Major asset managers Amundi and Man Group and a dozen other institutional investors have co-filed a shareholder resolution calling for HSBC to set out a plan for phasing out its exposure to fossil fuel assets, starting with coal.
The move comes after the bank in October announced an ambition to be a net-zero bank by 2050 at the latest, a pledge seen as important given HSBC’s large presence in Asia.
More than 100 individual shareholders plus European asset owners from Denmark, Sweden and the UK have joined Amundi and Man Group in co-filing the resolution*.
If the resolution receives more than 75% of the votes at HSBC’s AGM in April, the bank would have to publish a strategy and short-, medium-, and long-term targets to reduce its exposure to fossil fuel assets on a timeline aligned with the goals of the Paris agreement.
HSBC’s net-zero announcement has been criticised for not containing enough information about implementation, particularly about plans to avoid fossil fuel financing, as distinct from providing more green financing.
“In the end, increasing financing for green activities only gets us halfway,” said Natasha Landell-Mills, head of stewardship at Sarasin & Partners. “The board must be clear on its intent to withdraw financing of harmful emissions.”
She said that “in light of the urgency of the climate crisis”, Sarasin & Partners had decided to co-file the shareholder resolution to seek a clear timetable for emission reductions from HSBC’s financing activities.
At co-filer AkademikerPension, a Danish pension fund with its own net-zero commitment, CEO Jens Munch Holst said HSBC’s footprint in Asia would be “critical in encouraging a much-needed transition away from coal dependency in that region, while at the same time increasing HSBC’s own resilience to climate risk”.
“We urge HSBC to listen to its shareholders by introducing robust fossil fuel project and corporate finance restriction criteria and publishing a 1.5°C-aligned engagement policy for its clients in high-carbon sectors,” he said.
According to campaign group ShareAction, which co-ordinated the HSBC resolution, the proposal also encourages the bank to consider the social dimension of the transition to a low-carbon economy when developing its strategy, and to use climate scenarios that do not rely excessively on negative emissions technologies when developing its targets.
The resolution follows a multi-year investor engagement with HSBC, and also comes after ShareAction’s 2020 Barclays proposal, which was the first climate resolution backed by institutional investors at a major European bank. The NGO said shareholders filing the HSBC resolution had signalled their hope the board recommend a vote in favour at the April AGM.
At AkademikerPension, Munch Holst said: “By pressuring the banks that provide loans and financing for climate-damaging coal or oil extraction, we hope to achieve a greater effect faster than by continuing the dialogue with companies that are not moving fast enough.”
In a statement about the shareholder resolution, HSBC said it was 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.”
It added: “As we work to set out the detail of our roadmap to net-zero, we continue to positively engage with our customers, shareholders and ShareAction.”
The institutional investor co-filers are: AkademikerPension, Amundi, La Banque Postale Asset Management, Brunel Pension Partnership, Folksam, Friends Provident Foundation, Islington Pension Fund, Jesuits in Britain, Man Group, Marmot Charitable Trust, Merseyside Pension Fund, Rathbone Investment Management, Sarasin & Partners, Trinity College, Cambridge, The 1970 Trust.