HSBC to Eliminate Loans to Fossil Fuel Companies in Developed Countries by 2030

[Image source= EPA Yonhap News]

[Asia Economy Reporter Byunghee Park] HSBC Bank has decided to gradually cut off loans to fossil fuel companies.

According to major foreign media on the 11th (local time), HSBC plans to completely eliminate loan transactions with fossil fuel-related companies in European Union (EU) and Organisation for Economic Co-operation and Development (OECD) member countries by 2030, and to end such transactions in other regions by 2040.

This policy is in response to demands from shareholders.

In January, 15 major institutional investors of HSBC, including Amundi and Man Group, announced that they would submit a shareholder proposal at the annual general meeting in May to stop financial transactions with fossil fuel companies.

HSBC later decided to withdraw the shareholder proposal after discussions with shareholders but instead to reduce financial transactions related to fossil fuel energy on its own. It set targets to reduce the scale of financial transactions with fossil fuel companies in line with the Paris Climate Agreement and decided to cut loans. HSBC will start reducing financial transactions with oil, gas, power, and utility companies from this year and plans to expand to other sectors next year. Additionally, it will report annually on the progress toward climate change goals.

According to the environmental organization Rainforest Action Network based in San Francisco, USA, JPMorgan Chase has been the bank that has loaned the most funds to fossil fuel companies worldwide since 2016. During this period, JPMorgan Chase’s loan amount exceeded $250 billion. HSBC loaned $87 billion, ranking 12th among major global banks.