Resilience at risk? HSBC delays climate targets by 20 years
Global financial services provider, HSBC, is making headlines following an announcement to extend its goal to achieve net zero across its operations and supply chain by two decades.
Contributing factors
In the BCI Extreme Weather & Climate Change Report 2023 [1], it was noted that many countries had taken steps to address climate change, but the challenge of reducing emissions to the extent required to meet the Paris Agreement’s 2050 deadlines for carbon neutrality or net-zero emissions remained substantial. HSBC’s revision of its net emissions goal and news of total abandonment of similar goals from other organizations [2], suggest that, two years later, the challenge persists.
Supply chains
In the BCI Supply Chain Resilience Report 2024, natural disasters and adverse weather events - both heavily influenced by climate change - were identified as the third most common cause of supply chain disruptions, with 26.6% of respondents citing them [3].
Organizations rely on complex, global supply chains that involve carbon-intensive practices and transitioning these supply chains to more sustainable models take time and investment.
HSBC, as part of its commitment to sustainability, pledged to reduce its own emissions and support its clients in transitioning to a low-carbon economy, but recognised that the pace of decarbonisation across industries and supply chains was slower than anticipated, which is why it had to extend its net-zero emissions target from 2030 to 2050.
Government policies
HSBC highlighted slow-moving government policies as a significant contributing factor to the delay in their goal [4], which corresponds with findings from our BCI Extreme Weather & Climate Change Report 2023 [1], where buy-in from senior management was regarded vital, with the most efficient way to achieve this being through strict government policies and/or the introduction of regulations. Interestingly, the majority (19.2%) of respondents to this question in the report were from the banking and financial sector.
Without clear and strong policies in place, it's difficult for organizations to make the changes needed to reduce emissions. However, organizations can still align with ESG (Environmental, Social, and Governance) frameworks without government policies in place by taking proactive steps internally, driven by their own values, risk management strategies, and long-term goals. Integrating ESG frameworks into business continuity plans helps organizations to better understand the risks associated with climate change.
Further findings in the BCI Extreme Weather & Climate Change Report 2023 [1] revealed that while the number of organizations with an ESG plan remained the same, nearly half of those surveyed had ESG propositions to align with business continuity plans—an increase of 15 percentage points since 2022.
Reputational damage
Being environmentally conscious isn't just the right thing to do; it also brings tangible business benefits. Consumers are increasingly attracted to brands that reflect their values, particularly when it comes to sustainability. However, some organizations pretend to be eco-friendly just for the image, also known as ‘greenwashing,’ which can lead to distrust among stakeholders, believing actions are only giving lip service to the issue of climate-related risk, and damage to the organization’s reputation [1]. Reports from the EU on this subject revealed several cases of certain or alleged greenwashing in the financial sector [5].
HSBC has not only reaffirmed its commitment to reducing emissions and advancing environmental goals with a net-zero target by 2050, but has also adjusted its immediate goals, targeting a 40% reduction in emissions across its operations, business travel, and supply chain by 2030.
[1] BCI Extreme Weather & Climate Change Report 2023
[2] When Companies Reverse Their Climate Commitments | Yale Insights
[3] BCI Supply Chain Resilience Report 2024
[4] HSBC pushes back climate targets by 20 years and blames lag in government policy
[5] HSBC delays net zero climate targets by 20 years - BBC News
HSBC sets out ambition to build a net zero economy
HSBC net zero goal delayed 20 years amid CEO bonus row
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About the author
Naz Karimi-Clarke
Content Manager, The BCI
