HSBC has pushed back key parts of its net zero commitments by two decades, while revising its executive bonus scheme to reduce environmental targets.
The new long-term incentive plan for chief executive Georges Elhedery could now be worth up to 600% of his salary.
The London-based bank has launched a formal review of its net zero policies, acknowledging that its clients and suppliers have faced greater-than-expected challenges in reducing emissions.
Originally, HSBC had planned to achieve net zero across its own operations by 2030. However, these targets have now been extended to 2050.
According to HSBC’s latest annual report, the bank anticipates a 40% reduction in emissions across operations, travel, and supply chains by 2030.
However, it admits this progress falls short of its original goal and would require heavy reliance on carbon offsets.
As a result, HSBC has revised its timeline, aligning its operational net zero target with the 2050 deadline set for its wider financing activities.
Alongside the delay in climate commitments, HSBC is adjusting its executive pay structure. The environmental component of Elhedery’s long-term incentive plan (LTI) is set to drop from 25% to 20%. The total LTI package, which covers performance from 2025 to 2027, could reach £9 million, representing 600% of his base salary.
This is part of a broader remuneration package that could allow Elhedery to earn up to £15 million per year—an increase of 43% from his current potential pay of £10.5 million.
The LTI will now focus solely on HSBC’s own emissions reductions, excluding progress on financed emissions—the emissions linked to companies the bank lends to.
HSBC stated that tracking financed emissions remains a challenge due to reporting inconsistencies, making it difficult to incorporate into executive pay metrics.
The bank’s remuneration committee defended the changes, stating that while financed emissions targets are important, they remain difficult to measure accurately.
Investors were consulted before making this decision, and HSBC maintains that it continues to support environmental, social, and governance (ESG) objectives.
HSBC’s shift comes amid a growing climate policy backlash, particularly in the United States. Former president Donald Trump has openly advocated for rolling back environmental regulations in favour of fossil fuel expansion.
In response, major US banks—including Citigroup, Bank of America, Morgan Stanley, Wells Fargo, and Goldman Sachs—have withdrawn from the UN-sponsored Net-Zero Banking Alliance (NZBA).
Elhedery reaffirmed HSBC’s commitment to its 2050 net zero goal but emphasised the need to reassess the bank’s current progress. When asked whether HSBC would continue its membership in the NZBA, he simply confirmed the bank remains part of the alliance for now.
Meanwhile, HSBC has also announced plans to cut $1.5 billion (£1.2 billion) from its cost base by 2026, a move expected to result in job losses across its global workforce of over 220,000 employees. Despite this, HSBC reported a 6.6% rise in annual pre-tax profits for 2024, reaching $32.3 billion.
