HSBC fund arm toughens thermal coal policy to curb climate change

HSBC Holdings Plc HSBA.L told Reuters on Thursday it will stop financing the expansion of thermal coal from funds it manages actively with immediate effect, marking an acceleration of a broader commitment it made last year.

Thermal coal, a cheap energy source used widely across Asian markets where many of HSBC's clients are based, is one of the fossil fuels most responsible for climate-damaging emissions.

The banking sector has been slow to commit to no longer financing the production of the fuel. Standard Chartered STAN.L, a competitor of HSBC in emerging markets, said earlier this year it would end all direct coal financing for clients by 2032.

HSBC said last December it would cut exposure to thermal coal financing, across all its businesses including asset management, by at least 25% by 2025 and 50% by 2030, though non-EU or non-OECD-based clients could be funded until a global phase-out by 2040.

In a new 10-point plan, HSBC Asset Management, which oversees around $600 billion in assets, said it would immediately stop investing in listings or primary debt issuance of any company engaged in thermal coal expansion.

HSBC estimates that there are more than 300 companies globally with more than 10% of revenues tied to the fuel. The Global Coal Exit List, which tracks finance firms' ties to the coal sector, said HSBC's fund arm exposure was $3.4 billion at end-November.

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