Anger as HSBC ‘bulldozes’ its coal policy with billion-dollar Glencore deal

HSBC appears to have broken its own green pledge by helping raise $1bn for the mining giant Glencore, stoking anger from customers and investors.

Following pressure from climate-conscious investors, HSBC promised in December 2021 to stop funding companies that were increasing coal production “as soon as possible”.

Yet the Bureau of Investigative Journalism (TBIJ) has found that in May 2023 the bank helped raise $1bn for Glencore, which had been ramping up coal production for the previous two years.

As well as the hugely polluting Tweefontein mine in South Africa, the company runs the notorious Cerrejón mine in Colombia, the site of a litany of human rights abuses and environmental harms.

Anders Schelde, chief investment officer at AkademikerPension, a Danish pension fund that invests in HSBC, said he took the alleged breach “very seriously”.

“We do not believe there is room for backtracking as it would put HSBC’s credibility on the line,” he said.

TBIJ analysed data from the climate-focused bank switching platform bank.green, which compared banks’ lending with their public commitments around funding coal companies. HSBC, Barclays and Santander all appeared to have broken their pledges in 2023. Lloyds and NatWest appeared to have stuck more closely to their commitments.

“This is a really shocking finding and it just goes to demonstrate how there is such a lack of accountability even within HSBC itself,” said Zahra Hdidou, senior climate and resilience advisor at ActionAid, a non-profit organisation and high-profile HSBC customer.

“Despite its own ‘green’ rhetoric and what they would like the public to see and think about their ethics, HSBC is clearly falling short, neglecting its responsibility to the planet while keeping its customers in the dark about the true impact of its financing.”

HSBC is one of many banks around the world to have rolled back its climate pledges in recent months. It has abandoned certain emissions targets, introduced exceptions to its coal policy and dropped the chief sustainability officer role from its executive board.

AkademikerPension was part of a group of investors that pushed HSBC to strengthen its climate commitments and Schelde said, “we expect these to be upheld in practice”. They are now calling for the bank to reaffirm and implement its climate pledges.

Another member of that group is Epworth Investment Management, which is both a customer of HSBC and investor in its shares and bonds. Its deputy chief executive Andrew Harper said: “If these reports are accurate, then HSBC hasn’t just bent its coal policy – it has bulldozed through it.” He said the deal with Glencore “goes against both the spirit and the letter of HSBC's policy”, adding: “This isn’t a grey area. It’s a clear line being crossed.”

Responding to TBIJ’s findings, HSBC said: “We follow a clear set of sustainability risk policies which support our ambition to align the financed emissions in our portfolio to net zero by 2050. We do not comment on client relationships.”

That was not good enough for Harper, who said: “Silence and vague statements about sustainability won't cut it. Investors will not sit back while climate pledges are quietly undermined. We have tools – engagement, votes and capital – and we will use them to hold institutions to account.”

The dirtiest fuel

Coal is the world’s dirtiest fossil fuel. It is the single biggest cause of global temperature rise and a major source of deadly air, land and water pollution. Nowhere is that more evident than at Glencore’s vast Cerrejón coal mine in Colombia, which is almost six times the size of Manchester.

This mine has become emblematic of the way multinational companies operate with impunity in developing countries. A UN special rapporteur said that people living nearby suffered from headaches, breathing difficulties, burning eyes and blurred vision due to the open-pit mining being carried out round the clock, seven days a week.

The mine has not only diverted streams that local communities rely on for water, but also pours contaminated water back into them.

Grismaldo, an indigenous Wayúu man in his 20s, said that they used to use water from the Ranchería river – which passes through the mine site – for washing and bathing. “Everyone here used to benefit. It changed a lot because of the mine. Some animals that drank from these waters became ill or died for no apparent reason.”

Colombian courts have recognised the environmental and human rights abuses associated with Cerrejón in several rulings. Despite this, Glencore – which bought out the mine’s previous co-owners in 2022 – intends to extract coal from the site until at least 2034.

Glencore told TBIJ: “We aim to avoid harm to people from our activities, respect human rights, [and] contribute to the social and economic development of people and society more widely,” adding that it follows best business practices in line with international standards. The company said its activities do not negatively affect the Ranchería river’s water quality or volumes and that the flow rate increases as it passes through the mine.

Two years ago at the Cop climate talks, all countries agreed it was essential to accelerate the transition from coal power to renewables in order to avert catastrophic climate change. HSBC itself highlights “the importance of coal transition to the achievement of global climate ambitions” in its coal phase-out policy.

The bank, however, helped raise nearly $17bn for coal companies in 2023. Other deals that appear to have breached its pledge not to fund thermal coal expansion were with POSCO and Sumitomo, which were both building new coal-fired power stations in 2023, according to the Global Coal Exit List (GCEL) compiled by campaign group Urgewald.

TBIJ’s analysis of the bank.green data shows other UK high street banks may also have broken their climate commitments. Santander’s role in a $500m loan for PNM Resources – a US energy company that generates 13% of its power by burning coal, according to GCEL – appears to have breached the bank’s pledge not to take on new clients with coal-fired power plants.

Last year TBIJ reported that Barclays helped raise nearly $2bn in 2023 for companies running highly polluting coal-fired power plants in the US, an apparent breach of its policy to stop funding companies that make more than half their revenues from coal.

A spokesperson for Santander said they were confident the bank complies with its policies and that “all our lending decisions are subject to a strict policy framework”. Barclays said its policy only prohibits financing for companies that make more than 50% of revenues specifically from generating coal-fired power, and that TBIJ’s calculations did not account for these companies’ revenues from transmitting and distributing that power.

PNM said it was on track to reach 75% carbon-free generation in 2026 and that it would exit its final coal-fired power plant when its contract expires in 2031. POSCO and Sumitomo did not respond to TBIJ’s request for comment.

Additional reporting by César Molinares Dueñas