HSBC Ends New Oil and Gas Project Funding
After its greenwashing fiasco earlier this year, HSBC has now declared that it will stop financing new oil and gas projects in order to lower its greenhouse gas emissions and stop adding to climate change. This has come with great applause from environmental groups who have specified that it sends a strong signal to the giants of the fossil fuel world that further investment in their field is diminishing.
ShareAction is hoping that other banks will start to do the same and expects no new oil and gas funding will become the minimum standard in the banking sector. HSBC, as Europe’s largest bank, came under heavy criticism when ShareAction revealed that it had funded around £6.4 billion into new oil and gas projects in 2021, despite its 2020 pledge to become net zero. Lloyds Bank announced the same thing back in October and, as Britain’s largest bank, sends a clear message to others that this is the direction investment is going.
HSBC previously announced plenty of green pledges and investment of up to £806 billion in green projects to reach its net zero target. While still investing in new oil and gas projects, this was widely regarded as hypocritical. As such, following consultation with scientific groups, HSBC has been advised that current oil and gas projects will easily meet any demand that will be seen in 2050 under the UK’s Net Zero Strategy.
Banks have been historically slow to adopt any climate change policies, especially when it comes to halting the financing of the oil and gas industry. Dragging their heels, banks have argued that they need to gradually phase out financing in this sector in order to allow for a net zero transition by 2050. This has become a more agreed upon view since the Russian invasion of Ukraine, which exacerbated a global energy crisis through a lack of Russian gas. Funding in this sector, however, needs to diminish in order for banks to reduce their emissions and ties to fossil fuels.
The 2015 Paris Agreement was a massive milestone in the fight against climate change, where 197 countries committed to keeping global temperatures below a 1.5°C increase to mitigate the worst effects that climate change would have. Actions like banks stopping funding for new oil and gas projects is just one of the ways in which we can achieve this goal. Other businesses need to start doing what they can, from first becoming carbon neutral to then making our way towards net zero.
The UK Government announced new oil and gas licences in the North Sea, which goes against climate warnings and will do nothing to help the energy crisis. The government is acting in a different direction to banks, offering a way for oil and gas giants to not commit to renewable technology. Most groups don’t invest in renewables and even those that do invest more heavily in oil and gas production. With the trend becoming that banks aren’t investing in this area anymore, these oil and gas giants will have to start changing their tune, both for the sake of public opinion and for the future of their businesses.