New analysis by ShareAction reveals that, in the four months leading up to HSBC’s net zero announcement, the bank financed at least four fossil fuel companies that are actively involved in the construction of new coal, tar sands and/or oil and gas infrastructure, as well as directly financing an offshore oil and gas project. The findings “cast serious doubt over the credibility of HSBC’s climate commitments, given that phasing out financing of fossil fuels is an absolute must for any net-zero strategy”, according to the London-based non-profit.
ShareAction analysed data from Eikon, revealing that Europe’s largest bank could have provided as much as $1.8bn through its involvement in just five bond and loan transactions between June and September of this year. This estimate is only a snapshot of the fossil fuel transactions that the bank took part in in the last four months.
In one case, the bank signed off on a very-high carbon deal less than three weeks before committing to zero out its financed carbon emissions within 30 years, a move that was met with some criticism from investors and campaigners. On 22 September, HSBC helped lead on a bond deal worth $1.24bn issued by Aker BP ASA, a Norwegian oil exploration and development company. Some scientists say that there can be no further exploration of oil reserves to stay in line with globally agreed climate goals.
Not even a week before this, on 17 September, the bank arranged a project loan of $400m to help keep afloat an offshore oil and gas production and storage facility in Brazil.
ExxonMobil, facing criticism over leaked plans to increase carbon dioxide emissions, received financing of $1.25bn from HSBC as part of a $10bn loan in which other banks participated, according to Eikon.
HSBC took a leading role in the issuance of a bond worth $1bn by Enbridge on 5 July 2020. Enbridge is North America’s largest energy infrastructure company and, according to RAN, has a long track record of oil spills and Indigenous rights violations. Enbridge is currently building a new pipeline which would be one of the largest crude oil pipelines in the world, carrying up to 915,000 barrels per day of tar sands crude – one of the most carbon-intensive fuels on earth.
In June of this year, HSBC took part in a $498 million bond issuance to KEPCO, one of Asia’s most aggressive expanders of the coal industry. 40% of KEPCO’s business relies on coal. Global investors including Blackrock, Legal & General Investment Management, APG and the Church Commissioners for England have urged the company to drop overseas coal power projects, citing financial and environmental concerns. Yet KEPCO continues to pour millions into expanding the coal sector, most recently by investing in the construction of two new coal-fired power plants in Indonesia.
Last year a group of investors – representing more than $1 trillion in assets – sent a letter to HSBC’s then-CEO asking it to cease financing to companies that are highly dependent on coal mining or power. The group included Schroders, EOS at Federated Hermes and Edentree Investment Management.
Jeanne Martin, senior campaign manager, ShareAction, says: “This new data is just the tip of the iceberg of fossil fuel deals HSBC was finalising as it was dotting the Is and crossing the Ts on its new net-zero announcement. It casts serious doubt over the credibility of HSBC’s climate commitments, given that phasing out financing of fossil fuels is an absolute must for any net-zero strategy.”
HSBC is Europe’s second largest financier of fossil fuels, after Barclays, according to the Rainforest Action Network. Since the signing of the Paris Agreement, HSBC has provided $87 billion in financing to top fossil fuel companies. Between 2017 and Q3 2019 it also provided nearly $8 billion in loans and underwriting to 29 companies that are developing coal plants.
Notes to editors:
- For more information, please contact Conor Quinn at firstname.lastname@example.org or on +44 7444 696 214
- You can find the full analysis here.
- The $1.8bn figure is an estimated snapshot of just five controversial deals. The bank’s total financing of fossil fuels over that period is likely to be much higher. Transaction data was sourced from Eikon, where the value of a transaction is split between leading banks.
- ShareAction is a campaigning organisation pushing the global investment system to take responsibility for its impacts on people and planet, and use its power to create a green, fair, and healthy society.