was “thinking about emissions financed from them as part of our decision making”.

HF