HSBC PLC to phase out financing of thermal coal by 2030 in EU/OECD,

HSBC PLC (LSE:HSBA) said it plans to phase out the financing of coal-fired power and thermal coal mining by 2030 in EU and OECD markets, and worldwide by 2040.

The bank said in a statement that it expects all existing thermal coal-related clients to publish transition plans and will not provide new finance it their plans are not compatible with HSBC’s target to reach net zero by 2050.

It said the thermal coal phase-out policy is a key part of its ambition to align its financed emissions – the greenhouse gas emissions of its portfolio of clients – to net zero by 2050 or sooner.

The bank said it intends to reduce its exposure to thermal coal financing by at least 25% by 2025 and by 50% by 2030.

Thermal coal financing remaining after 2030 will only relate to clients with thermal coal assets in non-EU/OECD markets, and will be completely phased out by 2040.

HSBC warned that it will decline to provide new financing to any client that fails to engage sufficiently on its transition plan, or where plans are not compatible with HSBC’s net zero target.

It may withdraw financing from clients that make a commitment to, or proceed with, thermal coal expansion after 1 January 2021.

Noting its substantial footprint across Asia and the region’s heavy reliance on coal, HSBC said it recognises its critical role in helping to finance the region’s transition from coal to clean energy.

HSBC group chief executive Noel Quinn said: ”We want to be at the heart of financing the energy transition, particularly in Asia. This is where we can have the biggest impact to help the world achieve its target of limiting global warming to 1.5°C.

“We are committed to using our deep relationships to partner with clients in those markets to help them transition to cleaner, safer and cheaper energy alternatives in the coming decades.”

Group chief sustainability officer Dr Celine Herweijer added: “Asia’s ability to transition to clean energy in time will make or break the world’s ability to avoid dangerous climate change. Whilst our coal phase-out dates and interim targets are driven by the science, we need an approach that recognises the realities on the ground in Asia today.

“Our clients in Asia are at different starting points to their EU/OECD counterparts, with more infrastructure, resource, and policy obstacles, but many have declared a strong interest and ambition to invest in the transition and diversify their businesses.

“The good news is that zero-marginal-cost renewables, rising carbon prices and a terminal contraction in coal demand are factors helping them diversify.”

HSBC announced in October last year that it aims to provide between US$750bn and US$1trn of sustainable finance and investment to support the transition to net zero including through investment in innovative solutions and sustainable infrastructure.