HSBC Announces Carbon Reduction Targets for Oil & Gas, Power & utility Sectors
A Brief Summary
Global financial services and banking company HSBC announced carbon emission reduction targets for clients in Oil & Gas and Power & Utility sectors. The bank is initiating the next step to align its financing activities with the Paris Agreement goals and transition to net-zero by 2050.
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The bank said it set emission targets for clients in the Oil and Gas sector by 34% by 2030 and the Power and Utility sector by 75%. HSBC also said the targets set are in line with the International Energy Agency's requirement to bring down the global temperature rise to 1.5 degrees celsius.
"The targets are science-based and highlight to our customers the level of decarbonization we need to see across our portfolio by 2030," HSBC Group chief sustainability officer Celine Herweijer said.
The guidance from the Net Zero Banking Alliance has helped set the targets for reducing emissions. The Net Zero Banking Alliance is a group of 100 banks that extends its support to the U.N. goal of net zero emissions by 2050.
The bank said the target for the Oil and Gas sector was based on absolute emissions. Meanwhile, the target for the Power and utility sector was based on carbon intensity, which is a metric that calculates the amount of CO2 companies emit for a given amount of electricity generated.
The recent announcement from the bank draws criticism from environmental activists and climate scientists as they say if such a system continues, it will boost fossil fuel production volumes, making it difficult to align with the Paris Agreement. HSBC said the reason for choosing the intensity metric is because the electricity demand would grow when the world transitions to net-zero.
HSBC has plans to set targets for coal mining, aluminium, steel and transport sectors by the end of 2023.
Last year, the bank drafted a new policy to phase out thermal coal financing in the European Union and Organisation for Economic Co-operation and Development countries by 2030 and worldwide by 2040.
