The board at HSBC has tabled a resolution committing the firm to a phase out of financing coal-fired power and thermal coal mining by 2030 across the EU and OECD.

The resolution, put to a vote at the AGM on 28 May 2021, follows months of negotiations between HSBC and a $2.4trn coalition of investors led by campaign group ShareAction.

This week, HSBC, which channelled more than $15bn to coal developers from October 2018 and October 2020, pledged a series of commitments to fight the climate crisis, following pressure from the coalition.

The announcement comes after ShareAction field a shareholder proposal in January, calling on HSBC to reduce its exposure to fossil fuels.

The coalition, including Amundi and Man Group, agreed to withdraw the shareholder proposal in exchange for a board-backed resolution, but pledged to take further action next year if the bank failed to adequately implement new commitments.

Jeanne Martin, senior campaign manager at ShareAction praised the outcome of effective shareholder engagement: “Today’s announcement sets an important precedent for the banking industry.

“Net zero ambitions have to be backed up with time-bound fossil fuel phase-outs and today HSBC has taken an important step in that direction.”

If approved by 75% of shareholders, HSBC has pledged to:

  • Set, disclose, and implement a strategy with short- and medium-term targets to align its provision of finance across all sectors, starting with Oil & Gas and Power & Utilities, with the goals and timelines of the Paris Agreement.
  • Publish and implement a policy to phase out the financing of coal-fired power and thermal coal mining by 2030 in markets in the EU/OECD, and by 2040 in other markets. Financing is defined as project finance, corporate finance, and underwriting. The policy will be published by the end of 2021.
  • Report on progress against that strategy and policy on an annual basis, starting with the 2021 Annual Report and Accounts, including a summary of the methodology, scenarios and core assumptions used.

Martin continued: “Our focus now turns to ensuring it delivers on these commitments. HSBC must ensure that its coal phase-out policy, to be published before the end of the year, includes a clear commitment to stop financing coal developers and top coal companies and to ask its clients to publish their own coal-phase out plans by 2023 at the latest.”

In a statement from HSBC, the bank acknowledged that “the expansion of coal-fired power is incompatible with the goals of the Paris Agreement”.

The resolution renders HSBC as the first mainstream bank to take such a stance on negative emissions technologies.