On Tuesday, HSBC Holdings PLC (HSBC:NYSE) said that it will reduce its oil-and-gas financed emissions by 34% and power-and-utilities financed emissions by 75% by 2030, in line with its goal of net-zero greenhouse-gas emissions across its client portfolio by 2050.
The London-based company said that the goal is in line with an International Energy Agency emissions scenario that would limit global warming and, that it would work with clients to create their own climate plans.
However, the bank's targets excluded fossil-fuel financing from capital-markets activities such as helping companies issue stocks and bonds.
HSBC said it consulted industry standards before setting its targets, but they don't currently encompass emissions from capital-markets activities. It said it is working on developing efforts for those standards and will update its targets accordingly.
According to ShareAction, a U.K. nonprofit that organizes investor campaigns on ESG issues, HSBC's decision not to include capital markets activity in its new climate targets raises questions about the credibility of its net-zero strategy.
It says that the exclusion is concerning as 60% of HSBC's financing to the oil-and-gas exploration and production sector is in the form of capital markets underwriting.
QUARTERLY RESULTS & OUTLOOK
HSBC reported solid full-year results on Tuesday. Profit before tax was $2.7 billion, up 91.3% from $1.4 billion recorded in the prior-year quarter, reflecting growth in total operating income.
The reported quarter's results benefited from a rise in adjusted revenues and lower expenses. Another positive attribute was a decline in the adjusted change in expected credit losses and other credit impairment charges.
For 2021, pre-tax profit rose significantly from $8.8 billion recorded in the previous year to $18.9 billion. Adjusted operating expenses for full-year 2022 are projected to be in line with that reported in 2021 despite inflationary pressures.
According to Zacks Investment Research Newswire, the global low interest rate environment is expected to continue hurting HSBC's revenue growth to some extent.
Historically, HSBC's expenses have risen with interest rates, but management has promised to hold costs flat this year and increase between zero and 2% in 2023.
Moreover, the company's strong capital position, initiatives to strengthen digital capabilities, extensive network, and efforts to improve operating efficiency through business restructuring plans are expected to support financials.
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