KUALA LUMPUR (April 9): The financial services industry undoubtedly has a critical role to play in the transition towards a more sustainable future, and will likely be a key determinant of whether the world succeeds at limiting global warming to a maximum of 1.5 degrees Celsius.

Towards this end, HSBC has made the commitment to reduce emissions in its entire portfolio of clients to net zero by 2050, said HSBC group co-chief executive Surendra Rosha, with the group also targeting to reduce its own carbon footprint to net zero by 2030.

“Ultimately, we want to get our portfolio of customers to net zero by 2050 in line with the goals of the Paris Agreement. We have committed to provide up to US$1 trillion of financing and investment by 2030 to aid the transition and sustainability journey.

“We have set these targets and I admit that they are ambitious, but they are necessary. Sustainability is not a ‘nice to have’ — it’s an imperative for us,” said Surendra in a recent interview with The Edge.

To this end, HSBC is targeting to provide up to US$1 trillion in sustainable financing and investment to support its customers in their transition to net zero, and the bank has so far provided US$126.7 billion in sustainable financing to date.

Of the total earmarked, HSBC Malaysia has allocated RM1 billion towards green and sustainable financing.

The bank has also outlined its targets to reduce its baseline financed emissions, namely 35% reduction for its oil and gas (O&G) portfolio and a 75% reduction in its power and utilities portfolio. These targets are measured against levels reported in 2019.

Surendra pointed out, however, that these targets can only be achieved through coordination with its clients to address specific issues and needs of each business to meet their transition targets.

“We want to sit with our customers and work with them in their transition to lower carbon emissions. This is a multi-year journey — it’s almost a generational change in the way the industry is run.

“Our role is to help our clients with financing and connect them with capital or pools of capital that want to invest in this transition journey,” he explained.

In Malaysia, the bank has been involved in several sustainability sukuk issuances, including the government’s US$800 million 10-year sustainability sukuk and US$500 million 30-year sukuk, and Yinson Holdings Bhd’s RM1 billion five-year sustainability-linked sukuk wakalah.

HSBC had also provided Guan Chong Cocoa Manufacturer Sdn Bhd with a green trade financing facility — the first ever green trade financing facility for sustainable cocoa sourcing in the country.

Surendra emphasised that HSBC is not the only financial services provider doing this, as this shift towards better sustainability is an industry-wide movement, driven by societal demand, especially as the effects of climate change now is more palpable than ever.

Asked what HSBC’s strategy is in reducing its portfolio emissions in Malaysia, he said that the bank will be building these initiatives over time, adding that there is no single fixed strategy that could be employed across different jurisdictions to address emissions.

“How we offset in Malaysia would be different from how we offset in Singapore or Thailand or Indonesia. We can’t have one large solution -- we need multiple targeted solutions which work at the micro level,” he said.

He said there will need to be some form of offsets, although this is still taking shape currently.

The bank will be publishing its Climate Transition Plan in 2023, which will highlight its commitment to the phasing down of fossil fuel financing, in line with the requirements to limit the global temperature rise to 1.5 degrees Celsius.