The impact of capital market activities is now reflected in HSBC’s combined financed emissions targets for the oil and gas, and power and utilities sectors. Its facilitated emissions, included in its combined metrics, are weighted at 33%, in accordance with the PCAF Standard. This approach dampens volatility, apportions responsibility between underwriters and asset owners, and allows for flexibility in deploying on and off-balance sheet financing in line with clients’ needs.
For facilitated emissions, HSBC considered all capital market transactions in scope for the year of analysis. These included debt and equity capital markets, and syndicated loans.
To further reduce the inherent volatility in facilitated emissions, HSBC applies a three-year moving average across transactions for its target metric, building up from 2019 data. This means that transactions facilitated in 2028 and 2029 will still have an impact on the 2030 progress number and will need to be taken into consideration as HSBC manages progress towards its target. HSBC aims to achieve its target in 2030 notwithstanding the application of a three-year average.
Oil and gas: HSBC has set a target to reduce absolute on-balance sheet financed emissions and facilitated emissions for its oil and gas portfolio by 34% by 2030 relative to a 2019 baseline. This target is unchanged with the inclusion of facilitated emissions.
Power and utilities: HSBC has set a target to reduce the financed emissions intensity of its on-balance sheet and facilitated power and utilities portfolio to 138 tCO2 e/GWh by 2030. This target is unchanged with the inclusion of facilitated emissions (HSBC 2023).
Read more on HSBC’s net-zero targets here.
This case study was originally published in the Net-Zero Banking Alliance’s Target Setting for Capital Markets Activities report (October 2024).
Disclaimer: NZBA shares case studies to promote member banks’ awareness of new approaches, tools, products, services, and transactions related to financing the transition to net zero. Featuring a case study naming a particular bank does not represent an endorsement of all actions from that bank.