HSBC feeling the heat as AGM looms

April 12, 2016

Last month we launched our Quit Coal campaign. Since then several hundred people have emailed CEO Stuart Gulliver (full text here) and senior Sustainability managers at HSBC to express their anger over HSBC’s reckless financing of coal extraction, and to demand that their new Mining and Metals Policy explicitly excludes this destructive use of capital. We’ll be taking all of your demands straight to HSBC’s AGM next Friday, so if you haven’t signed yet, now’s the time!

HSBC have since responded. It is to be celebrated that we have drawn a reaction so soon after launching the campaign. HSBC is clearly feeling the heat. But this should only empower us to apply greater pressure. Indeed, the letter thanks us for “taking the time to approach HSBC on this subject” and for helping them understand the “depth of feeling” which people have towards the existential crisis that is climate change. They are almost inviting us to press on with the campaign!

depth-of-feeling (350, David Gilbert)

HSBC’s response is a masterclass in misdirection, courtesy of our friend Brendan McNamara, with whom we’ve had very similar correspondence in the past.  That too, was all about exaggerating the strength of their existing climate commitments, playing down the severity of the situation and omitting any comment on our actual demands. Such chicanery! They can’t even be bothered to write new spin: both letters end with the exact same paragraph.

Both also refer to HSBC’s internal climate credentials. Did you know, for example, that HSBC have reduced their own carbon emissions by 22% since 2011?! Kudos to all those HSBC employees who cycle to work, but if they’re just going to arrange corporate loans for coal companies when they get there, like the $750mn credit facility for Drummond which HSBC were involved with in 2012, these efforts to mitigate everyday carbon emissions are rendered entirely pointless.

HSBC should instead be investing in a just transition to a renewable future, and supporting projects that are accountable to the communities in which they operate, rather than financing coal mines that no one wants and bankrolling companies who steamroll local opposition. HSBC claim to be increasing support for “low-carbon sectors,” but as the below chart from BankTrack’s Undermining our Future report shows, fossil fuels still dominate! This picture looks even more ridiculous when you know that the cost of solar is 1/150th of what it was in 1970. The fossil fuel jig is up, and if HSBC really wanted to do their bit, they would need to combine any advances in operational sustainability with a proper re-appraisal of their lending policies. Quitting coal is the obvious first step.

Undermining our future - HSBC loan comparison 2004-2014HSBC go on to say they are restricting finance for the “two sectors with the highest emissions,” those being deforestation and fossil fuels. This is only half true! Certainly, HSBC has exited 60 forestry and 104 palm oil clients, and this is an admirable effort, but they provide no evidence whatsoever that they are doing anything comparable on fossil fuels. If HSBC are willing to take decisive action against palm oil and pulp companies with self-evidently abysmal social and environmental records, how can notorious coal companies like Peabody, Glencore and SUEK possibly remain on the books?

One of the ways to see HSBC’s failure to address fossil fuels (and hence climate change) is by looking a their approach to coal. It’s a useful indicator because it is the dirtiest and most dangerous of the lot. If you’re happy to fund coal, anything goes. The 2011 Energy Policy Mr McNamara refers to was a step in the right direction, narrowing the pool of CFPP (coal-fired power plant) projects which HSBC was willing to finance. In fact, five years on it remains one of the best such policies in the sector. Despite this, it contains no commitment to limit other financial services, like credit facilities and underwriting, to the companies actually running the CFPPs, which gives you an idea of just how dire the situation is across the board.

Additionally, this policy did nothing to stop HSBC participating in a €750 million loan in 2012 for the new Tufanbeyli plant in Turkey, which came online just last year. It’s true that none of the Tufanbeyli units exceed HSBC’s rejection threshold of 500MW. However, in terms of carbon emissions per unit of power produced, the technology in use is orders of magnitude worse than normal regulations demand!

Tufanbeyli pollution

As usual, the damage goes far beyond atmospheric chemistry. Locals, some of whom have already been stripped of 90% of their arable land to make way for the accompanying mine, are already reporting bouts of asthma and other respiratory problems. And a coal plant isn’t like a solar panel – it has huge inertia, scarring a landscape and its people for decades. The point is, this Energy Policy HSBC are so proud of is  not fit for purpose. We should be saying NO to any and all new coal infrastructure!

Moreover, whatever advances this policy makes are completely undermined by HSBC’s failure to move on mining, on which they have one of the worst records of any big bank. Coal extraction and combustion are two sides of the same coin. The ever-growing divestment movement is motivated by the understanding that if we allow fossil fuels to be dug up, they will be burnt. Therefore, it’s about choking the source.

Hence the clarion call of climate campaigners to #keepitintheground, and that means more than 80% of known coal deposits! The resources wiped off companies’ balance sheets in the process are called “stranded assets”, and you really want to avoid holding the ball when the regulations hit.

The thing is, HSBC are well aware of this line of reasoning. In their own report HSBC admit that “coal assets face the greatest regulatory risks”. It hardly needs saying, but HSBC should follow their own advice and cut all ties with the industry! The revision of their Mining and Metals Policy is the perfect opportunity to realise that ambition on paper, in three easy steps:

  1. Commit to never again provide finance for new coal mines or their expansion
  2. Commit to end loans and underwriting for all coal mining companies
  3. Produce a roadmap showing how and when they’ll have #QuitCoal for good

HSBC say “more needs to be done if the world is to keep global warming well below 2°C”. We say, do it!  They say this policy revision is part of them tightening their approach to climate change. We say, prove it! Next week’s AGM is our chance to bring this message home to the Board, and we want as much ammunition as possible. So if you haven’t already, please email CEO Stuart Gulliver and share our content on Facebook!

Or tweet your support: #HSBC feeling the heat to #QuitCoal as their AGM approaches. Get involved @moveyourmoneyuk

We’re getting ready to ramp up the campaign with more actions, so keep your eyes peeled!

<< Go back