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HSBC Unveils Its Transition Plan

HSBC Holdings Plc has published the first so-called transition plan in its history.

HSBC Unveils Its Transition Plan

The mentioned action strategy of the financial institution is aimed at starting the implementation of measures to slash emissions from the books of the lender. The banking giant has decided to begin the transformation of its business concept, taking into account the priority attention to efforts that contribute to environmental protection during a period of similar changes throughout the industry. HSBC’s measures will be part of a wide-ranging action focused on sustainability. The transformation of the banking sector in the appropriate direction is at an early stage, but it is already obvious that this process will have long-term consequences and a huge impact.

HSBC’s transition plan, which was unveiled on Thursday, January 25, and is a 101-page document, does not include any new climate commitments. In this case, the financial institution details its planned forces to lower emissions and expectations regarding the main changes that are necessary for the successful decarbonization of high-emission industries supported by the lender.

The bank’s chief executive Officer, Noel Quinn, says that the radical change in the shape of many spheres of activity required by net zero cannot be achieved by any one organization or part of the financial system as part of a separate effort. Besides, he noted that HSBC’s ability to become a net zero bank by 2050 depends on the pace of decarbonization in the real sector of the economy. Also in this context, Noel Quinn stated the importance of transforming the business models of financial institution clients within the framework of focusing on achieving the so-called climate goals.

Currently, the banking sector and asset managers are facing a kind of pressure that is aimed at eliminating risks to the environment. In this case, it is of particular importance to ensure security in terms of such a parameter as the impact on the climate when allocating capital. The heads of financial institutions are increasingly making lists of caveats and conditions. In this case, tasks such as ensuring the profitability of the process and the necessary support from customers, regulators, and governments are envisaged.

The official statement of HSBC focuses on the fact that the effectiveness of the financial institution’s efforts in the context of climate goals relies on the decarbonization process in the real sector of the economy from both the supply and demand sides at the necessary pace.

Currently, the financial industry is increasingly transforming its business strategies towards an image of the future of this sphere of activity, in which customers with high carbon emissions will be identified as too risky to keep on the books. In some cases, such a transformation occurs by revamping investment and corporate banking units to create teams specializing in servicing transitional consumers. Relevant decisions have been made by major financial industry players such as Barclays Plc., BNP Paribas SA, and Citigroup Inc.

Noel Quinn says that HSBC sees significant commercial opportunities in helping to finance a new economy, transition to a new type of economic growth and create a safer and more resilient planet. This financial institution is one of the first major banks to publish a transition plan. Noel Quinn noted that the mentioned plan is a key mechanism for stimulating decarbonization. According to him, the lender will update its concept of transition and adjust the level of relevant ambitions as science and methodologies for measuring progress develop.

As we have reported earlier, HSBC Completes Sale of Its French Retail Banking Business.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.