Press Release
Paris, December 14, 2022 – HSBC today committed not to directly finance new oil and gas fields in its new sectoral policy (1). While the policy focuses on project finance, HSBC takes a step to tackle oil and gas expansion and shows the way for other banks that claim they are committed to net zero. Reclaim Finance calls on HSBC to systematically exclude companies with oil & gas expansion plans and calls on all banks to adopt in turn robust policies to stand strong behind the objective of limiting global warming to 1.5°C.
As part of its commitment to net zero, HSBC announced new measures on the energy sector.
For the oil and gas sector, HBSC says that it will “no longer provide new lending or capital markets finance for the specific purpose of projects pertaining to new oil and gas fields and related infrastructure when the primary use is in conjunction with new fields”. This makes HSBC the biggest bank to exclude direct support to new oil and gas fields, as aligned with the IEA’s NZE scenario (2).
However, HSBC does not adopt strict criteria to stop providing support to companies with oil and gas expansion plans. The policy introduces a requirement for transition plans which consider a number of factors: plans related to the exploration & development of new oil and gas fields is one of the assessment criteria but failure to stop expanding is not a strict exclusion criteria. Moreover, HSBC fails indicating any deadline by which companies need to have adopted a transition plan to remain a client.
Lucie Pinson, Director of Reclaim Finance, declares: “HSBC’s policy shows the way for other banks, including the French banks that like to claim that they are climate leaders but which continue to finance oil and gas expansion. Many questions remain, including whether or when oil and gas developers will be excluded. This must be clarified and we call on other banks to stand strong behind 1.5°. This means nothing less than stopping all direct and indirect support for new oil and gas projects and phasing out finance for the fossil fuel industry.”
In addition to stop support to new oil and gas fields and related infrastructures, HSBC also commit to these following measures:
- HSBC excludes direct support for existing unconventional oil and gas projects – defined as ultra-deepwater offshore oil and gas, shale oil, extra-heavy oil – , and existing projects in environmentally and socially critical areas – including the Arctic and the Amazon. Yet, existing shale gas projects and ultra-deep water oil and gas projects located between 1,500 and 2,000m are only subject to enhanced due diligence.
- New oil-fired power generation projects and some new gas-fired power generation projects are excluded, but HSBC can still finance gas-fired power plants developed by companies “in transition”.
- Commitments taken by the bank at the corporate level are very limited: HSBC only excludes clients whose overall operations are “substantially” in some unconventional sectors, meaning that no systematic exclusion criterion is applied (3).
- There is no mention of a strategy for phasing out finance for oil and gas.
Despite these limitations, HSBC’s policy goes beyond almost all of its competitors, as shown by the Oil and Gas Policy Tracker (4). To deliver net zero by 2050, HSBC will need to end financing for all fossil fuel developments (5).