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The backlash against corporate environmentalism may have its roots in the US, but its tendrils have started creeping across the Atlantic. As a result, some financial companies that previously seemed keen to tackle social problems look to be changing tack.
The Net-Zero Banking Alliance — an alliance of lenders nominally committed to fighting climate change — is debating whether to ditch a key pledge, and several companies including HSBC, Standard Chartered and Barclays have been pruning or restructuring their sustainability teams.
HSBC provides some of the starkest examples of the change in tone. Last month it pushed back its target date for eliminating carbon emissions from its own operations by 20 years, and said it would review the way it measures emissions caused by the loans it makes to clients.
Even targets founded on the best intentions can prove more complicated than expected. But the company is also shifting the way it talks about its priorities.
Shortly after Georges Elhedery took charge as chief executive last year, the bank’s chief sustainability officer — a trained climate scientist — was dropped from the group executive committee and then replaced by a career banker. Its latest annual report shows several changes in emphasis from using sustainability policies to limit “unacceptable impacts” on the environment to using them to manage business risk.
In a note on its asset management arm, it removed references to restricting investments in thermal coal and other environmentally damaging sectors. Overall, mentions of climate-related terms such as “sustainable finance” and “net zero” in HSBC’s annual report tumbled, according to data from Alphasense.
For anyone who subscribes to the classic view that a company’s job is to serve shareholders, this might be a good thing. If environmental commitments are assumed to be incremental costs, it makes economic sense to scale back when Donald Trump’s election victory has given its large US rivals a reprieve from similar commitments.
It could also help limit legal risks, given US states and regulators have been clamping down on the use of “non-pecuniary” factors in investing. HSBC already walks a fine geopolitical tightrope between the US and China — it is sensible not to draw extra attention from US authorities for being perceived as “too woke”.
HSBC, for its part, insists it still cares and is simply trying to be more agile. Turning down the volume on climate may be an unintended consequence. But if some big European banks appear to waver in their climate commitments, others will surely follow suit. Peer pressure is a powerful force, but one that works in both directions.
nicholas.megaw@ft.com
