Lawyers for an environmental charity have written to HSBC to remind it of its legal duties with regard to climate risk, as the banks mulls supporting a climate change resolution ahead of its next annual general meeting.
The resolution, which was filed by ShareAction last month, called on the bank to take urgent action to scale back its exposure to fossil fuel assets, in line with a timeline set out by the Paris climate agreement.
According to charity ClientEarth, HSBC is Europe’s second largest fossil fuel financier. The charity has urged HSBC board members to vote in favour of the resolution.
The bank recently announced its ambitions to be aligned with the Paris Agreement goal to be net zero by 2050.
But ClientEarth lawyers have questioned the credibility of the bank’s goal, as HSBC has financed some $86.6bn in lending and underwriting to polluting industries.
Last week ClientEarth released a detailed report that found top listed companies in the UK were “woefully inadequate” at disclosing in corporate reporting how climate change will affect their business.
The report found half of FTSE businesses mentioned some sort of ‘Paris-alignment’ or ‘net zero’ target in their reports, but many provided limited details, which raised concerns of greenwashing among major firms.
ClientEarth lawyer Jamie Sawyer said: “It is not enough to declare net-zero ambitions; HSBC must explain how they will achieve them. The directors have both legal and moral duties to consider the bank’s impact on the environment and mitigate the risks of climate change.
“Inaction will not only jeopardise HSBC’s own financial health, but will exacerbate the systemic impacts the crisis will inflict on the entire economy. We urge board members to show real leadership in responding to the climate emergency and support the resolution.”
ClientEarth also argued that knowingly continuing to support businesses that are failing to reduce their warming impacts makes HSBC complicit in the environmental and economic damage they cause, and heightens the risk of greenwashing.
“Around the world, governments, investors, businesses and the public are rapidly raising their ambitions on climate action – HSBC’s response falls below the benchmark,” Sawyer continued.
“If it is serious about transitioning to net zero emissions then it must move quickly to address the current gap and implement a Paris-aligned strategy supported by targets in line with emerging market practice.”
HSBC said: “HSBC is strongly committed to addressing climate change, in line with our clear ambition to align our financed emissions of our entire business portfolio to net zero by 2050 or sooner.
“We are a leader in sustainable finance and expect to provide between $750bn and $1trn in finance by 2030 to support our customers in all sectors to progressively decarbonise. As we work to set out the detail of our roadmap to net zero, we continue to positively and proactively engage with our customers, shareholders and ShareAction.”