HSBC Holdings Plc postponed its deadline by 20 years to 2050 and is reviewing other objectives, to cut emission, reported Bloomberg.
The lender attributed this delay to a “lag” in government policy measures, as per Independent. HSBC explained, “As a bank, our ability to finance our customers’ transition and, in turn, progress toward and meet our targets, relies on decarbonisation solutions scaling across sectors, alongside growing demand from our customers for capital to transition their business models,” reported Independent.
“We are limited by, and cannot on our own overcome, the present lag in policy measures and the overall slower pace of the transition. These factors put our customers’ and our own, net zero ambitions at risk,” it added.
HSBC shared that several external factors affected its ability to meet its 2030 financed emissions target and its overall 2050 net zero goal. These include technological advancements, diversification of the energy mix, market demand for climate solutions, changing customer preferences and government leadership.
According to the bank, it plans to meet the revised target by focusing on supporting its clients’ net-zero transitions through financing and decarbonisation technologies. HSBC intends to phase out fossil fuel financing and will prioritise clients with credible transition plans. To meet its long-term goals, the bank will rely on carbon offsets, aiming for a 40% emissions reduction by 2030, according to The Guardian. Despite the delay, HSBC remains committed to aligning its strategies with global net-zero targets and helping its clients decarbonise, though challenges remain in tracking emissions from its client base.
Diluting environmental goals
In addition to the net-zero delay, HSBC is also planning to dilute environmental targets in Elhedery’s new pay package. This includes a long-term incentive plan (LTI) worth up to £9m, or 600% of the his base salary, reported The Guardian. It is part of a wider pay proposal that will give Elhedery a chance to earn up to £15m a year, a 43% increase from his current potential pay of up to £10.5m.
As part of the new pay plan, the environmental portion of the LTI, a bonus that will cover performance from 2025-2027, has been reduced to 20% from 25%. HSBC told The Guardian that this would “ensure a greater proportion of the LTI is aligned to value creation while supporting our ESG (environmental, sustainability and governance) ambitions”.
The LTI will now focus only on the bank's efforts to cut its own emissions, including those that were delayed, because it is difficult for the bank to track the emissions progress of its clients.
