(Bloomberg) -- HSBC Holdings Plc has become one of the first global banks to set targets for limiting the carbon footprint of its capital markets business.

The bank’s so-called facilitated emissions targets will apply to its underwriting of deals for the oil and gas, as well as power and utilities sectors, according to its annual report published on Wednesday.

The calculation is new, and follows a recent industrywide agreement to disclose the emissions associated with banks’ capital markets operations. HSBC said it will include debt and equity capital markets as well as syndicated loans in the disclosure.

“We recognize that data, methodologies and standards for measuring emissions and for target setting will continue to evolve,” the London-based bank said on Wednesday in connection with the publication of its annual results. 

Disclosure guidelines around facilitated emissions were introduced by the Partnership for Carbon Accounting Financials at the end of 2023. The PCAF accord asks banks to disclose 33% of greenhouse gas emissions associated with bond and equity underwriting. That’s in line with a proposal put forward by an eight-member working group chaired by Barclays Plc and Morgan Stanley, and of which HSBC was also a member.

Barclays has included capital markets along with lending in its climate targets using its own methodology since 2020. JPMorgan Chase & Co. also includes facilitated emissions in its emissions intensity reduction targets.

HSBC’s Facilitated Emissions:

  • Instead of setting standalone facilitated emissions goals, HSBC said it has combined its on-balance sheet financed emissions and its capital markets emissions in a single target. The bank on Wednesday set such targets for two of the most carbon-intensive industries it finances: oil and gas, and power and utilities.
  • In oil and gas, the bank recorded combined emissions of 31.9 million tonnes of carbon dioxide equivalent in 2022, of which 14.4 Mt CO2e came from capital markets activity. HSBC is targeting a 34% reduction in combined absolute emissions by 2030 relative to a 2019 baseline.

Ulf Erlandsson, founder and chief executive of the Anthropocene Fixed Income Institute, called HSBC’s move a “nice step forward,” in a post on LinkedIn. “It is good to see banks now setting up targets on facilitated emissions.”

Though banks have long been expected to publish the carbon footprint associated with their loans books, known as financed emissions, coming up with estimates for facilitated emissions has remained a divisive subject. That’s because corporate bond sales rarely remain on a bank’s balance sheet once they’re issued. 

“As we are at the beginning of our journey to track and measure progress, we believe it would be premature to infer future trends from the 2019 to 2022 progress at this stage,” HSBC said. 

Jeanne Martin, head of banking program at London-based climate nonprofit ShareAction, said a 100% target — instead of the 33% agreed by PCAF — would be better for the environment.

“This is a missed opportunity for the bank to show it is serious about its green credentials and meeting its own net zero goal,” Martin said in a statement. “The bank needs to set ambitious targets and stick to them to prevent catastrophic global warming that puts people and planet at risk.”

Read More: HSBC Shareholders Ask Bank to Cut Fossil-Fuel Lending Exposure

(Adds reference to JPMorgan’s targets in sixth paragraph.)

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