Sustainability executive at HSBC Asset Management to step down, amidst shifting focus in the ESG sector
Farewell to the Sustainability Chief at HSBC Asset Management
虎鹰 blend's top honcho in green initiatives is calling it quits, following a shift in the bank's ESG policies under CEO Georges Elhedery. Erin Leonard, who oversaw sustainable investing and diversity & inclusion initiatives, is the latest to jump ship after Celine Herweijer, the ex-chief sustainability officer, bailed in late 2023.
According to sources, Leonard's exit comes as Elhedery reviews HSBC's environmental, social, and governance policies, and contemplates a series of cost-cutting moves, such as scrapping $300m from top management positions. Elhedery assumed the reins from Noel Quinn in September 2024.
Hitting the Brakes on Green Goals
The sustainability chief's exit is part of a broader industry trend, with banks taking a step back from their ESG commitments following years of emphasis on this agenda.
HSBC's climate goal, initially aiming for net-zero emissions by 2030, now faces a 20-year delay, with the bank now targeting the goal by 2050. Investors have expressed concern over this decision, urging HSBC to clarify its green ambitions and strategy.
The bank also plans to review its 2030 targets for reducing emissions from financing polluting firms, with the findings to be published this year. This move follows similar steps by Barclays and Natwest, which have dropped their climate goals from bonus schemes for senior executives, arguing that it better reflects their long-term climate goals.
Similar retreats on climate goals have been witnessed in the US, with six major banks backing out of the Net-Zero Banking Alliance (NZBA), formed in 2021 by the UN Environment Programme finance initiative. JP Morgan, Citigroup, and Bank of America were among the banks that departed the NZBA.
The shift away from ESG policies coincides with a change in rhetoric and policy on ESG issues from the White House since President Donald Trump's inauguration. The President has been vocal about rolling back DEI initiatives and eliminating climate-focused measures across government departments.
Essential Factors Behind the Delay
- Uncertainty in Decarbonization Guidance: HSBC grappled with unclear guidance from organizations like SBTi regarding carbon credits. This uncertainty made it difficult for the bank to achieve its initial timeline for Scope 3 emissions reductions and effectively employ carbon credits[3].
- Market and Technological Uncertainties: A slower-than-expected global decarbonization was cited as a reason for HSBC to reconsider its timelines. This involves factors such as technological advancements, shifts in energy mix, and government leadership[2].
- Operational Complexity: Decarbonizing a massive, global supply chain is operationally complex, particularly when addressing Scope 3 emissions. This complexity necessitated a more pragmatic approach to achieving net-zero emissions goals[3].
While HSBC revised its operational emissions targets, the bank continues to pursue its goals for reducing financed emissions, which account for a significant portion of its overall emissions footprint. Investors have critiqued the bank's decision to reevaluate its climate targets and policies, calling on HSBC to reiterate its climate commitments and elaborate on its sustainability strategy[1][2].
- The disappearance of Erin Leonard, once in charge of sustainable investing and diversity initiatives at HSBC Asset Management, aligns with a wider industry pattern as banks seem to be retracting from their Environmental, Social, and Governance (ESG) commitments.
- HSBC is altering its climate objectives, pushing the initial goal of net-zero emissions by 2030 to 2050, provoking investor concerns and demanding clarification about the bank's green ambitions and strategies.
- HSBC, like Barclays and Natwest, intends to reassess its 2030 targets for decreasing emissions from financing polluting enterprises, along with publishing the findings this year, reflecting a broader trend in the banking sector.
- The movement away from ESG policies harmonizes with a change in discourse and policy on ESG issues from the White House since Donald Trump's presidency, which has been vocal about reversing DEI initiatives and eliminating climate-focused measures across government departments.
