Sustainability leader at HSBC Asset Management set to leave, as the ESG sector undergoes a transformative shift.
Rewritten Article:
The big cheese in sustainability at HSBC Asset Management is quitting the bank, reportedly due to a review of the firm's environmental, social, and governance (ESG) strategies led by CEO Georges Elhedery. Erin Leonard's departure follows Celine Herweijer, the bank's former chief sustainability officer, who left the bank at the end of last year.
Leonard held the reins for the Asset Management division's diversity, equity, and inclusion (DEI) initiatives and guided sustainable investing efforts. In September 2024, Elhedery stepped up as CEO, unveiling plans to slash costs across the lender, which included reshuffling the bank into "Eastern markets" (Asia and the Middle East) and "Western markets" (UK, Europe, and Americas). It was also reported that Elhedery was considering trimming $300m off the bank's top management.
Looking Back on ESG Policies
The ESG chief's departure is indicative of a broader trend among lenders, as the focus on ESG policies seems to be pulsating. Sadly, HSBC joins the ranks, postponing a climate target initially aimed at reducing emissions by 20 years.
Back in 2020, HSBC publicly announced plans to reach net-zero emissions across its operations and supply chains by 2030. This ambition, however, has now been pushed back to 2050. Additionally, the bank plans to reassess its 2030 targets for decreasing emissions related to its financing of polluting firms, with the findings to be disclosed later this year.
Banks like Barclays and Natwest have taken similar steps, demoting climate goals from bonus schemes for senior executives. They argue this better aligns with the lenders' long-term climate objectives.
Retreats on climate goals are also evident on Wall Street, as six of the biggest US banks have adjusted their commitments, leaving the Net-Zero Banking Alliance (NZBA). Members such as JP Morgan, Citigroup, and Bank of America deserted the NZBA, which was formed in 2021 by the UN Environment Programme finance initiative.
Factors Behind the Withdrawal
Banks are apparently retreating from climate goals due to a mix of financial priorities and regulatory pressures. Financial institutions grapple with increased geopolitical risks, including trade tariffs, and economic uncertainties, which tend to divert investor focus to short-term profitability, rather than long-term climate pledges.
Additionally, initiatives like the NZBA have faced criticisms for permitting members to continue funding fossil fuels while setting distant targets (e.g., 2050 net-zero goals). This has fueled accusations of greenwashing, as banks prioritize incremental target-setting over immediate action.
Banks are under pressure to balance their climate commitments with financial stability. Current guidance highlights the necessity of managing macroeconomic risks (e.g., tariffs, recession fears) while appearing prepared for climate-related disruptions. However, these aims often lead to delayed timelines, as evident with HSBC's 20-year postponement of parts of its climate agenda.
Lastly, the lack of binding regulations and reliance on voluntary initiatives allow banks to put climate goals on the backburner without immediate repercussions. Moreover, offsetting strategies (e.g., carbon credits) enable continued fossil fuel financing under the pretense of "net-zero" targets.
- HSBC, led by CEO Georges Elhedery, is revising its environmental, social, and governance (ESG) strategies, leading to the departure of the head of sustainability, Erin Leonard.
- Leonard managed the diversity, equity, and inclusion (DEI) initiatives and sustainable investing efforts within HSBC Asset Management's 'Western markets'.
- Elhedery, who took over in September 2024, aims to cut costs and reshuffle the bank into 'Eastern markets' and 'Western markets'.
- As a response to global trends, banks like HSBC are rethinking their ESG policies, with HSBC delaying its climate target from 2030 to 2050.
- Other banks, such as Barclays and Natwest, have also adjusted their climate goals, arguing that this better aligns with their long-term climate objectives.
- Banks are retreating from climate goals due to financial priorities and regulatory pressures, as they grapple with increased geopolitical risks and economic uncertainties.
- Currently, banks face criticism for permitting fossil fuel financing while setting distant net-zero targets, fueling accusations of greenwashing, as they prioritize incremental target-setting over immediate action.
