HSBC has been criticised after it delayed key parts of its climate goals by 20 years, while watering down environmental targets in a new long-term bonus plan for its chief executive, Georges Elhedery, that could be worth up to 600% of his salary.
The London-headquartered lender said it was reviewing its net zero emissions policies and targets – which are split between its own operations and those of the clients it finances – after realising its clients and suppliers had “seen more challenges” in cutting their carbon footprint than expected.
HSBC had planned to hit net zero targets for its own operations – arguably a much easier goal than cutting the emissions of its loan portfolio and client base – by 2030. However, those plans, which were set in 2020, are being pushed out by two decades to 2050.
“Progress in reducing emissions in the … supply chain component is proving slower than we anticipated,” HSBC’s annual report said. “We currently expect a 40% emissions reduction across our operations, travel and supply chain by 2030 which would mean that we would need to rely heavily on carbon offsets to achieve net zero in our supply chain by 2030.
“As such, we have revisited our ambition, taking into account latest best practice on carbon offsets. We are now focused on achieving net zero in our operations, travel and supply chain by 2050.”
HSBC is also proposing to water down environmental targets in Elhedery’s new pay package, including a long-term incentive plan (LTI) worth up to £9m, or 600% of the his base salary. It is part of a wider pay proposal that will give Elhedery a chance to earn up to £15m a year, a 43% increase on his current potential pay of up to £10.5m.
The environmental portion of the LTI, a bonus that will cover performance from 2025-27, has been reduced to 20% from 25%. HSBC said this would “ensure a greater proportion of the LTI is aligned to value creation while supporting our ESG (environmental, sustainability and governance) ambitions”.
Meanwhile, the LTI will only be linked to progress made in cutting the bank’s own emissions – including those that have been delayed – given that tracking progress of its client base was “difficult”.
HSBC’s remuneration committee said in its annual report: “At this stage, financed emission targets remain difficult to include given challenges in the methodology, timeliness and frequency of reporting. This was recognised by the investors we spoke to as part of our policy engagement.
“We therefore decided to retain metrics on carbon reduction in our own emissions and sustainable finance and investment, given we cannot currently use financed emissions, which is a material metric in supporting our ESG ambitions.”
The pay proposals will be put to shareholders at its annual general meeting this spring.
HSBC’s climate target delay prompted criticism from a wide range of environmental campaigners. “HSBC is just putting its feet up and watching the world burn, rather than owning its responsibility for the climate crisis,” Joanna Warrington at Fossil Free London said.
“HSBC helped get us into this mess by financing the growth of fossil fuels which drive up emissions, so it has no right complaining that now it’s suddenly too hard to bring them down,” she added.
Zahra Hdidou, a senior climate and resilience adviser at ActionAid UK, urged HSBC to “abandon this disastrous delay and stop financing the fossil fuels and agribusiness corporations that are destroying the planet. The time for kicking the can down the road is over.”
HSBC announced the decision amid a climate backlash in the US, where the president, Donald Trump, has been encouraging a retreat from environmental policies in favour of support for oil and gas production. The shift has already prompted six of the largest banks in the US – Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs – to withdraw from the UN-sponsored net-zero banking alliance (NZBA) in recent weeks.
Elhedery said the bank remained committed to a wider net zero goal by 2050 but told journalists it was “reasonable that we take stock of where we are on that journey”. When asked whether he was committed to remaining a member of the NZBA, Elhedery confirmed only that HSBC was, indeed, a member.
HSBC confirmed the scale of its cost-cutting drive, with plans to cut $1.5bn (£1.2bn) from its annual costs by the end of 2026, including through an unconfirmed number of job losses across its 220,928 international workforce. Pre-tax profits for 2024 rose 6.6% to $32.3bn.
