HSBC to lead the transition to net zero carbon through sustainable finance – Businesses

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Sudibyo Wiradji (The Jakarta Post)

Jakarta ●
Fri 10 December 2021

2021-12-10
07:00
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HSBC, finance, banking
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Expectations are high to see tangible actions following the COP26 conference, and financing decarbonization and the transition to net-zero is a major challenge for many countries. HSBC, supported by its international network, is ready to lead the transition and mobilize change.

Getting back on track to limit temperature increases to 1.5 degrees Celsius above pre-industrial levels will require huge funding from the financial system.

Globally, the world needs $ 100,000 to $ 150 trillion in external financing to transform our carbon-intensive economies over the next three decades. While in Asia, the funding gap to mitigate climate change is estimated at around $ 66 trillion over the same period.

François de Maricourt, CEO of PT Bank HSBC Indonesia, said: “Partnership is essential to close this huge funding gap. And climate change needs solutions and actions without borders.

Maricourt stressed that COP26 was a historic opportunity that brought together the public and private sectors to mobilize the global transition to net-zero.

“As a bank, we can help, and the most important contribution we can make is to help our customers decarbonise and make the transition through funding and investments, to help businesses to high emissions to take steps to become more environmentally sustainable over time, ”he explained in a recent written interview.

“We support our clients on their journey towards a low carbon economy by financing the transformation of businesses and infrastructures”

He stressed that finance has a vital role to play in building a more sustainable, healthy and resilient future.

“We are evolving the circular economy while opening up new and better growth opportunities for businesses of all sizes as they transition. “

Explaining what drove HSBC to lead the transition to a sustainable future, Maricourt said: “We recognize the threat climate change poses to global economic, social and geopolitical stability, and that every organization must play its part to help. to ensure the future of our planet. . “

He added that to avoid the worst impacts of climate change, global greenhouse gas emissions must be reduced by 45% by 2030 and the world must reach net zero by 2050, according to the Group of United Nations intergovernmental experts on climate change.

With global climate change becoming one of the pressing global issues to be addressed, HSBC, which is part of the Nature-Related Financial Disclosures Task Force, has increased its presence in Asia and Indonesia, with the bank prioritizing l ‘help clients transition. , expand new technologies and build global partnerships to create common standards.

Maricourt said HSBC plans to provide $ 1 trillion in financing and sustainable investments around the world by 2030 to help its customers make the transition.

“This is part of our commitment to become a net zero bank by 2050, which includes emissions from the companies we fund, as well as our own operations and supply chain,” he said.

Infrastructure projects in the region face varying degrees of barriers to bankability, and private capital can play a unique role in bridging this gap, according to Maricourt.

At the regional level, HSCB is partnering with Temasek to launch a US $ 150 million debt financing platform dedicated to sustainable infrastructure projects with an initial focus on South East Asia and support from the Asian Development Bank (ADB).

“This platform aims to make $ 1 billion in additional investments,” said Maricourt.

He added that his initial goal through this platform would be to reduce greenhouse gas emissions by funding the production and storage of renewable energy, water and waste treatment, and transportation solutions. sustainable, “but we plan to expand the scope as the platform matures.”

Maricourt said a significant portion of the platform’s loan portfolio would target sustainable and marginally bankable infrastructure projects, providing project development expertise, technical assistance and blended finance solutions as needed.

As part of the bank’s commitment to unlock next-generation climate solutions, HSBC recently launched a global philanthropic program to donate US $ 100 million to develop climate innovation projects, renewable energy and nature-based solutions by 2025, in partnership with World Resources Institute (WRI) and World Wide Fund for Nature (WWF).

“We are building one of the world’s largest natural capital managers – to integrate natural capital as an asset class and invest in activities that preserve, protect and enhance nature for the long term. To this end, we have created a joint venture called HSBC Pollination Climate Asset Management, ”said Maricourt.

HSBC has also set up a dedicated unit and tailor-made proposal to support CleanTech innovation firms and is targeting $ 100 million in CleanTech investment within the bank’s tech debt fund.

The bank is also helping to transform sustainable infrastructure into a global asset class, leading the “Finance to Accelerate Sustainable Transition-Infrastructure” (FAST-Infra) initiative to stimulate investment in sustainable infrastructure.

When it comes to global partnerships to set common standards, HSBC Group CEO Noel Quinn chairs the Prince of Wales Sustainable Markets Initiative Financial Services Working Group (FSTF), developing industry-wide initiatives and common standards to measure sustainable finance with the support of 11 other banks.

HSBC is also a founding member of the Net Zero Banking Alliance, a group of 58 banks from 29 countries that will bring urgency, collaboration and consistency to net zero standards.

. (Courtesy of HSBC /.)

Green financing

In Indonesia, HSBC supported the government’s inaugural green framework in 2017 and with green bonds and sukuk issued annually under it, including $ 750 million in green sukuk in 2021.

“We are committed to providing green financing to our customers in Indonesia,” said Maricourt. “Indonesia has a great opportunity to lead by example in the transition to net-zero. The country is particularly vulnerable to the impact of climate change, which is why Indonesia can find a huge opportunity to transition to sustainable development, as it can accelerate recovery and lead to sustained economic growth.

“For our private and wealth banking clients, HSBC is also the first bank to launch ESG [environmental, social and governance] mutual fund products as part of our commitment to support Indonesia’s commitment to building more sustainable economic growth.

The ESG mutual fund product includes equity investments in companies that integrate environmental, social and governance principles into their value chains, such as clean technology, human rights and business ethics. .

In partnership with WRI and WWF, HSBC has launched a five-year pilot project to help accelerate the adoption of renewable energy and leverage private sector investment to support Indonesia’s clean energy transition, focusing on the country’s commercial and industrial sectors and developing nature-based solutions.

As a “green structuring advisor” for the Indonesian sukuk, HSBC is also witnessing some reforms the government has undertaken to support the goal of net zero emissions by 2060. These include the creation of a task force on sustainable finance by the OJK; a plan to establish an emissions trading mechanism that aims to implement provisions relating to the taxation of carbon emissions, the creation of a market for carbon credits and investment in energy renewables, with 56% of the 40 gigawatts (GW) of new power plant capacity coming from renewables. energy by 2030.

“I have been in Indonesia for about a year. I was impressed during this time by the progress made; first, in terms of raising awareness of the need to work on transition plans and the urgency to act – and this is true for both the public and private sectors, ”said Maricourt.

“There is still a lot of work to be done to reach the goal, but things are moving in the right direction and the President [Joko] ‘Jokowi'[WidodohasmadeitapriorityAsIndonesiawillchairtheGroupof20nextyearthisiswuestometangoneblackeyeskeywestyearthisiswuestometangiofthatiblrequireskey[WidodoenafaituneprioritéCommel’IndonésieprésideraleGroupedes20l’annéeprochaineceseral’unedesquestionsclésquinécessiteradesactionsconcrètes»[WidodohasmadeitapriorityAsIndonesiawillchairtheGroupof20nextyearthisiswillbeoneofthekeyissuesthatwillrequiresometangibleactions”


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