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HSBC will stop providing services to corporate clients that have involvement in coal as it seeks to phase out all financing for the coal industry by 2040 globally and by 2030 in the EU and the OECD, the bank said in a new policy.
“Eliminating coal-fired power emissions is the most symbolic and important milestone along the road to net zero,” said the chief sustainability officer of the bank, Celine Herweijer.
“Coal-fired power stations contribute roughly a fifth of global carbon emissions output, and the science very clearly tells us they can have no part of a net zero world. No new coal is no longer good enough: our attention has to turn to urgent phase-out of existing coal-fired power.”
However urgent the phase-out of current coal-fired generation capacity, HSBC made a note of saying that a premature exit from coal will not be an option, aware that “An abrupt shift away from coal would literally turn the lights off for these people. It would endanger their most basic development needs, while disrupting industry and rendering a huge social impact from job losses in coal regions.”
Be that as it may, the bank has quite big ambitions in the coal-related emissions department. The policy includes plans to cut its financing to the thermal coal industry by a quarter by 2025 and by half by 2030, Herweijer said.
As part of this effort, the bank will require its corporate clients to submit transition plans and will check them for clarity, credibility, and pace of progress. If a client fails the test or refuses to provide such information, HSBC will suspend services that may include funding and advice.
HSBC is one of the biggest lenders in Asia, which in turn is the world’s largest consumer of coal. However, per Herweijer, this is more of an opportunity than a risk.
“Arguably the biggest contribution we can make… is to be at the heart of the energy transition in Asia,” she said.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.