HSBC is the first big bank to commit to going carbon neutral as it seeks to reduce its environmental impact.
Starting in 2005, it will plant trees, reduce energy use, buy green electricity and trade carbon credits to cut carbondioxide flows.
HSBC chief executive Stephen Green said: “In 2003, HSBC’s CO2 emissions…were more than 550,000 tonnes. We need to act now.”
The move will cost up to $7m (£3.6m) in 2005, less in future years.
This represents 0.004% of the bank’s market value of £99,331m.
The bank, which has 10,000 offices in 76 countries, made the announcement in Buenos Aires at the Tenth Convention of the Parties of the UN Framework Convention on Climate Change.
“Let’s hope its next step will be to deal with its indirect impacts as creatively as it is tackling its own housekeeping.” Peter Knight, Context
It is concerned about the contribution its carbon dioxide emissions from electricity, natural gas, fuel oil and business travel have on the environment.
“It is our judgement that climate change represents the largest single environmental challenge this century,” said the bank’s chairman Sir John Bond.
Environment experts welcomed the move. “It is good to see a major bank taking a lead on climate change,” said Peter Knight, director of Context, a London-based corporate responsibility consultancy.
“But HSBC is restricting its actions to its own carbon emissions from buildings and executive travel. Its real environmental impact is the result of loans it makes to big projects, such as dams, oil exploration and mines.
“Let’s hope its next step will be to deal with its indirect impacts as creatively as it is tackling its own housekeeping.”
In addition to the carbon-neutral plan, the bank is investing £650,000 in environment research at two UK universities and developing a range of socially responsible investment funds.
HSBC hopes to send a signal to its peers in the City that climate change should be taken seriously. Until recently financial markets treated the possibility that carbon dioxide emissions were contributing to global warming with some scepticism.
“HSBC’s decision sets a new benchmark for the financial services sector,” said Steve Howard, chief executive of The Climate Group, a non-profit coalition of organisations committed to reducing their greenhouse gas emissions, of which HSBC is a member.
“They will gain a deeper insight into the emerging low carbon economy.”
However, Greenpeace sounded a note of caution on HSBC’s tree planting plans. “Becoming carbon neutral is great and we thoroughly support many of the steps HSBC is taking, ” said Doug Parr, Greenpeace’s chief scientist in the UK.
“But planting trees is of questionable benefit: what if there is a forest fire?”
He said: “Many organisations opt to plant trees because on paper it seems cheaper but scientific bodies like the Royal Society are starting to question whether this is really the best way to reduce carbon dioxide emissions.”
The only other big financial institution apart from HSBC to make a similar carbon-neutral pledge is Swiss Re, the insurers.