HSBC Ceases Funding For New Oil, Gas Projects

HSBC will stop financing and advising new oil and gas fields and metallurgical coal projects after being barraged with relentless criticism over its climate policies from shareholders and the global green community alike, Kenza Bryan and Emma Dunkley reported for the Financial Times.

Photo Insert: HSBC promised it would reject prospective oil and gas clients if more than 10 percent of their planned capital spending was set aside for project exploration.

However, the bank will still finance energy companies that have drawn expansion plans which could affect competing banks to follow its lead.

For years, banks have been condemned to financing oil and gas industry expansion even as they claimed fossil fuel companies are already cutting emissions and pleaded they be allowed to stay in the market with a transition to net zero by 2050.

This argument has gained traction during the energy crisis and the scarcity of gas supplies as Russia launched its bloody, but losing, war against Ukraine.

But the need to accelerate the shift to renewable energy quickest has been pushed by experts led by those in the International Energy Agency (IEA) and the UN body of scientists.

HSBC has been hammered for its dependence on oil and gas industry financing and shareholders are not pleased by this policy. Investors have revolted last year for HSBC’s not doing much to wean itself away from dirty financing.

The global bank provided $54.9 billion in loans and underwriting services to energy companies with the most significant oil, gas, and coal expansion projects between 2016 and 2021, making it the sixth largest player globally and the largest in the UK, the Rainforest Action Network (RAN) said.

HSBC promised it would reject prospective oil and gas clients if more than 10 percent of their planned capital spending was set aside for project exploration.

At least 91 percent of fossil fuel financing globally by the bank came from finance not tied to specific projects, according to RAN, and only 4 percent was from project finance which HSBC is now seeking to limit.

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