HSBC, one of the world’s ten biggest banks, has long been addicted to coal. Over the past decade it has lent over a billion dollars to coal power stations worldwide.
So the bank’s bold announcement at its April 2018 annual general meeting that it would “stop financing new coal-fired power in all countries around the world”- albeit with some exceptions – heralded a positive step forward.
Unfortunately since then HSBC has carried on merrily backing coal. Several loopholes in its not-so-shiny new policy means it can keep financing coal projects in Bangladesh, Indonesia and Vietnam. This is despite projections that from 2030 more than 43,600 people could die annually due to coal power pollution across Indonesia and Vietnam.
Right now, it’s looking to help finance a coal power plant in Vietnam as well as port-dredging in Bangladesh that will allow more coal imports.
HSBC’s continued funding of coal is outrageous given the urgency of climate change and impacts on local communities. In the words of the chairman of another leading bank, Standard Chartered, which recently claimed it would stop funding new coal power altogether:
“To pull millions out of poverty, we need reliable and affordable electricity and, up until now, that has meant burning coal – almost nine billion tonnes of it every year. This cannot continue” – José Viñals, Chairman, Standard Chartered, 25 September 2018
H is for Hypocrisy
“Forecasts suggest that there needs to be a significant and immediate reduction in the use of coal if the world is to achieve the target set in the 2015 Paris Agreement”HSBC
The countries HSBC has chosen to exempt from its policy coincidentally have some of the world’s largest pipelines of new coal power projects. Unlike other such countries, they rely on overseas finance from banks like HSBC. The Global Coal Plant Tracker identifies 33 gigawatts (GW) of coal power under development in Vietnam, 19 GW in Bangladesh and 18 GW in Indonesia – the 4th, 5th and 6th largest pipelines globally.
Indonesia and Vietnam sit within Southeast Asia, where HSBC has pumped most of its $854 million in project financing lending to new coal power stations since 2010.
HSBC claims to care about our climate, and accepts that CO2 emissions need to be limited to meet the Paris goals. Indeed, its CEO John Flint even holds a couple of impressive-sounding roles in the climate world: he’s a member of the Climate Finance Leadership Initiative and a Global Commissioner of the New Climate Economy.
“Climate change represents an urgent and potentially irreversible threat to human societies and the planet, a threat recognised by the 184 countries that have signed the 2015 Paris Agreement on climate change.”
“HSBC supports, and is building into its business the aims of the Paris agreement…making financial flows consistent with a pathway to low greenhouse gas emissions.” – HSBC
What HSBC conveniently fails to mention is that to achieve the Paris goals, no new carbon emitting infrastructure can be built. In fact, to achieve a 1.5°C warming target, 618 GW of coal power capacity – approximately 31% of global capacity – must end operation by 2025. HSBC’s policy does not even broach the subject of finance to existing coal infrastructure, such as rail or ports, that directly support coal power projects. For a bank whose official climate change statement claims to take the risk ‘of ‘stranded assets’ into account, this smacks of greenwashing of the highest order.
Vinh Tan 3: a disaster in the making
HSBC is named as a financial adviser and potential lender to the proposed Vinh Tan 3 coal power plant in Vietnam. The plant is planned to sit within the Vinh Tan complex in the Vĩnh Tân commune, Tuy Phong district, Bình Thuận province, Vietnam. The total capacity of this controversial power complex is 6,224 MW.
Vinh Tan 3 is expected to come online in 2019. Community organisations have expressed concern about the proposed plant, arguing it is:
1. Non-compliant with the Equator Principles
Local communities have not been able to access any information on Vinh Tan 3’s expected level and nature of emissions. This contravenes Principle 5 of the Equator Principles, to which HSBC is a signatory, and states that documentation must be readily available to affected communities. Principle 7, which states that Independent Reviews must be conducted and disclosed, is also contravened. There’s no evidence that HSBC has conducted such a review. These contraventions are discussed in detail in Market Forces’ 2018 report ‘Unprincipled’.
2. Potentially in breach of HSBC’s own emissions intensity limit
Vinh Tan 3 is expected to employ outdated ‘supercritical’ technology. As noted, no information about Vinh Tan 3’s expected emissions intensity has been made available. So it’s difficult to assess whether the plant could breach HSBC’s carbon intensity limit when funding new coal-fired power plants in developing countries.
@StPeterMancroft handing in a letter to CEO of HSBC signed by over 60 people at the church saying stop investing in coal production! Part of the @christian_aid #BigShift campaign to stop this happening in Bangladesh, the Philippines and Vietnam. https://t.co/Dmb0CxNb2p pic.twitter.com/r4zi51ecaS— CA East England (@CAEastEngland) March 13, 2019
“We have no room to build anything that emits CO2 emissions.”Fatih Birol, executive director of the International Energy Agency
Local people bear brunt of coal pollution
“If they commit to the Paris goals when they are in France then HSBC can commit to the Paris goals when they are in Indonesia, Vietnam, or Bangladesh”Hong Hoang, executive director of CHANGE Vietnam.
