Major investors tell HSBC: STOP investing in fatal coal

Written by Rebecca Jones on 7th Mar 2019

Shareholders in HSBC that collectively manage more than £700 million have called on the global bank to stop investing in coal plants, particularly in developing countries where coal related pollution kills tens of thousands of people every year.
 
In an action coordinated by responsible investment charity ShareAction, the shareholders have sent a letter to the CEO of the global bank, John Flint.

The group – which includes global investment bank Schroders, ethical fund manager Edentree and leading stewardship provider Hermes EOS – is asking HSBC to strengthen its coal policy by ending finance to coal-reliant companies and by excluding future financing of coal projects in emerging markets.  

The action follows several successful investor engagements on climate change, which saw Glencore most recently agree to limit its coal production. 

Coal’s time is up. The time for forceful investor action on climate change is now

Commenting on the move, Sonia Hierzig, Senior Projects Manager at ShareAction, says: Coal’s time is up. The time for forceful investor action on climate change is now. Whether targeted at high-carbon companies or at the financial institutions keeping them alive, investor engagement is working. It is time HSBC listened to its shareholders and faced the facts: coal poses a climatic and financial risk too great to bear.” 

HSBC’s multi-level coal financing

Unlike many of its peers, such as Standard Chartered and Barclays, HSBC has failed to institute a global exclusion policy for coal power project finance. Instead, HSBC’s policy allows it to continue financing coal power projects in Bangladesh, Vietnam and Indonesia. ShareAction has been campaigning on this since HSBC’s AGM last year. 

Similarly, the group says that HSBC has so far failed to take a prudent stance on corporate finance – for example, in the form of general loans to companies involved with the coal industry – enabling the bank to continue indirectly financing and underwriting companies that are highly reliant on coal.  

The group of shareholders has called on HSBC to implement the following:

  • A prohibition of project finance to new coal mines and coal-fired power plants anywhere in the world, including Indonesia, Bangladesh and Vietnam 
  • A prohibition of general corporate financing, underwriting and advisory services to companies that are highly dependent on coal mining or coal power 
  • Come up with a clear, timebound plan to phase out existing exposure to coal-related assets 

Investment hindering renewable growth

Extensive research has shown that there is a clear path to renewables in IndonesiaVietnam and Bangladesh. Yet by financing coal power sector expansion in these three countries, the shareholder group claims that HSBC is facilitating the lock-in of high-carbon infrastructure and avoidable emissions and failing to support these countries in the transition to a low-carbon economy.

This week a report released by Greenpeace and software company IQAir AirVisualit revealed that Asia has a major air pollution crisis, with 50 of the world’s most polluted cities located in the region. Dhaka, the capital of Bangladesh, is number 17.

Developing countries have as much right as we do to clean air

On the impact that coal funding from HSBC has on developing economies, Jack Bertolus, Research Coordinator at Market Forces, says: “Harvard University researchers project that by 2030, pollution from coal-fired power plants could result in 43,620 excess deaths in Indonesia and Vietnam every year.

“The Executive Director of the International Energy Agency has warned that ‘we have no room to build anything that emits CO2 emissions.’ Yet HSBC continues to actively support pollution, from a controversial coal port in Bangladesh to coal-fired power stations in Vietnam.

“The bank must recognise that developing countries have as much as right as their developed counterparts to clean energy and clean air. HSBC should immediately rule out all funding to new coal, no matter the location.” 

New coal plants mean climate disaster

It is widely acknowledged that no new coal plants can be built anywhere to keep temperature rises to well below 2 degrees of warming – a limit that was agreed by a coalition of countries across the world including the US, China and the UK at the UN climate convention in Paris in 2015. 

Since then, however, further scientific evidence has prompted governments to be more ambitious and aim for 1.5 degrees, which in itself will still see the loss of most of the world’s coral reefs and 350 million more people face water scarcity every year across the globe. 

Esmé van Herwijnen, Responsible Investment Analyst and Climate Change Lead at Edentree, says: “The UN’s Intergovernmental Panel on Climate Change has made it clear that there can be no future for coal in a 1.5-degree scenario and, as shareholders, we are urging HSBC to show leadership in this vital area. 

“We support urgent moves that lead to HSBC strengthening its policy on new coal investments. Alongside some of its peers such as Barclays and ING, we believe the time has come for HSBC to institute a global coal exclusion policy that makes a firm commitment to end the financing of coal reliant projects within a clearly defined time frame.”

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