HSBC - A New Approach to Climate Risk?
HSBC stated they would not support oil and gas projects that received final approval after the end of 2021 and expect more information from energy clients about their plans to cut carbon emissions.
ALL ABOUT RISK
As one of the world’s largest funders of oilfield projects and is by no means a philanthropic entity. While divesting in oil and gas is a good, climate-positive story to sell to the public, the priorities of the $10.8 trillion dollar bank aren't to protect the planet. It’s about risk. It’s about the decline of the fossil fuel industry and avoiding the stranded assets within it.
Although the oil industry has made record breaking profits during the Ukraine crisis, this is only really enticing to short-term investors. The bigger players in the industry, like HSBC, are more concerned about the long-term viability of investing in an industry that is volatile and expected to decline.
This announcement from HSBC comes after greenwashing accusations from the bank's advertisements, which highlighted investments of $1 trillion in climate-friendly programs, yet failed to acknowledge HSBC’s contribution to increased global GHG emissions. Due to new ESG policies, HSBC is joined by other major banks in divesting from fossil fuels. There is a significant risk associated with misleading investors, especially in publicly traded companies, which only leads to banks being on the back foot.
Investing in fossil fuels carries risks. Greenwashing carries risks. Banks are risk averse. This combination bodes well for our planet.