Bankrolling Environmental Change

The UK's largest bank, HSBC, has just announced a new five-year $100m contribution towards addressing the causes and effects of climate change. The contributions, to be spread among four environmental groups, is intended to fund research into freshwater river systems, low-carbon urban living in megacities, the impact of climate change on forests, and educational research towards sustainable living.

However, as an analysis piece by BBC business editor Clare Davidson higlights, its lending policies will not change:
"After showing a short HSBC-branded film featuring imagined scenes including London under water and the Amazon being transformed into a huge motorway, the bank's chairman Stephen Green said that withdrawing from so-called "sensitive sectors" - including energy, water, forestry, chemicals or mining, would not be the right thing.

"HSBC would remain committed to clients across these sectors, Mr Green said, "as long as we are confident that they are engaged in a journey towards environmental sustainability"."

$100m is a contribution that certainly should not be sniffed at - and it will enable the benefiting organisations to scale up their work over a medium-term five year timescale. For the groups, these multimillion contributions will make a big difference. But there is a tinge of greenwash to this burst of generosity because for HSBC, $100m when compared with record-breaking $22bn of profits still really isn't much.

The bank, like many others now, are talking about being carbon neutral - but such descriptions only extend to their own operations - staffing, buildings, travel and offsetting. While these are undoubtedly necessary, what most banks fail to address - and RBS has taken the brunt of the attention because of its own emphasis on this area - are its lending policies towards environmentally unsound industries and services. By providing credit and overdraft facilities for oil & gas, logging and mining sectors, banks actively support the expansion and continuied prosperity of these industries that contribute to climate change and environmental degradation.

The real challenge is to ensure that all $22bn of HSBC's profits, and not just a pigeonholed $100m, can be earned in environmentally sensitive and ethically responsible ways.