HSBC Earns Credit for Being First ‘Carbon Neutral’ Bank

HSBC Earns Credit for Being First ‘Carbon Neutral’ Bank

HSBC has announced its intention to be the first major bank to go “carbon neutral” in a program that may cost up to $7 million in the first year.

The bank -- one of the world's largest -- made the announcement on Monday, the opening day of the 10th Conference of the Parties of the UN Framework Convention on Climate Change.

HSBC's commitment to carbon neutrality -- which involves reducing energy use, buying green electricity and then offsetting the remaining carbon dioxide (CO2 ) emissions by investing in carbon credit or allowance projects -- is part of a package of environmental measures announced by the bank to help tackle climate change.

The package also includes a three-year, £650,000 partnership with Newcastle University and the University of East Anglia (UEA) called the “HSBC Partnership in Environmental Innovation” to research climate change, society's awareness of the issues, and to develop technologies to overcome some of the problems identified.

Speaking at the launch of the Climate Group in April 2004, when HSBC became a founder member of its Bank Working Group, Sir John Bond, HSBC group chairman, said: "HSBC has a deep and longstanding commitment to the environment, and it is our judgment that climate change represents the largest single environmental challenge this century. It will have an impact on all aspects of modern life. It is therefore a major issue for our customers and our staff, as well for every organization on the planet, no matter how large or how small."

HSBC's carbon management plan, which commits the bank to carbon neutrality globally, will be implemented in 2005 under the direct supervision of the bank's group chief executive, Stephen Green. Green says: "In 2003, HSBC's CO2 emissions from using electricity, natural gas, fuel oil and business travel were more than 550,000 tons. We need to act now to reduce our emissions.

"We are setting up a carbon management task force to determine the best way forward. At present, not all allowances and offsets that can be bought have the same environmental value, and as a matter of principle we will ensure that ours are of the highest credibility, and are genuinely incremental.

"We are also determined to make carbon neutrality as cost-effective as possible, and as we move towards better energy efficiency we expect the annual cost to the bank to fall from the $7 million it may cost us in the first year."

Steve Howard, chief executive of The Climate Group, said: "HSBC's decision sets a new benchmark for the financial sector. They will gain a deeper insight into the emerging low carbon economy and be exceptionally well placed to understand the needs of and opportunities for their clients."

The bank's move towards carbon neutrality is to ameliorate the direct impact it has on the environment, with its buildings, air travel, and so on. This complements the actions it is already taking to address the indirect impact it has on environmental and social issues arising when financing projects for customers.

For example, in 2003, HSBC adopted the Equator Principles. These are voluntary guidelines that direct the bank not to lend to projects where the borrower is unable or unwilling to comply with the Principles or the bank's own internal environmental and social policies, whichever carries the higher standard. HSBC is also developing a range of socially responsible investment funds.