Shareholders are increasingly targeting banks over their role in financing carbon-intensive projects and industries © Roy Liu/Bloomberg

HSBC is under fire for financing the fossil fuel industry after a group of investors including Amundi and Man Group filed a climate resolution ahead of the bank’s annual meeting in April.

The lender announced in October that it would become a “net zero” carbon emissions bank by 2050, but some of Europe’s biggest investors involved in the resolution said it was failing to take climate change seriously, having made no specific commitments to reduce funding for fossil fuels.

The resolution — which was filed by 15 institutional investors with $2.4tn in assets, and 117 individual shareholders — called on HSBC to publish a strategy and targets to reduce its exposure to fossil fuel assets.

ShareAction, a responsible investment charity that brought the shareholders together, said the bank was Europe’s second-largest financier of fossil fuels after Barclays.

“The message from the resolution is clear: net zero ambitions by top fossil fuel financiers are simply not credible if they fail to be backed up by fossil fuel phaseout plans,” said Jeanne Martin, senior campaign manager at ShareAction.

Investors are increasingly targeting banks over their role in financing carbon-intensive projects and industries. Last year, shareholders filed a landmark climate resolution at Barclays’ AGM, which received the support of a quarter of shareholders and forced the lender to strengthen its policies.

Caroline Le Meaux, head of ESG research, voting and engagement at Amundi, a top 25 shareholder in HSBC, said climate change constituted a “systemic risk”.

“The financial sector has a key role to play in supporting the switch to a low-carbon economy and the alignment with the Paris agreement,” she added. 

In response, HSBC said it was “strongly committed to addressing climate change, in line with our clear ambition to align our financed emissions of our entire business portfolio to net zero” and that it would continue to “positively engage” with customers, shareholders and ShareAction.

The bank has pledged up to $1tn of support in the next decade to help clients become more environmentally friendly. It also cut its oil sands financing from $1.3bn in 2017 to $231m in 2019, leaving it only the ninth largest bank in that sector, according to Rainforest Action Network data.

However, RAN said the bank has provided $87bn in total to some of the world’s largest fossil fuel companies since the 2016 Paris climate agreement, which aims to tackle rising temperatures.

ShareAction said HSBC provided an additional $1.8bn to fossil fuel companies in the four months leading up to its net zero announcement, including projects to construct coal mining and tar sands infrastructure.

The investors said they hoped the bank’s board would recommend shareholders vote in favour of the proposal.

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matecBarclays was the first big UK lender to target net zero emissions by 2050, after pressure from shareholders and activists. But critics still argued that the policy was a watered-down version of the more robust resolution proposed by investors. 

HSBC is also debating whether to propose its own motion on the subject and is considering whether to give shareholders an annual vote on climate change policy, according to a person familiar with internal discussions.

Other banks have taken more decisive action, including UniCredit, which recently said it would phase out its exposure to coal by 2028.

Regulators are also putting pressure on banks to change their practices. The Bank of England is planning its first climate stress test for financial institutions in June. This will examine whether bank capital levels are sufficient to absorb potential losses from climate change.

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