Standard Chartered plans to publish a comprehensive plan in October to press clients to transition to net zero carbon emissions, by broadening its client exclusion policy to cover non-coal fossil fuel and other emission-intensive industries, said CEO Bill Winters.
The bank hopes its clients will be able to slash their carbon dioxide emissions by 45 per cent to 50 per cent by 2030, and achieve net zero emission by 2050 – the time frame for global warming to limited to well below two degrees Celsius under the 2015 Paris agreement.
Net zero, also known as carbon neutrality, is achieved when emissions are offset by deploying facilities to capture and store the same amount from the atmosphere.
“We are working very hard on it now and will probably publish something around October,” he told the Post in an exclusive interview, adding it will be put to vote by shareholders during the annual shareholders’ meeting next May. “We are working with a couple of external consultants to map it out sector by sector, client by client.”
Standard Chartered CEO Bill Winters. Photo: Xiaomei Chen
The bank has already dropped a few coal sector clients which refused to work with it to meet its net zero transition targets aimed to help fight climate change and plans to drop more as the pressure becomes more acute.
Amid rising global pressure to phase down coal combustion, Standard Chartered four years ago announced to stop providing financing to new coal projects. Coal combustion is the biggest source of carbon dioxide emission, which causes the so-called greenhouse effect and global warming.
Rival HSBC is also pushing ahead with such initiatives, pledging to bring its customers in line with the Paris goal of net zero emissions by 2050.
“Our mission is to help our clients effect their own transition, which means we are going to be lending to coal companies and other emitters for some time, and that is ok, as long as we are going in the right direction at the right pace,” Winters said.
Standard Chartered, which serves 60 markets across Asia, Africa and the Middle East, will also step up its lending, underwriting and advisory services to support coal sector clients’ renewable energy projects development, Winters said.
Its income from sustainable finance in the year’s first half grew 55 per cent year on year, the bank said, without disclosing the amount.
It has a target to facilitate US$35 billion of project financing, mergers and acquisitions advisory, debt structuring, transaction banking and lending services for renewable energy projects in the five years to 2024.
Two years ago, it announced a tiered exclusion system under which existing clients were asked to gradually wind down their coal operations over a decade, or face service suspension.
Those sourcing 10 per cent or more of their operating profit from coal by 2030 will not be served. The bank this year further tightened the threshold to 5 per cent.
Clients have also been asked to publicly report their greenhouse gas emissions annually adhering to internationally-recognised methodologies.
Winters rejected criticism from some non-government organisations, which called for faster severing of ties with coal companies, saying their suggestion is counterproductive to their own objectives.
“If we don’t provide the financing to the point where they are no longer emitting, then they are not going invest in renewable energy and they will get coal financing from someone else,” he said.
A group of NGOs, including Urgewald and Climate Risk Horizon, called on the bank to accelerate its exclusion policy in May, saying its policy tightening this year meant it will only have to drop two clients in 2024, and a major effect on emission reduction will only be seen in 2027.
Meanwhile, Winters, who chairs the private sector-led initiative Taskforce on Scaling Voluntary Carbon Markets, which seeks to accelerate voluntary carbon trading by setting standards and governance mechanism, said Hong Kong can play an “extremely important part” in the global transition to net zero.
He said the city can host a trading platform for voluntary carbon credit purchases by mainland Chinese suppliers to developed markets who are under pressure to cut emissions across the entire supply chain.
“There is a compelling need for Chinese companies to buy carbon credits to deal with the very hard-to-abate emissions,” he said. “A natural place for it to be based is Hong Kong, [where] we can put in place a verification and an assessment process that is supportive of [such a] market.”