HSBC is facing a shareholder resolution filed in co-ordination with 117 shareholders, including Man Group, Sarasin & Partners and Amundi, targeting the bank's substantial exposure to fossil fuel assets and its compliance with the Paris Climate goals.
The investors, which together represent $2.4trn in AuM, are calling on HSBC to publish a strategy and targets to reduce its exposure to fossil fuel assets, starting with coal, on a timeline consistent with the Paris climate goals.
It follows a four-year engagement campaign with the bank, most recently including the March 2020 letter, signed by the likes of Hermes, Schroders and Edentree, urging HSBC to restrict its financing of the coal industry.
HSBC is Europe's second largest financier of fossil fuels, after Barclays, according to the Rainforest Action Network."
HSBC is Europe's second largest financier of fossil fuels, after Barclays, according to the Rainforest Action Network (RAN), which found the bank had provided $87bn to some of the world's largest fossil fuel companies since the signing of the Paris Agreement.
In October 2020, HSBC announced its ambition to be a net zero bank by 2050 at the latest, but faced criticism for not outlining plans to reduce funding for fossil fuels, in particular coal, which has risen each year since 2016.
In the four months leading up to its announcement, the bank invested an additional $1.8bn in fossil fuel companies, according to ShareAction analysis, including those constructing new infrastructure for coal and tar sands.
If the latest shareholder resolution receives more than 75% of the votes at HSBC's AGM in April 2021, it would require the bank to publish a strategy and short-, medium- and long-term targets to reduce its exposure to fossil fuel assets on a timeline aligned with the goals of the Paris agreement.
The resolution also encourages HSBC to consider the social dimension of the transition to a low-carbon economy and to use climate scenarios that do not rely excessively on negative emissions technologies when developing its targets.
Co-head of responsible investment at Man Group Jason Mitchell said: "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 towards Paris-aligned commitments rather than mere ambitions.
"As shareholders supporting this resolution, we recognise the imperative and urgency for establishing targets and a timeline towards emissions reductions."
Head of stewardship at Sarasin & Partners Natasha Landell-Mills added: "In light of the urgency of the climate crisis, we have decided to co-file this Shareholder Resolution to seek a clear timetable for emission reductions from HSBC's financing activities.
"In the end, increasing financing for green activities only gets us halfway; the board must be clear on its intent to withdraw financing of harmful emissions.
"The sooner the board sets out its strategy for delivering this, the less disruptive the transition. And - above all - the greater the chances that HSBC helps to build, not destroy, our collective capital."
An HSBC spokesperson said: "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.
"We are a leader in sustainable finance and expect to provide between $750bn and $1trn in finance by 2030 to support our customers in all sectors to progressively decarbonise.
"As we work to set out the detail of our roadmap to net zero, we continue to positively engage with our customers, shareholders and ShareAction."
This article was first published by our sister title Investment Week