The policy change

On November 6, 2025, HSBC (UK) updated its Sustainability Risk Policies Framework, rolling back several fossil fuel–related commitments. The previous version dated from February 2025.

Why this is important

Five years ago, HSBC was one of the first banks globally to set a net-zero-by-2050 target for its financed emissions. Now, it has become one of the clearest examples of climate backsliding.

In recent months, HSBC has delayed its operational net-zero goal by 20 years, backtracked on previous climate commitments, and left the Net Zero Banking Alliance before its dissolution. The bank has now revised its Sustainability Risk Policies Framework, which defines what activities it will not support. These policies are crucial because clients with fossil fuel expansion plans are not on a transition pathway.

The International Energy Agency (IEA) has been clear since 2021 – and reconfirmed in 2023 – that no new fossil fuel supply investment is compatible with a net-zero pathway. A UN high-level expert group also recommended that financial institutions include phasing out fossil fuel finance in their net-zero commitments. Yet most commercial banks, including HSBC, continue financing fossil fuels, including high levels of expansion finance.

HSBC’s sustainability rules should exclude new finance for projects and companies expanding fossil fuel production, and phase out all remaining fossil fuel finance in line with a just transition within a 1.5ºC-warming scenario.

Scope of this scan

This scan focuses on changes introduced in November 2025 to the Energy and Thermal Coal Phase-Out sections of HSBC’s Sustainability Risk Policies Framework, compared with the February 2025 version. This scan highlights the changes with the highest real-world impact.

Key changes

1. HSBC removed previous exclusion for prospective clients in the oil and gas (O&G) sector

The revised framework drops a commitment “not start a new relationship with a prospective client … where >10% of total planned O&G capital expenditure is in O&G exploration has >10% production volume from” unconventional O&G.

Reasons this key change is negative

Clients with O&G exploration plans are going against a net-zero pathway

Science shows any new fossil fuel investment is incompatible with a net-zero pathway. Companies developing exploration projects therefore lack credible transition plans, and banks with net-zero commitments should stop financing them. HSBC’s previous policy – although limited to prospective clients – was a step forward. Its removal opens the door for HSBC to onboard clients planning new exploration, which is out of line with its net-zero goal.

2. HSBC changed its previous commitment on new oil and gas fields projects

Previously, HSBC committed not to “provide new finance or new advisory services for the specific purposes of projects pertaining to new O&G fields where the final investment decision was taken after 31 December 2021; or O&G infrastructure whose primary use is in conjunction with new O&G fields”.

The new version commits not to provide finance to “new O&G fields where the government permitting (or equivalent) for development of the specific field was taken after 31 December 2021; or O&G infrastructure whose primary use is in conjunction with new O&G fields”.

Reasons this key change is negative

Government permitting is a weaker restriction

The IEA has consistently stated since 2021 that no new fossil fuel supply investment is compatible with its net-zero pathway. HSBC’s previous policy aligned with that guidance. The new wording weakens the restriction: the bank can now finance projects approved by governments before the cutoff date, but which reached a final investment decision afterwards.

It is not aligned with scientific recommendations

HSBC provides no justification for adopting wording that diverges from the IEA language used since 2021 and previously reflected in its own policy. The change contradicts its own claim that the policy review considered scientific evidence and sector-specific pathways where relevant.

3. HSBC reduced exclusions for unconventional oil and gas activities

HSBC removed its commitment “to not provide new finance or new advisory services for the specific purpose of O&G exploration, appraisal, development, and production pertaining to ultra-deepwater offshore O&G projects”. It also narrowed the scope of commitments related to shale gas.

Reasons this key change is negative

Ultra-deepwater offshore O&G projects is one of the most destructive forms of extraction

HSBC still commits to avoiding corporate-level finance for companies whose operations are “substantially” in specific areas. However, by removing “ultra-deepwater offshore O&G projects” from the list, HSBC can now finance both projects and companies in this subsector. The previous policy explicitly acknowledged the local environmental risks associated with ultra-deepwater drilling, which remain unaddressed.

Weaker restrictions for shale gas mean worse impacts

Previously, shale gas activities required enhanced due diligence (EED) and pre-approval. The new policy applies these requirements only to activities “linked to existing O&G fields”, meaning shale gas linked to new fields would face fewer safeguards – even though HSBC had acknowledged environmental harm from hydraulic fracturing. Instead of strengthening the policy, HSBC has weakened an already limited commitment.

4. HSBC takes one step forward on thermal coal

HSBC now states it “will not start a new relationship with a prospective client that has made a new commitment to thermal coal expansion; or has proceeded or intends to proceed with thermal coal expansion”. It also added new requirements for existing clients, but failed to exclude financing for all thermal coal developers.

Reasons this key change is positive

Thermal coal developers should be excluded

The new prohibition on onboarding thermal coal expansion developers strengthens previous rules for prospective clients. It draws a necessary red line: thermal coal expansion is incompatible with a net-zero trajectory.

Reasons this key change is negative

The exclusion for thermal coal developers is limited to new clients

HSBC sets no equivalent exclusion for existing clients. While some existing clients now face EDD and governance pre-approval, there is no clear prohibition on financing companies with expansion plans. HSBC “seek to withdraw” from such clients, but this language is vague and leaves room for continued financing not directly related to expansion.

Metallurgical coal developers should also be excluded

HSBC applies no equivalent exclusion to existing clients that plan new metallurgical coal mines. Although it will not provide new financing specifically for such projects, HSBC does not rule out providing new financing for the expansion of existing metallurgical coal mines. In addition, the bank sets no strict exclusion for prospective clients that own metallurgical coal assets.

Additionally, the exception clause introduced earlier in 2025 remains in place, undermining the overall ambition of the policy, since it allows the bank to approve exceptions to its policy as long as HSBC “is satisfied that it is within the intention of the Policy”.

Conclusion: HSBC accelerates backsliding on fossil fuel commitments

While attention has focused on HSBC’s new net-zero transition plan, the bank has simultaneously weakened core sustainability risk policies. This is most evident in the oil and gas sector, where it removed exclusions for prospective clients, eliminated restrictions on ultra-deepwater activities, and changed policy language in a way that allows financing of new fields approved before 2021 but reaching FID afterwards. The bank’s small step forward on thermal coal is less significant than the several backward steps.

These backward steps continue HSBC’s trend of weakening climate commitments. HSBC already lagged peers in terms of its efforts to phase out fossil fuel financing, and its own analysis shows that 60% of 4,000 customers reviewed do not plan to scale down fossil fuel activities – which is incompatible with a credible net-zero pathway.

BankTrack therefore urges HSBC to restore and strengthen the elements removed from its previous policy, and we reiterate our call on the bank to immediately stop financing fossil fuel expansion projects and the companies developing them, and move towards phasing out all fossil fuel finance in line with a just transition within a 1.5ºC.