HSBC avoids revolt by investors demanding cuts in fossil fuel lending

HSBC has pushed back a shareholders revolt ahead of its annual meeting after a $ 2.4 billion coalition of big investors agreed to back the bank’s climate change plans.

Amundi, Man Group and 13 other big investors in January deposit a resolution for HSBC’s May annual meeting calling on the bank to cut back on fossil fuel funding. Asset managers, including Black rock had already been pressured to support the proposal.

After months of negotiations between the bank and investors, shareholders said they would withdraw their resolution. Instead, HSBC will present its own proposal to the AGM, committing to review its financing of coal and committing to setting targets to reduce its exposure to carbon-intensive assets.

As part of the resolution supported by the HSBC board of directors, the bank will commit to setting short- and medium-term scientific goals to align its corporate financing with the Paris Agreement, which aims to limit the global warming. It will start with oil, gas, electric and utility companies in 2021, before expanding to other sectors in 2022.

HSBC has said it will also cut funding for companies involved in coal-fired power generation and thermal coal mining by 2030 in the EU and the OECD, and by 2040 elsewhere.

The bank is committed to reporting on the process of its climate change efforts on an annual basis in its report and accounts – which investors have been urging all businesses to do.

Noel Quinn, chief executive of HSBC, said his proposal marked the “next phase” of the bank’s so-called “net zero” strategy to reduce carbon emissions, which was announced in October.

“This represents an unprecedented level of cooperation between a bank, shareholders and NGOs on a critical issue, with a positive result for all,” he added.

The shareholder coalition welcomed HSBC’s resolution, but warned it would consider further action next year “if it is not satisfied with the bank’s implementation of the new commitments.”

HSBC is ranked among the top 10 fossil fuel financiers in the world, according to the Rainforest Action Network, a charity. RAN data showed the bank had provided a total of $ 87 billion to some of the world’s largest fossil fuel companies since the 2016 Paris Agreement.

Jeanne Martin, senior campaign manager at ShareAction, the responsible investment charity that brought shareholders together, said HSBC’s willingness to work with investors and its resolution “sets an important precedent for the banking industry.”

“Our goal now is to make sure that he respects these commitments,” she added.

Banks are under pressure from shareholders, policymakers and consumers about their role in financing carbon-intensive projects and industries.

Last year, investors, via ShareAction, filed a landmark climate resolution at Barclays, the UK bank. Barclays responded with its own plan, which received overwhelming support from shareholders. About a quarter of investors supported ShareAction’s proposal.

Colin Baines, head of investment engagement at the Friends Provident Foundation, one of the resolution’s co-declarers, urged other shareholders to support it.

“HSBC investors must support the resolution and make clear today their expectations regarding HSBC’s new coal policy and climate strategy, to ensure that HSBC sets the benchmark for other banks to follow,” he said. -he declares.

Natasha Landell-Mills, Head of Stewardship at Sarasin & Partners, the UK asset manager, added: “Covering all aspects of its financing, all the regions in which it operates and all the sectors to which it lends, HSBC’s commitment offers a model for other banks to follow. “

The special resolution will become binding as long as it is approved by 75 percent of the voting shareholders.

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