HSBC, one of the world’s largest financial institutions, is deepening its commitment to sustainability by launching a new business unit—HSBC Infrastructure Finance (HIF). This unit, specifically designed to promote low-carbon finance, is set to focus on financing infrastructure projects and offering advisory services that support the global transition to a low-carbon economy. The launch comes alongside the bank’s ambitious pledge to allocate between $750 billion to $1 trillion in financing and investment towards sustainable projects by 2030.

A Key Player in Low-Carbon Transition

HSBC’s new Infrastructure Finance unit, led by former UK Member of Parliament Danny Alexander, reflects the bank’s growing focus on sustainability and its role in fostering a low-carbon future. With Alexander at the helm, HSBC aims to secure a prominent role in funding critical infrastructure projects globally and building partnerships with governments, private sector entities, and multilateral development banks.

HSBC is positioning itself as a leader in the green finance sector, emphasizing supporting projects that contribute to environmental, social, and governance (ESG) goals. By establishing HIF, the bank intends to accelerate its debt origination and distribution businesses, particularly in markets where infrastructure is crucial for a sustainable transition.

“We have a leading presence in regions where infrastructure needs to be developed and financed for a just transition to a low-carbon economy,” remarked Greg Guyett, CEO of Global Banking and Markets at HSBC. The bank’s commitment aligns with the UK government’s initiatives to build critical infrastructure while decarbonizing the economy, making it a crucial partner in the green transformation.

Danny Alexander, who brings extensive experience as Vice President of the Asian Infrastructure Investment Bank (AIIB), is set to play a vital role in HSBC’s strategy. His leadership will focus on building relationships with governments and institutions worldwide to advance sustainable infrastructure development. 

In his announcement as CEO of HIF, Alexander expressed his enthusiasm for leading this effort, noting the significance of infrastructure financing in achieving a low-carbon economy. His expertise in policy and strategy will be instrumental in advancing HSBC’s role in shaping the global infrastructure landscape with sustainability at its core.

The launch of HIF is not just about financing projects but also about offering advisory services, ensuring that the projects are aligned with global sustainability standards and have a meaningful impact on reducing carbon emissions.

HSBC’s Net-Zero Ambition

The creation of HIF follows HSBC’s comprehensive Net Zero Transition Plan, which outlines its strategy to support the transition to a net-zero economy by 2050. HSBC’s net-zero target, set in 2020, aims to align its financing activities with the goals of the Paris Agreement, ensuring that all operations and investments contribute to the global climate goals.

The bank has identified key sectors where it can make the most significant impact, focusing on industries that are currently high emitters of greenhouse gases. These sectors include energy, transportation, and infrastructure. HSBC has outlined the technologies, investment needs, and steps required for each area to align with a 1.5°C temperature increase limit by 2030. The bank’s strategy also addresses external dependencies and risks associated with achieving these targets.

While HSBC’s operational emissions are relatively small compared to its financed emissions, the bank is committed to leading by example. By 2030, HSBC aims to achieve net zero across its operations and supply chain, including using 100% renewable energy and minimizing its environmental footprint. 

In 2022, the bank made notable progress, reducing energy consumption by 58.5% compared to 2019, primarily by optimizing building usage and reducing travel-related emissions. With a further 50% reduction target by 2030, HSBC continues to set a high bar for corporate sustainability practices.

Building a Robust Carbon Market

HSBC’s commitment to low-carbon finance extends beyond its operations. The bank actively engages with market participants to develop a credible carbon credit market, recognizing that carbon offsets are vital in reaching global climate goals. 

Through its joint venture, Climate Asset Management, HSBC is sourcing high-quality carbon removals and supporting the development of carbon credits vital for hard-to-abate industries. The bank also collaborates with key stakeholders like the Hong Kong Exchanges and Clearing Limited’s International Carbon Market Council to advocate for integrity and transparency in the voluntary carbon market.

Importantly, HSBC has emphasized that it does not plan to use carbon offsets to meet its 2030 sectoral targets or its 2050 net-zero target for financed emissions. Instead, the bank is committed to directly reducing emissions through financing activities aligning with decarbonization goals.

HSBC’s Role in Driving Systemic Change

HSBC’s approach to sustainability is not limited to its financial offerings. The bank is actively shaping the policies and regulations needed for a low-carbon future. HSBC is a signatory of the Taskforce on Climate-related Financial Disclosures (TCFD), advocating for greater transparency in how companies report climate risks and impacts.

The bank also prioritizes customer support by providing finance, services, insights, and tools to help clients transition to a net-zero economy. By working with corporate customers on their transition plans, HSBC is facilitating a shift towards sustainable business practices and assisting clients to mitigate their environmental impact.

This proactive approach has led HSBC to embed net-zero considerations into its risk evaluation processes, decision-making tools, and sustainability policies. By integrating climate risk into its corporate strategy, HSBC ensures that all aspects of its business contribute to a sustainable future.

A $1 Trillion Commitment to a Low-Carbon Future

HSBC’s $1 trillion pledge is the centerpiece of its low-carbon finance initiative. This substantial commitment aims to finance projects and investments directly contributing to the global low-carbon transition. With a target date of 2030, HSBC’s pledge includes funding for renewable energy, energy-efficient infrastructure, and projects addressing social equity and environmental impact.

By making such a significant financial commitment, HSBC is positioning itself as a global leader in combatting climate change. The bank’s focus on financing a low-carbon transition supports its clients and partners and helps drive systemic change in how the financial sector approaches sustainability.

Looking Ahead: Shaping the Future of Sustainable Finance

HSBC’s launch of its Infrastructure Finance unit marks a crucial step in its journey towards becoming a net-zero bank and a leader in sustainable finance. As the world continues to grapple with the challenges of climate change, HSBC’s role in providing low-carbon financing solutions will be pivotal in driving the transition to a greener, more sustainable global economy.

With a solid commitment to supporting customers, transforming its operations, and advocating for systemic change, HSBC sets a new standard for sustainability in the financial sector. Its $1 trillion pledge underscores the bank’s dedication to financing the future, one that is low-carbon, resilient, and inclusive.

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