HSBC Scales Back Net Zero Plans by 20 Years: A Climate Setback or Realistic Strategy?

HSBC, Europe’s largest bank, has taken another step toward achieving its net zero goals. The bank set a new interim target to reduce emissions from its financed activities, aiming for net zero by 2050. That’s 20 years later than the bank’s first net zero goal. But is it making real progress—or just delaying action?

Banking on Change: HSBC’s Net Zero Shift

Originally, HSBC pledged in 2020 to achieve net-zero emissions in its operations by 2030. In its latest annual report, the bank said it was reducing emissions in its supply chain more slowly than expected.

• HSBC now expects only a 40% reduction in emissions by 2030, requiring heavy reliance on carbon offsets to bridge the gap.

HSBC said,

“As such, we have revisited our ambition, taking into account the latest best practice on carbon offsets. We are now focused on achieving net zero in our operations, travel, and supply chain by 2050.”

Also, HSBC will review its 2030 targets for emissions from its financing activities. Results from this review are expected later this year.

Challenges in Meeting Climate Goals 

HSBC made its decision based on several factors it couldn’t control. These include new technology, demand for sustainable solutions, and policy changes. Julian Wentzel, HSBC’s new Chief Sustainability Officer, said the bank needed a “more measured approach.” This is because clients face real challenges when moving to lower-carbon operations.

The bank also highlighted that its original plan relied on the ability to use carbon credits to offset supply chain emissions. Recent guidance from the Science Based Targets Initiative (SBTi) advised against using offsets. As a result, HSBC changed its strategy.

The European bank has dropped its plan to start a carbon credits trading desk. This decision reflects a larger trend. Many big companies are reducing their use of carbon offsets. Instead, they are concentrating on cutting emissions directly.

• SEE MORE: HSBC Drops Carbon Credit Trading Amid Voluntary Carbon Market’s $1B Decline

Companies like Google, Delta Air Lines, and EasyJet are rethinking their carbon credit use. They worry about the integrity of the credits they buy to compensate for their carbon pollution. Some offsets may be issued too much and don’t provide real climate benefits.

HSBC’s decision comes after Shell, which just revealed plans to sell most of its nature-based carbon projects. Other banks, including Bank of America, have also been cautious about engaging in the carbon market due to its lack of liquidity and declining participation.

Following the Leaders or Falling Behind?

HSBC has stepped back from carbon credit trading, but it still supports climate finance. The bank has launched several initiatives to support low-carbon technologies and businesses. 

In July, HSBC launched the HSBC Infrastructure Finance (HIF) unit. This unit aims to finance and advise on infrastructure projects for the low-carbon transition. But just four months later, this unit stopped working. This showed the difficulties in managing large-scale climate finance programs.

HSBC has also invested in key climate technologies. The bank promised $1 billion last year. This money will boost progress in:

• Carbon dioxide removal
• EV charging
• Battery storage
• Sustainable agriculture
• Carbon capture solutions

HSBC has also invested $100 million in Bill Gates’ Breakthrough Energy Catalyst Fund. This fund backs green projects and helps scale climate innovations.

In another strategic move, HSBC partnered with Google Cloud to back companies developing climate-focused technologies. Through the Google Cloud Ready-Sustainability (GCR-Sustainability) program, HSBC provides financial support to businesses working on carbon reduction, supply chain sustainability, and ESG data management.

Climate Critics Push Back

HSBC’s move has sparked backlash from environmental groups. Reclaim Finance, a climate advocacy group, said the delay hurts the fight against climate change. Christophe Etienne from Reclaim Finance noted that:

“HSBC has opted to weaken its climate target rather than showing the ambition needed to drive the economy toward net zero.”

Joanna Warrington of Fossil Free London was even more direct. She remarked that HSBC is just putting its feet up and watching the world burn, rather than owning its responsibility for the climate crisis.

Critics also noted that HSBC has played a major role in financing fossil fuel projects over the years. The chart above shows that the bank is among the top 12 banks that financed fossil fuels globally. 

Opponents say moving the net-zero deadline to 2050 goes against their earlier promise. This promise was to align their financial activities with the Paris Agreement’s goals.

The Bigger Banking Picture 

The announcement comes amid a broader retreat from climate commitments by major banks. Many U.S. banks, like Morgan Stanley, Citigroup, and Bank of America, have lowered their emissions goals or left the UN-supported Net-Zero Banking Alliance (NZBA). HSBC is still part of NZBA, but Elhedery did not promise to stay involved when asked by reporters.

• RELATED: Morgan Stanley, Citi and Bank of America Exit Net-Zero Alliance: What’s Next for Sustainable Finance?

Meanwhile, the Net-Zero Asset Owner Alliance mandates members to disclose financed emissions. These are GHG emissions attributed to financial institutions through their lending and investment activities.

In 2021, emissions peaked at 278 million tons but fell to 254 million tons by 2023, despite growing membership. This decline reflects shifts toward sustainable investments. By 2023, alliance members committed $555 billion to climate solutions, up $175 billion from 2022. 

Key investment areas include bonds ($148 billion), real estate ($132 billion), equities ($99 billion), and infrastructure ($75 billion). Of 81 members with mid-term goals, 80 set climate investment targets, reinforcing the alliance’s push for net-zero progress through portfolio adjustments and sustainable financing.

Looking Ahead: Will HSBC Step Up or Step Back?

Despite the climate policy revision, HSBC reported strong financial results, with pre-tax profits rising 6.6% to $32.3 billion in 2024. The bank is cutting costs to save $1.5 billion by 2026. 

HSBC maintains that it remains committed to net zero by 2050. However, its revised strategy raises questions about the role of banks in climate action. The institution claims that policy and market factors slow the transition. However, critics argue that financial leaders should lead the decarbonization effort, not just follow it.

With a review of its financed emissions targets set for later in the year, the banking sector will be watching closely to see whether HSBC introduces stronger policies—or continues to take a step back from its climate responsibilities.

• READ MORE: First the Americans, Now the Canadians: What Banks Are Making an Exodus from NZBA?

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