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HSBC will no longer fund new oil and gas fields

After facing criticism over its climate change policies from shareholders and environmental activists, the bank has announced it will cut direct financing to fossil fuel projects it isn’t already involved with.

Part of its policy to support a net-zero transition, HSBC has announced it will stop funding new oil and gas field developments.

The move, which environmental activists say sends a ‘strong signal’ to fossil fuel giants and governments that investment is finally beginning to wane, comes after Europe’s biggest bank was accused of misleading consumers and greenwashing its reputation by The Advertising Standards Authority (ASA).

‘We will no longer provide new lending or capital markets finance for the specific purpose of projects pertaining to new oil and gas fields and related infrastructure when the primary use is in conjunction with new fields,’ said HSBC in an update on its energy policy.

‘Given the parallel urgency of today’s global energy crisis, we plan to accelerate our activities in renewable energy and clean infrastructure, aligned with our previously announced ambition to provide $750 billion to $1 trillion in sustainable finance and investment by 2030.’

HSBC to stop funding new oil and gas fields after greenwashing criticism

Simply put, HSBC will cut direct financing and advisory ties to fossil fuel projects it isn’t already involved with.

Though it will continue to provide these services to clients that received final approval before the end of 2021 to help them overhaul their businesses and drive development of cleaner energy sources like biomass, hydrogen, nuclear, and thermal coal.

‘It’s not no new fossil fuel investment as of tomorrow. The existing fossil fuel energy system needs to exist hand-in-hand with the growing clean energy system,’ Celine Herweijer, HSBC’s Chief Sustainability Officer, told Reuters.

‘The world cannot get to a net-zero energy future without energy companies being at the heart of the transition.’

HSBC to stop funding new oil and gas fields after accusations of greenwashing

To ensure oil and gas companies are on-track, HSBC will now ask for new information, including production levels beyond 2030.

This is in accordance with the UN’s body of scientists’ and International Energy Agency’s warnings, which state that no new oil and gas developments can now take place if the world is to reduce carbon emissions to net-zero by 2050.

As we know, this is desperately needed to keep temperatures below the 1.5 degrees Celsius threshold and to avoid the worst impacts of climate change, including increasingly extreme storms, floods, droughts, rising sea levels, and exacerbating wildlife and crop losses.

Only one other has committed to this so far: Britain’s largest domestic bank, Lloyds.

HSBC to stop funding new oil and gas fields as part of policy overhaul | Nasdaq

‘HSBC’s announcement sets a new minimum level of ambition for all banks committed to net-zero,’ said Jeanne Martin, a campaigner at Share Action, a charity fighting for reduced investment in fossil fuels.

But she added the decision ‘doesn’t deal with the much larger proportion of finance HSBC still provides to companies that have oil and gas expansion plans.’

Experts, however, say it’s nevertheless a major milestone following a report from earlier this year showing that the world’s top 60 banks poured as much as $742 billion in fossil fuel financing in 2021 alone.

It’s their hope that this will act as another nail in the coffin for fossil fuel expansion, signalling to other banks across the globe that the game is up on new oil and gas.