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Banks and energy transition: You can run, but you can’t hide

Asset managers and owners are scrutinizing firms’ climate commitments like never before, as HSBC is discovering.

Can banks such as HSBC turn a blind eye to sustainability in their pursuit of revenue?

When HSBC chief executive Noel Quinn announced a “net zero by 2050” commitment in October, he was presumably expecting a positive response from investors – or, at least, to quieten those accusing the bank of heel-dragging on energy.

Alas, the days when vague promises of vast sums for transition and phrases about applying “a climate lens” to financing decisions would win plaudits are long gone.

As the shareholder climate resolution recently filed at HSBC demonstrates, asset managers and owners are scrutinizing firms’ climate commitments ever more stringently – and are ready to take public action against laggards and obfuscators.

It is no longer enough merely to pledge to achieve net-zero emissions in 30 years’ time. Investors want to know how banks plan to get there.

They want to see a credible pathway with short- and medium-term goals. They also want to know that banks will stop funding environmentally sensitive sectors such as thermal coal and oil sands – and they want to be sure it will happen now, not at some point during the next five or 10 years.