Our energy policy to support net zero transition

We’re committed to supporting and financing the transition to a secure net zero future.

Our energy policy is informed by consultation with scientific and international bodies. It is also informed by analysis of a range of pathways that, if followed, would help limit global warming to 1.5°C. We review our policy annually to consider the latest outlooks from scientific and international bodies on updated pathways to net zero by 2050.

Together with our previously announced 2030 targets for the oil and gas and power and utilities sectors, the policy is an important mechanism for reducing the financed emissions of our portfolio of energy clients and helping to deliver decarbonisation in the real world.

The policy also emphasises our commitment to supporting clients who are taking an active role in the transition. We engage closely with them on their transition plans, helping to finance and invest in the technologies and infrastructure needed to succeed in the transition.

We plan to support our customers in their transition to net zero and a sustainable future, aligned with our previously announced ambition to provide $750 billion to $1 trillion in sustainable finance and investment by 2030.

The need for an orderly transition

The policy covers the broader energy system, including upstream oil and gas, oil and gas power generation, coal, hydrogen, renewables and hydropower, nuclear, biomass and waste to energy sectors.

It seeks to balance three objectives: driving down global greenhouse gas emissions, the need to enable an orderly transition that builds energy resilience in the longer term, and the need to support a just and affordable transition.

In line with the policy, we no longer provide new lending or capital markets finance for the specific purpose of projects pertaining to new oil and gas fields and related infrastructure when the primary use is in conjunction with new fields.

We provide finance or advisory services to energy sector clients at the corporate level, where clients’ transition plans are compatible with our 2030 portfolio-level targets and net zero by 2050 ambition.

The International Energy Agency’s 2023 Net Zero Roadmap report states that an orderly transition requires continued, though declining, financing and investment in fossil fuel supply to maintain the necessary output. It also states that sequencing the decline in supply investment with declining demand, and increasing clean energy investment, is vital to avoid damaging price spikes and support energy security.

We will therefore continue to provide finance to maintain supplies of oil and gas in line with current and future net zero-aligned declining global oil and gas demand, whilst accelerating our activities to support clean energy deployment.

The importance of client engagement

Engagement on transition plans is a vital part of our approach, to encourage and support clients to decarbonise and diversify their energy supply, production and business models. If a transition plan is not produced or, after repeated engagement, is not compatible with our targets and commitments, we will formally assess whether we continue to provide finance or advisory services for that client.

As part of this transition plan engagement, we look at future exploration and production plans relative to projected demand curves, as well as capital investment plans to scale clean energy and broader decarbonisation solutions. We engage with clients on emissions across scopes – including scope 3 – to help drive transition in their businesses and in the energy system at large.

The policy supports an accelerated phase down of fossil fuel sources with the highest emissions intensity and greatest local environmental risks, with direct financing restrictions for the most emissions-intensive oil assets, and environmentally and socially harmful energy activities.

The policy also recognises that oil and gas will follow different phase down curves in a 1.5°C pathway, with a steeper decline in the demand for oil. We take into account these projected demand curves in our evaluation of clients’ transition plans.

The policy also aims to help drive decarbonisation through the adoption of stringent methane mitigation standards and investment in carbon abatement technologies.

We aim to focus our efforts on areas where we can help drive meaningful change, whilst taking into account experience from policy implementation over time. Our approach to identifying transactions and clients in scope of our energy policy is therefore proportionate to risk and materiality.

Read our energy policy in full.

See our HSBC Net Zero Transition Plan chapter on “Using Policies to Drive Change” for further insight on our approach.