HSBC HSBC Holdings PLC

By Maitane Sardon

A group of institutional investors are pressuring HSBC Holdings PLC to phase out coal and make sure its financing activities are aligned with the Paris Agreement on climate change.

The coalition, which includes Europe's largest asset manager Amundi SA and U.K.-based hedgefund firm Man Group PLC, filed a shareholder resolution calling on the British bank to publish a strategy and targets to reduce its exposure to fossil fuels, in particular coal, on a timeline aligned with the goals of the Paris agreement. The resolution will need to receive backing from 75% of the votes cast at HSBC's annual general meeting in April to pass.

The move comes after HSBC pledged in October to achieve net-zero carbon emissions across its portfolio of customers by 2050 and to provide up to $1 trillion in financing over ten years to help clients lower their environmental impact.

The net-zero pledge was deemed insufficient by some environmental groups and investors that have been pressuring the bank to turn its ambitions into short and medium-term targets and stop lending to the coal sector.

"As Europe's largest bank and the second-largest provider of fossil-fuel financing, HSBC has the unique opportunity to help lead the financial-services sector toward Paris-aligned commitments rather than mere ambitions," said Jason Mitchell, co-head of responsible investment at Man Group.

The bank pumped $1.8 billion into fossil-fuel companies, including for new coal and tar-sands infrastructure projects, in the four months prior to committing to net-zero, according to ShareAction, the nonprofit spearheading the campaign. It has also provided $87 billion to some of the world's largest fossil-fuel companies since the Paris Agreement was signed in 2016, according to nonprofit Rainforest Action Network.

"HSBC is 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 by 2050 or sooner," a spokesperson for the bank said, adding that the bank continues to engage with customers, shareholders and campaign groups.

HSBC has previously expressed its willingness to help companies with a high carbon footprint--including those in the coal sector--decarbonize rather than walking away from them. Coal is one of the highest carbon emitters and has an important presence in Asia, where HSBC makes half of its revenue.

Last year, the bank was a joint bookrunner for a $350 million "energy transition" bond issued by Castle Peak Power Co., a subsidiary of Hong Kong's power giant CLP Holdings Ltd. CLP is heavily reliant on coal to generate power but has committed to stop investing in coal-fired generation capacity and phase out its coal assets by 2050.

The HSBC climate resolution is the latest action taken against a major European bank over the last year. British bank Barclays PLC faced a similar resolution in May, which didn't pass but got 24% of the votes cast.

Write to Maitane Sardon at maitane.sardon@wsj.com

(END) Dow Jones Newswires

January 11, 2021 06:41 ET (11:41 GMT)

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