HSBC 'duping public' after helping raise £37bn for companies investing in new oil and gas fields

By ITV News Business and Economics Editor Joel Hills and The Bureau of Investigative Journalism's Josephine Moulds

The world must decarbonise. Progress has been made but not enough. 

The risks posed by climate change dominate the World Economic Forum’s Global Risks Report this year.

Last month, representatives from nearly 200 countries agreed to begin reducing global consumption of fossil fuels, signalling the beginning of the end of the oil age. 

But almost all of the energy companies, whose executives have assembled on the snowy slopes of Davos, plan to ramp up oil and gas production in the next few years.

And, thus far, the international banks, who are also here in force, appear willing to help them raise the money they need.

In December 2022, HSBC published a new energy policy, which contained a bold pledge: to end funding for new oil and gas fields. 

The text seemed unambiguous. HSBC would “no longer provide upstream finance (through lending or capital markets) for the specific purposes of new oil and gas fields and related infrastructure whose primary use is in conjunction with new fields."

The bank said the decision had been made after "consultation with leading scientific and international bodies" and was based on the belief that the transition to net zero could be “more than met by existing known [oil and gas] fields”.

The announcement was warmly welcomed by environmental groups who hoped other banks would follow suit. Generally speaking, they haven’t.

Analysis of Refinitiv data by The Bureau of Investigative Journalism (BIJ) found that in the year since HSBC’s policy was announced, the bank helped raise more than $47 billion (£37 billion) for companies that are expanding oil and gas production.

In the first half of 2023, HSBC - with other banks - helped Adnoc, the United Arab Emirates’ state oil and gas company, raise $3.2 billion (£2.5 billion) from selling shares in its gas and logistics business. 

Adnoc currently plans to expand oil production by 25% in the next four years.

The company’s new Hail and Ghasha project, which was signed-off last year, is designed to operate with net zero emissions.

But the gas it will produce, when consumed, will release 30 million tonnes of carbon dioxide every year - the equivalent of Denmark’s annual emissions. 

Last year, HSBC also helped raise $1.2 billion (£950 million) for Ades Holding, which provides oil and gas drilling rigs primarily to Saudi Aramco, the world’s biggest oil and gas producer. 

Saudi Aramco plans to grow oil production by 8% by 2027 and increase gas production by up to 60% by 2030.

Last year, HSBC was part of a group of banks that arranged loans worth $14.3 billion (£11 billion) for two companies which are building Liquified Natural Gas (LNG) terminals on the Southern Coast of the United States. 

The US boom in LNG projects has, in part, been triggered by Russia’s invasion of Ukraine in 2022.

The dash for new fossil fuel extraction from the vast Texan shale fields is understandable in the context of securing reliable, non-Russian, supplies of energy but it is also cause for concern.

“The potential scale of development on the Southern coast of the US and the timelines for its production are indeed worrying,” says Lord Nicholas Stern, a respected climate economist.

“Development of new facilities that will come on-stream, for the most part, 10 - 15 years from now is a mistake and is incompatible with the route to net zero because we have to move away very rapidly from fossil fuels,” he added.

HSBC’s energy policy applies at a project level but not at a corporate level. If it did, the bank would probably have to exit the oil and gas sector altogether. 

Put another way, HSBC is not directly financing new oil and gas fields but continues to help fund energy companies which are.

HSBC’s pledge may not be as tough, in practice, as it reads but it is far more exacting than the commitments made by other international lenders. 

The most recent report from BankTrack lists HSBC as 13th in its league table of fossil fuel financers: JP Morgan, Citi and Wells Fargo are the three biggest lenders.

But some of HSBC’s shareholders are unhappy.

“As an investor [in HSBC], we feel we’ve certainly been duped and we feel the public has been duped” says Andrew Harper, chief responsibility officer at Epworth, a wholly owned subsidiary of the Central Finance Board of the Methodist Church, which manages £1 billion on behalf of churches and charities. 

“When we first saw the pledge [to end funding for new oil and gas fields], we were hopeful. But we’ve been here before and we’ve been burned before.

"And so we were quickly skeptical and sought to investigate further what these commitments really meant. And what we found is they weren’t commitments at all. They were areas of manoeuvrability for the bank,” he added. 

HSBC declined ITV News' offer of an interview. 

We approached the HSBC Chief Operating Officer John Hinshaw, after a panel discussion at Davos but he wasn’t too keen to talk about the bank's lending practices. 

In a statement, HSBC said: “We are committed to financing actions that will decarbonise today’s fossil fuel based energy system while scaling the clean energy system of tomorrow”.

The statement added: “HSBC has stopped providing finance for the specific purposes of new oil and gas fields and related infrastructure, in line with what the science requires.

“It is wrong to suggest that our policies allow for financing that is at odds with a science based net zero transition.

“HSBC’s approach is to engage with our major oil and gas clients on their targets and transition plans, and to align our oil and gas financing portfolio to a 2030 net zero aligned financed emissions target”.

Have you heard our new podcast Talking Politics? Every week Tom, Robert and Anushka dig into the biggest issues dominating the political agenda…

In May 2021, the International Energy Agency (IEA) warned that the exploitation and development of new oil and gas fields needed to stop more or less immediately, in order to meet the goal of net zero emissions by 2050 and to limit global warming to 1.5 degrees.

The IEA’s analysis formed the foundation of the energy policy HSBC published in December 2022.

Executive Director of the IEA Fatih Birol was reluctant to comment about HSBC specifically when we spoke to him here at the World Economic Forum, but he warned that the behaviour of energy companies and banks needs to change.

“If we want to avert catastrophic extreme weather events, we need to reduce the use of oil, gas and coal substantially and substitute them with clean energy sources such solar or wind, or nuclear power,” Birol told ITV News.

In Birol’s view, the continued exploitation of new oil and gas fields runs two risks. 

“One is climate risk, because if those fields are developed, we have no chance whatsoever to meet our climate goals,” Birol said.

“The second is business risk. The world may not need additional amounts of oil and gas”.

Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know...