Texas Adds HSBC to Energy Sanctions List

Facts

• On Monday, Texas added HSBC Holdings to its list of financial firms that are allegedly boycotting the oil and gas industry in light of Europe's largest bank's new fossil fuel funding policy.¹
• This comes after HSBC's December announcement that it will no longer provide new finance and advisory services for projects pertaining to new oil and gas fields as part of its updated climate strategy.²
• Terming HSBC's new energy policy an attempt to "push a social agenda and prioritize political goals over the economic health of their clients," Texas Comptroller Glenn Hegar said the firm's policies threaten Texas jobs, state economy, as well as national security.³
• However, HSBC maintained the firm doesn't boycott the fossil fuel industry and instead "seeks a balanced approach in the implementation of its net zero commitment" to support its clients' "transition from a high-carbon to a low-carbon economy."⁴
• The move to add HSBC to the energy sanctions list — which stems from a state law established in 2021 — could prohibit Texas' governmental entities from investing in the firm as they are required to sell, redeem, divest, or withdraw all publicly traded securities of blacklisted companies.³
• The crackdown on HSBC for allegedly prioritizing environmental, social, and governance (ESG) policies over its financial responsibilities came on the day the UN released a report emphasizing the need to move from fossil fuel-powered infrastructure to reduce global warming to 1.5 °C.⁵

Sources: ¹ Reuters, ² Associated Press, ³Comptroller, ⁴Bloomberg, and ⁵ PBS NewsHour.

Narratives

• Republican narrative, as provided by Comptroller. Prioritizing ESG, which is part of progressives' effort to promote woke capitalism, leads financial firms to discount their financial duties. Such policies don't just promote liberal priorities ranging from renewable energy to the Black Lives Matter movement, they lead to disinvestment in fossil fuel companies that provide tax revenue and jobs.
• Democratic narrative, as provided by Greenbiz. ESG considers the financial costs of environmental damage and social upheaval; it doesn't in any way prioritize political or ideological objectives. With ESG funds expected to see massive growth in the coming years, US states can attract investors by highlighting projects and companies with a favorable climate or social impact.
• Narrative C, as provided by Quartz. HSBC's annual lending to fossil fuel projects is to the tune of $20B. In the past, the bank's executives have downplayed climate change risks. Moreover, HSBC will continue to finance existing fossil fuel projects in line with current and future declining global oil and gas demand, which is why labeling HSBC as a financial company that prioritizes ESG issues is misplaced.

Predictions