By Fabiana Negrin Ochoa
HSBC Holdings PLC is planning to phase out coal financing in the European Union and the Organization for Economic Cooperation and Development by 2030, as part of the lender's efforts to decarbonize its portfolio.
The London- and Hong Kong-listed bank has called for a special climate-change resolution to be voted on at its next annual general meeting on May 28 to set out a strategy for transitioning to net-zero carbon emissions, including $750 billion to $1 trillion in financing and investment to support customers' decarbonization and sustainable growth.
The measure needs 75% of the votes to pass. If it is approved, the policy would likely be published by year's end.
"We are delighted to be setting out the next phase of our net zero strategy in this resolution," HSBC Group Chief Executive Noel Quinn said Thursday. "This represents an unprecedented level of cooperation between a bank, shareholders, and NGOs on a critical issue, with a positive outcome for all."
The move comes after months of negotiations with a $2.4 trillion coalition of investors that includes Amundi--Europe's biggest asset manager--hedge fund company Man Group and Norwegian investment house ShareAction, as well as 117 individual shareholders.
The coalition set the talks in motion in January when it filed a resolution calling on HSBC to cut its exposure to fossil fuels. The discussions culminated in the coalition agreeing to withdraw its proposal in favor of the board's resolution, though it said it could still take action next year if HSBC falls short of its commitments.
HSBC in October set the goal of becoming carbon neutral at a portfolio level by 2050 but drew criticism from ShareAction and others that said it had continued pumping money into coal.
In a statement, the investors' coalition applauded the HSBC board's proposal, saying it could set the model for other banks to follow.
"HSBC's commitment to phase out from coal is a wake-up call to the Asian banking and coal sectors and will contribute to the much-needed transition away from coal dependency in the region," AkademikerPension Chief Executive Jens Munch Holst said in the statement.
Write to Fabiana Negrin Ochoa at firstname.lastname@example.org