HSBC pledges to end coal financing under shareholder pressure

HSBC has pledged to phase out financing of coal by 2040 under pressure from a $2.4trn coalition of shareholders.

The bank has proposed a resolution for its annual general meeting committing it to end financing of coal-fired power and thermal coal mining in the EU and OECD by 2030 and globally by 2040.

HSBC drew up the resolution after pressure from 15 pension and investment funds including Amundi, Europe's biggest asset manager, and Man Group. As a result the investors, led by campaign group ShareAction, have withdrawn a climate resolution they had planned to put before the AGM on 28 May.

The bank's move follows a similar decision by Barclays a year ago. HSBC is said to be Europe's second biggest financier fo fossil fuels after Barclays.

HSBC had previously said it would not finance new coal projects or new customers that depend on thermal coal mining. It is now promising to phase out all financing of coal. It will publishe a detailed plan before the end of 2021.

Noel Quinn, HSBC's chief executive, said: "We are pleased that ShareAction and a group of shareholders have agreed to support the resolution and would like to thank them for their positive ongoing engagement and constructive challenge and input as we have shaped the detail of our plans to support the direct financing requirements of our corporate clients in the low carbon transition. This represents an unprecedented level of co-operation between a bank, shareholders and NGOs on a critical issue, with a positive outcome for all."

ShareAction said its investor coalition had agreed to withdraw the resolution but that it might take action in 2022 if HSBC did not live up to its promises in implementing the pledges.

Jeanne Martin, campaign manager at ShareAction, said: “Today’s announcement shows that robust shareholder engagement can deliver concrete results and sets an important precedent for the banking industry. Our focus now turns to ensuring HSBC delivers on these commitments."