HSBC: Confused about coal, dismissive of human rights, indignant about regulatory blackmail

April 22, 2016

Today, Move Your Money crashed HSBC’s AGM. For many shareholders, these meetings are an annual excuse for shareholders to grab a free lunch (no judgement here), but they also offer a unique opportunity for shareholders and campaigners alike to grill the Board over scandals, policy, and future direction.

This year Chairman Douglas Flint faced questions on many fronts, including:

  • The bank’s financing of companies implicated in grave human rights abuses
  • Continued support for the tanking coal industry
  • Exposure to the Panama Papers tax evasion meltdown
  • A “combative” approach to US monitoring of basic anti-money laundering compliance
  • Remuneration (a corporate codeword for high pay)
  • “Blackmailing” of the regulator by threatening to leave the UK

We were there to confront the Board over their financing for coal mining on behalf of the hundreds of people who have supported our #QuitCoal campaign, many of them aggrieved HSBC customers. In just the last six years they have extended $5.4 billion in that direction! In particular, we wanted to raise concerns about HSBC’s continued financing of coal companies implicated in grave human rights abuses ,like Drummond. So we started the day by highlighting that Stuart Gulliver, HSBC CEO, has “blood on his hands”.

ShareAction photo of action crop

One of the places most notorious for human rights abuses in the name of coal extraction is Colombia. Key transgressors include Anglo American, BHP Billiton and Glencore, who jointly manage the Cerrejón mine in La Guajira. Their abuses should not be consigned to history in the name of “progress”, as was the response from one shareholder we talked to, not least because they are happening now. As Richard Solly from London Mining Network said, addressing the Board:

After many years of local, national and international pressure, Cerrejon Coal has put some effort into improving its community relations, but on 24 February this year there was another brutal eviction of a farming family on behalf of the company by the notorious Colombian riot police squadron, ESMAD. Over a dozen people were injured, including a young man with learning difficulties and a pregnant woman who suffered a miscarriage as a result.”

In preparing for this AGM, we also worked with BankTrack, who wrote a brilliant briefing which charts in detail how Drummond collaborated with paramilitaries in Cesar, Colombia, in order to secure their business interests in the region. This resulted in at least 3,100 murders and the displacement of over 55,000 farmers from their land, according to research by PAX campaign Stop Blood Coal. Despite these allegations, HSBC have financed Drummond to the tune of $233 million since 2010, and are therefore complicit in Drummond’s crimes.

Richard then asked whether HSBC would suspend all financial support for both the Cerrejón companies and Drummond at least until they take serious steps to remedy their abuses and provide remediation for the affected communities. Chairman Douglas Flint responded that “we can and do drop customers for human rights abuses,” although what kind of carnage a company would have to cause to qualify for rejection under HSBC’s lax due diligence regime is anyone’s guess. At least one other large bank declined to deal with Drummond in 2012 on exactly these grounds, but as Yann Louvel, Climate and Energy Campaign Coordinator at BankTrack, has observed,

11 international banks have already moved in the right direction on coal mining, but we’re yet to see any progress from HSBC on this front.

That is, HSBC are a laggard. And as usual, they hide behind their commitment to “client confidentiality” (strange in the context of such disregard for all other forms of regulatory compliance), refusing to comment on any specific case and speaking only in vagaries.

Hand to ear (Vincent Yu, AP Photo)

Noting HSBC’s especially poor record on coal mining, and building on this previous question, we asked whether HSBC’s new Metals and Mining Policy would exclude coal from all future lending and underwriting. Stuart Gulliver’s answer: “it’s complicated”. He also recognised us as the people who sent him “those 10,000 emails,” which is wildly inaccurate but just goes to show how annoying sustained criticism can be.

He said that having good policy is one thing, but action is another thing altogether, which makes you wonder what the point of policy is. Mr Gulliver also made much of the world’s continued reliance on coal. Certainly, it still generates 40% of global electricity, and much more in places like China, but demand is in structural decline across the board. HSBC’s stubbornness on the issue will at best delay coal’s inevitable collapse whilst exposing HSBC to plenty more “bad debt,” which Mr Gulliver was good enough to recognise as an inevitable result of the stranding of fossil fuel assets.

Gulliver then trotted out the coal industry’s favourite trope: that coal is fundamental to development. That any anti-coal position condemns millions to poverty. This is a claim oft-made by those with vested interests, but which is easily dismissed. It is really just the cynical instrumentalisation of global south struggle to legitimate continued investment in coal. It also flies in the face of HSBC’s recent endeavours to capitalise on its newfound accreditation with the UN’s Green Climate Fund, which describes itself thus:

“The Fund is a unique global initiative to respond to climate change by investing into low-emission and climate-resilient development.”

In no dictionary does coal feature in any “low-emission” or “climate-resilient” form of development. Either HSBC believes in the possibility of “clean development,” and is serious about adjusting to a model of finance oriented towards mitigation and led by organisations in the global south, as GCF accreditation should imply, or they are abusing it as a shameless greenwashing exercise. We know where our money is.

Interestingly, Mr Gulliver also used language typically reserved for climate justice organising. He said we need an “orderly and just transition” to a low-carbon future. Here we see the beginning of the corporate appropriation of the language of just transition, in the same way that the lexicon of “development” has previously been recuperated.

And here’s Stuart Gulliver’s final comment on the matter:

The problem is, the climate crisis is a juggernaut. It’s not going to wait while big banks sit around counting their beans. We need decisive action! We are already hitting tipping points, the most obvious example at present being the almost total bleaching of the Great Barrier Reef. And the scariest thing is that we cannot hope to predict when and where they will manifest in future. Later, we had the chance to ask one final question, before we bugged out to sample the free wine:

This year the board announced that they would not, in fact, be moving their headquarters out of the UK. This announcement was not made before extracting a number of regulatory concessions from Government. […] What gives the board and the bank the right to blackmail regulators, to the detriment of the British public and the financial stability of the UK?”

This got some applause, but the response from Flint was surprising. Whilst he had been calm and collected whilst an AGM regular shook handcuffs and demanded his resignation, our comment seemed to strike a nerve. He flustered and accused us of failing to conduct our research properly. Perhaps he was surprised anyone had managed to join the dots.

After the meeting, we took the time to hand out our Drummond briefings to shareholders as they left. Security had confiscated all of them our way in, probably for some very good reason like protecting shareholders from papercuts and definitely not in order to secure HSBC’s reputation. We had many positive responses or at least expressions of interest, although it was curious to see people parroting Stuart Gulliver’s comments about how 70% of Indian electricity is from coal, as if that had resolved the matter. Perhaps profit restricts the critical faculty. In what was quite sincerely the quote of the day, one shareholder responded thus:

The takeaway: if HSBC want to take climate change and human rights abuses seriously, they need to divest themselves of coal. They can’t keep bankrolling environmental devastation and then justifying it with appeals to alleviating energy poverty. It’s just not going to cut the mustard. We have to pile on the pressure and escalate our campaign to make sure their new Mining Policy is as strong as possible, rather than just another opportunity for them to wash the blood off their hands.

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