We’re phasing out coal financing
We are committing to phase out thermal coal financing, in a net zero aligned timeline, in a way which enables HSBC to help finance a just transition in emerging markets.
This policy fulfils our commitment, approved by shareholders at the 2021 Annual General Meeting (AGM), to phase-out thermal coal financing in the EU and OECD by 2030, and to global phase-out by 2040.
Every year we commit to review our policy and targets – and take into account evolving science and internationally recognised guidance.
- phase out the financing1 of coal-fired power and thermal coal mining by 2030 in markets in the EU and OECD, and by 2040 in other markets
- engage with relevant clients2 on their transition plans and agree financing phase-out timelines
- seek to withdraw any financing and advisory services with a client that makes a new commitment to, or proceeds with, thermal coal expansion after 1 January 2021 (unless such expansion was contractually committed or under construction before that date)3
- review the policy and report on progress annually
HSBC intends to reduce thermal coal financing exposure by at least 25 per cent by 2025; and aims to reduce financing exposure by 50 per cent by 2030, using its 2020 Task Force on Climate-Related Financial Disclosures (TCFD) as its baseline.
Additionally, unless in conflict with fiduciary or other regulatory obligations, all relevant HSBC entities, products and businesses, including asset management, will seek to implement policies that support the transition from coal-fired power and thermal coal mining within HSBC’s 2030/40 timelines.
How we’re enabling the transition from coal to clean
Our coal policy will facilitate a just transition to net zero for developed and developing countries.
HSBC will not:
- Provide new finance to any client for the specific purposes of activities that HSBC considers incompatible with HSBC’s Net Zero by 2050 target. These would include new thermal coal infrastructure, and, for EU and OECD markets only, where the client’s thermal coal related revenues are greater than 40 per cent of total revenues (or 30 per cent of total revenues by 2025)4
- Provide any new financing to any client where the client declines to engage sufficiently on its transition plan or HSBC determines that the plan is not compatible with HSBC’s Net Zero by 2050 target
- Start new relationships with prospective clients with significant thermal coal power capacity, mining production or revenues, except for the purposes of materially reducing greenhouse gas emissions
HSBC expects clients to:
- Formulate and publish transition plans that are compatible with HSBC’s Net Zero by 2050 target. HSBC expects to complete transition plan assessments relating to clients operating within EU and OECD markets by the end of 2022, and clients in all other markets by the end of 20235
- Provide regular (usually annual) detailed disclosures to HSBC regarding the implementation of their transition plans
Our assessments will be based on factors including: level of ambition to reduce greenhouse gas emissions; clarity and credibility of transition strategy, including any proposed abatement technologies and consideration of a just transition.
We aim to focus our efforts on areas where we can help drive meaningful change, whilst taking into account experience from policy implementation over time. Our approach to identifying transactions and clients in scope of our thermal coal phase out policy is therefore proportionate to risk and materiality.
The most recent review of our Thermal Coal Phase Out Policy was completed in January 2024.
This article was updated in January 2024.
1 Finance (or financing) means the provision of (or when considering the provision of) project finance, direct lending, or arranging or underwriting of capital markets transactions to clients. New finance or financing includes the refinancing of existing finance facilities.
2 The Policy applies to clients that are corporate entities (including state-owned enterprises), trusts or individuals that: own, control or operate thermal coal mines, thermal coal-fired power plants or coal to gas / liquids plants (together, thermal coal assets); or are engaged in activities that HSBC considers to be incompatible with HSBC’s NZ50 Target. The Policy does not apply to certain exempted activities, such as services to the thermal coal sector. If an existing or prospective client is part of a wider group, HSBC will take into consideration the activities of the client group and apply the policy to the extent appropriate in light of the organisational structure and governance of the client group.
3 In such cases, HSBC will seek representations from the client group, where relevant, that new finance provided to other members of the client group will not be used for such activities.
4 Unless the new finance or new advisory services are to be used for the specific and demonstrable purpose of financing clean technology or infrastructure as part of the client’s transition.
5 State-owned enterprises in markets outside EU and OECD may be subject to different national development planning cycles. HSBC will take those planning cycles into account where necessary.
Our climate strategy
We’re focused on helping to deliver a net zero global economy by transforming ourselves and working with our customers to make their own transition.