Serious pollution from Vinh Tan’s existing power complex provoked strong community protest within a year of operations starting at Vinh Tan-2 in 2014. Coal ash from the plant has affected air quality, with many villagers, especially children, reporting respiratory illness. Leaks have also caused damage to farms, and plant water discharged into the sea has resulted in declining fish stocks, impacting local incomes. In April 2015 hundreds of people in Vĩnh Tân Commune took to the streets, blocking the national highway for two days to stop trucks from transporting coal slag to the cinder dump. Some protestors were even later given prison sentences.
Plans for dredging at Vinh Tan-1 to create a channel for waste transportation also sparked wide concern over potential harm to the pristine 12,500 hectare Hòn Cau Marine Protected Area. The marine park is a spawning ground for shrimp, fish and sea turtles, and home to 34 rare and endangered species.
Vietnamese communities are deeply concerned about the impact of the Vinh Tan power complex (which can be seen in the distant background) on the pristine Hon Cau Marine Protected Area. Credit: 350.org
Coal is not good for humanity
In announcing its loophole-riddled policy, HSBC said:
“A targeted and time-limited exception will apply to these three countries [Bangladesh, Vietnam and Indonesia] in order to appropriately balance local humanitarian needs with the need to transition to a low-carbon economy.”
This is reminiscent of language from Standard Chartered, another bank with a history of lending to coal across Asia, which last year actually did adopt a policy to (in the words of HSBC) “stop financing new coal-fired power in all countries around the world”.
At Standard Chartered’s May 2018 AGM, Chairman José Viñals told shareholders “there are a number of markets in which there is no viable alternative to coal”. By September his tune had changed entirely, stating:
“As the only international bank present in all 10 ASEAN markets” and one that loaned US$1.8 billion to coal power since 2010, Standard Chartered’s policy is proof there’s simply no excuse left for banks like HSBC to contemplate funding new coal power anywhere.
“HSBC should turn the tap off for coal and fossil fuel projects. Hanoi’s air pollution is already choking us and we have seen storm-surges and floods exacerbated by climate change. Hong Hoang, Change Vietnam
Watch: Leading global bank @HSBC had its Annual General Meeting disrupted by protesters calling on the bank to change its policies with respect to finance for fossil fuel projects and weapon manufacturers.— 350 dot org (@350) April 12, 2019
Add your name to the petition today: https://t.co/yfqsbbmUtJ pic.twitter.com/8agGjOkPow
Fund clean energy, not coal power
Harvard University researchers calculate that by 2030, pollution from coal power plants could cause a combined 43,620 extra deaths every year across Indonesia and Vietnam.
Vietnam and Bangladesh are highly vulnerable to the flooding and sea level rise associated with climate change. Both countries are pursuing renewable energy plans. Vietnam’s policies have led to a flurry of projects being announced since mid-2017. Bangladesh, however, needs to attract more private sector finance to its renewable energy projects.
“Bangladesh could replace large portion of 13.3 GW of planned coal projects with utility-scale solar for an average LCOE of $91/MWh, compared to $110/MWh for coal, given the identified 53GW potential from solar PV.” – Shiraishi et al. 2018
The global bank’s double standards on coal have also angered local activists. “If they commit to the Paris goals when they are in France then HSBC can commit to the Paris goals when they are in Indonesia, Vietnam, or Bangladesh,” says Hong Hoang, executive director of CHANGE Vietnam.
“If @HSBC is to be taken seriously, it must extend its “no #coal” policies globally. Not just for people’s lives on the line in directly affected countries, but also to avoid the #climate impacts that touch us all.” - Nguyen Thi Hang of @GreenIDVietnam https://t.co/Syt34OCEUT— Market Forces (@market_forces) April 3, 2019
HSBC needs to stop dumping this problem in Vietnam and start taking responsibility for the harm its policy is causing.” Hong Hoang, Change Vietnam
Time for action!
HSBC must stop funding coal power in these countries, honouring the spirit of its pledge to combat climate change. Market Forces urges HSBC to:
- Close the loopholes which permit financing to new coal plants in Bangladesh, Vietnam and Indonesia; and
- End the refinancing of coal projects and the financing of coal infrastructure by 2020.
Groups backing this campaign
- 350.org, Christian Aid, Market Forces, ShareAction, Global Witness, Fund Our Future
- See the open letter launched 2 April 2019, signed by the following groups in the region: AEER, Auriga, CHANGEVN, CLEAN, GREENID, Greenpeace, JATAM, Kanopi, Transparency International Bangladesh, RTCCD, TrendAsia, Walhi (Walhi (Wahana Lingkungan Hidup Indonesia)
- HSBC shareholders with over $1trillion in assets either under management or stewardship (including Schroders and Hermes EOS)
Photos credit: © CHANGE/Thiêu Duyên