Sustainability Head of HSBC Asset Management to Leave Amid Sector Shift Focusing on Environmental, Social, and Governance (ESG) Standards
Revised Article:
The chief sustainability honcho at HSBC Asset Management is calling it quits, as the firm undergoes a review of its environmental, social, and governance (ESG) policies. According to reports by Reuters, Erin Leonard, who had been overseeing the Asset Management arm's diversity, equity, and inclusion-focused initiatives, is stepping down.
This departure follows Celine Herweijer, HSBC's former chief sustainability officer, who departed the firm at the end of the previous year. Leonard managed sustainable investing efforts within the company.
Georges Elhedery, who took over as CEO at HSBC in September 2024, unveiled plans to slash costs and restructure the firm. This includes splitting the firm into "Eastern markets" and "Western markets." Moreover, it has been reported that Elhedery is planning to shave $300m off the top management layers.
Lenders across the globe seem to be rethinking their ESG policies after years of prominence. For instance, HSBC has delayed its climate target by 20 years, aiming to reduce emissions across its operations by 2050 instead of 2030, as initially planned in 2020. The firm is also reviewing its 2030 targets for reducing emissions related to financing polluting firms.
This move mirrors that of Barclays and Natwest, who removed their climate goals from senior executive bonuses, arguing it aligns better with their long-term climate objectives.
The retrenchment on climate goals is also noticeable on Wall Street, with six major US banks altering their commitments following their exit from the Net-Zero Banking Alliance (NZBA). Participants in NZBA, convened by the UN Environment Programme finance initiative in 2021, included JP Morgan, Citigroup, and Bank of America.
This dramatic U-turn comes at a time of significant shift in rhetoric and policy on ESG issues from the White House since President Donald Trump’s inauguration. Trump's first executive order saw the US withdraw from the Paris climate agreement and pledged to clamp down on diversity, equity, and inclusion initiatives across government departments.
Banks, it seems, are reassessing their commitment to ESG policies and climate targets, driven by a complex interplay of internal reviews, operational challenges, concerns over greenwashing, and changes in executive compensation frameworks. This trend signals a more cautious or pragmatic approach among banks towards environmental responsibilities.
- HSBC, in its ongoing review of environmental, social, and governance (ESG) policies, is pondering over revising its 2030 targets for reducing emissions related to financing polluting firms, signaling a potential shift in its sustainable investing efforts within the banking and finance sector.
- The banking industry, fuelled by internal reviews, operational challenges, worries over greenwashing, and updated executive compensation structures, appears to be reassessing its commitment to ESG policies and climate targets, with HSBC's delay of its climate target by 20 years reflecting this trend.
- As major banks across the globe, including HSBC, Barclays, and Natwest, rethink their ESG policies, the financial business landscape may witness a more cautious or pragmatic approach towards environmental responsibilities and sustainable investing.
