Fifteen institutional traders with a mixed $2.four trillion in belongings below administration have filed a local weather change decision at multinational financial institution HSBC, alongside 117 particular person shareholders.
The decision was co-ordinated by accountable funding NGO ShareAction. According to a ShareAction information launch, the decision calls on HSBC to publish a technique and targets to scale back its publicity to fossil gas belongings, beginning with coal, on a timeline in step with the Paris local weather objectives.
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In an indication of the rising attraction of local weather resolutions for mainstream traders, the group of co-filers consists of Europe’s largest asset supervisor, Amundi, the world’s largest publicly-traded hedge fund firm, Man Group, in addition to asset managers and asset house owners from the UK, Denmark, France, and Sweden.
HSBC is Europe’s second largest financier of fossil fuels, after Barclays, in line with the Rainforest Action Network (RAN). RAN discovered it has offered $87 billion to a number of the world’s largest fossil gas corporations for the reason that signing of the Paris Agreement (2016-2019).
In October final yr, HSBC introduced an ambition to be a net-zero financial institution by 2050 on the newest, an vital transfer given the financial institution’s sturdy publicity to Asia.
But the announcement was criticised by traders and campaigners for making no dedication to scale back HSBC’s funding for fossil fuels, specifically coal, which has risen every year since 2016.
Analysis by ShareAction confirmed that within the 4 months main as much as its announcement, the financial institution pumped an extra $1.eight billion into fossil gas corporations, together with these establishing new infrastructure for coal and tar sands.
These findings solid critical doubt over the credibility of HSBC’s local weather commitments, on condition that phasing out financing of fossil fuels is an absolute should for any net-zero technique.
The shareholder decision is the fruits of a four-year engagement with the financial institution. In March 2019, a bunch of traders representing $1 trillion in belongings, co-ordinated by ShareAction, despatched a letter to HSBC urging it to limit its financing of the coal trade. The investor signatories included Schroders, Hermes EOS and Edentree Investment Management.
If the decision receives greater than 75% of the votes at HSBC’s AGM in April 2021, it could require the financial institution to publish a technique and short-, medium- and long-term targets to scale back its publicity to fossil gas belongings on a timeline aligned with the objectives of the Paris settlement.
The decision additionally encourages HSBC to contemplate the social dimension of the transition to a low-carbon financial system (‘a Just Transition’) when growing its technique. Investors representing greater than $10.2 trillion have expressed assist for the Just Transition.
It additionally encourages the financial institution to make use of local weather situations that don’t rely excessively on Negative Emissions Technologies when growing its targets. The IPCC particular report on 1.5°C states that large-scale CO2 removing is “unproven” and that “reliance on such know-how is a significant danger within the skill to restrict warming to 1.5°C“.
The decision follows within the footsteps of ShareAction’s January 2020 decision at Barclays – the primary ever local weather decision backed by institutional traders at a significant European financial institution. Barclays responded to that decision by tabling its personal and turning into the primary mainstream financial institution to decide to internet zero by 2050 on the newest.
Shareholders submitting the HSBC decision have signalled their hope that the board recommends a vote in favour of the decision at its April 2021 AGM.
Jeanne Martin, Senior Campaign Manager at ShareAction, mentioned: “The message from the decision is obvious: internet zero ambitions by high fossil gas financiers are merely not credible in the event that they fail to be backed up by fossil gas section out plans.
“Five years after the Paris Agreement was signed,…