Schroders and Edentree haul HSBC over the coals

Investors press UK bank to drop financing for the fossil fuel



Fund managers Schroders, Edentree and Hermes EOS are among those demanding that HSBC ceases to finance coal power plants anywhere in the world.

The groups wrote a letter to the bank on Wednesday in a co-ordinated engagement approach with investor lobbying group Shareaction.

“We expect that financing new coal-fired power will prove to be highly risky, given the increasing competitiveness of renewables, and is incompatible with the goals of the Paris Agreement,” explained Roland Bosch, associate director at Hermes EOS.

“We want to see the bank evolve its policy to rule out all investment in coal and instead to focus on financing low-carbon energy across emerging markets.”

The bank was heavily criticised last year, when it decided to fund six new coal power plants in Indonesia and Vietnam, despite publicly claiming to have aligned its banking policy with the Paris Climate Agreement. At the time, the bank said that Bangladesh, Indonesia and Vietnam were the exception to this commitment.

On Wednesday, the fund management groups said it was time that the bank prohibited the “general corporate financing, underwriting and advisory services” to companies who remain reliant on coal.

“Expansion of coal infrastructure anywhere in the world is incompatible with the Paris Agreement, which HSBC has publicly supported,” they wrote. “There are substantial stranded asset risks facing the entire coal sector. Coal power is not a solution but an obstacle to economic development.”

In a media statement, published separately, Sonia Hierzig, senior projects manager at Shareaction, went further.

“Coal’s time is up. The time for forceful investor action on climate change is now,” she said.

“Whether targeted at high-carbon companies or at the financial institutions keeping them alive, investor engagement is working. It is time HSBC listened to its shareholders and faced the facts.”

Esmé van Herwijnen, a responsible investment analyst and climate change lead at Edentree, added: “We support urgent moves that lead to HSBC strengthening its policy on new coal investments.

“Alongside some of its peers such as Barclays and ING, we believe the time has come for HSBC to institute a global coal exclusion policy that makes a firm commitment to end the financing of coal reliant projects within a clearly defined time frame.”

Responding to the letter, HSBC defended its position, but stood its ground on excluding Bangladesh, Indonesia and Vietnam from its coal power financing ban.

Daniel Klier, global head of sustainable finance at HSBC, said: “HSBC has stopped financing new coal-fired power in all countries around the world apart from Bangladesh, Indonesia and Vietnam.

“A targeted and time-limited exception applies to these three countries until 2023 in order to appropriately balance local humanitarian needs with the need to transition to a low-carbon economy, but only if independent analysis confirms that there is no reasonable alternative to coal and any new plant complies with the highest efficiency standards.”


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