In an effort to reduce global greenhouse gas emissions, HSBC has announced it will no longer finance new oil and gas fields.
The largest financial institution in Europe claimed it made a choice after consulting with energy experts worldwide.
This follows the previous backlash against HSBC for backing oil and gas projects despite the bank’s claims to be environmentally conscious.
ShareAction, a non-profit that works to reduce investment in fossil fuels like oil and gas, has a spokesperson named Jeanne Martin who said, “HSBC’s announcement sends a strong signal to fossil fuel giants and governments that banks’ appetite for financing new oil and gas fields is diminishing.”
According to the charity, this action establishes “a new minimum level of ambition” for the banking industry, encouraging other institutions to follow suit.
By 2020, HSBC aims to invest and lend up to $1 trillion (£806bn) in green projects and achieve “net zero” in terms of greenhouse gas emissions.
ShareAction estimates the bank will invest $8.7bn (£6.4bn) in new oil and gas in 2021, which has drawn criticism from some quarters.
The bank stated in its updated energy policy that the decision was made “follow[ing] consultation with leading scientific and international bodies,” which determined that existing oil and gas fields would suffice to meet any demand in 2050 under a “net-zero” scenario.
To mitigate climate change’s worst effects, 197 countries pledged in the 2015 Paris Agreement to work toward keeping average global temperatures “well below” 1.5C.
The goal of net zero is something that experts say needs to be reached by the year 2050.
When it comes to pollution, how are countries doing in terms of “net zero”?
Lloyds Bank, the largest domestic bank in Britain, announced a similar decision in October, and now HSBC is following suit.
“It’s another nail in the coffin for fossil fuel expansion and a massive signal to other UK banks that the game is up on new oil and gas,” said Tony Burdon, chief executive of the climate finance campaign Make My Money Matter.
A new round of licensing for oil and gas production in the North Sea was announced by the UK government just months ago, but it is not yet clear if this is the start of a trend across the sector.
The United Kingdom continues to ignore climate change concerns by issuing new oil and gas licenses.
But HSBC “recognizes that fossil fuels, especially natural gas, have a role to play in the transition, even if that role will continue to shrink,” so it will keep investing in oil and gas fields.