Why is HSBC Struggling to Hit Scope 3 Emissions Targets?

HSBC has pushed back its net-zero target from 2030 to 2050, acknowledging that progress in tackling Scope 3 supply chain emissions is not moving as fast as expected.

The shift, detailed in its 2024 Strategic Report, highlights the broader challenges financial institutions face in cutting emissions beyond their direct operations.

The report was published a matter of days after Julian Wentzel stepped in as Chief Sustainability Officer on 7 February. HSBC had removed the role from its executive committee in November 2024, leading to Celine Herweijer stepping down.

Alongside the revised timeline, the bank is reviewing its interim financed emissions targets for 2030 and related policies.

Scope 3 emissions and HSBC’s challenges

Scope 3 emissions refer to indirect emissions occurring across a company’s supply chain—such as those from suppliers, business travel and the end use of its products. These are often the hardest to reduce because they involve external businesses and industries beyond a company's direct control.

HSBC’s decision to extend its net zero deadline to 2050 stems from several challenges.

The report states: “Progress in reducing emissions in the Scope 3 supply chain component is proving slower than we anticipated, driven mainly by the slower pace of the transition across the real economy.”

The bank points to the limited speed of technological advancements, the diversification of energy sources, and market demand for climate solutions as key barriers.

The bank also highlights the role of policy and regulation, explaining that it is “limited by, and cannot on our own overcome, the present lag in policy measures and the overall slower pace of the transition".

Without stronger policies and incentives, HSBC suggests that financial institutions alone cannot drive the necessary changes at the speed originally planned.

HSBC still expects to reduce its Scope 1 and 2 emissions—those from its own operations and purchased energy—by more than 90% by 2030, using energy efficiency improvements and investment in renewable power.

However, reducing emissions in the wider supply chain remains a much tougher challenge.

The role of financed emissions and offsets

One of the main ways banks contribute to global emissions is through their financed emissions—those linked to the businesses and projects they invest in.

HSBC is currently reviewing its interim financed emissions targets for 2030, recognising that customers in carbon-intensive industries face difficulties in transitioning.

“To the extent our customers are facing challenges, especially in light of the slower pace of the transition, there is no real benefit to society in simply sending those customers to another organisation that may be less committed to supporting their transition,” HSBC states in the report.

This reflects a broader debate in the financial sector about whether banks should divest from high-emission industries or work with them to support a slower, more managed transition.

HSBC says it wants to continue financing businesses making “positive steps” towards net zero but acknowledges that external factors—such as regulations and market shifts—are out of its control.

The bank also notes that to achieve net zero under its original timeline, it would have needed to rely heavily on carbon offsets. Offsets allow companies to compensate for emissions by funding projects that remove carbon from the atmosphere, such as reforestation or carbon capture technology.

HSBC states that its approach considers the latest best practice guidance from the Science Based Targets initiative (SBTi) on carbon offsetting.

Despite these challenges, HSBC continues to invest in sustainable finance.

Since 2020, it has provided and facilitated US$393.6bn in sustainable finance, an increase of US$99.2bn from 2023. The bank remains committed to its target of between US$750bn and US$1tn in sustainable finance and investment by 2030.

How HSBC compares to other financial institutions

HSBC’s revised 2050 net zero target aligns with many other major financial institutions, including Barclays, Citigroup, Goldman Sachs, JPMorgan Chase, Lloyds Banking Group, NatWest and BlackRock. Very few financial firms have set net-zero targets earlier than 2050.

Government-backed institutions, such as the Bank of England and the US International Development Finance Corporation, have set more ambitious goals, aiming for net zero by 2040.

However, even within the financial sector, there has been a shift in commitment levels.

BlackRock, one of the world’s largest asset managers, withdrew from the Net Zero Asset Managers initiative (NZAM) on 9 January, stating that its membership “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials.” Following BlackRock’s exit, NZAM has suspended its activities for review.

HSBC’s decision to delay its net-zero target exposes the complexity of reducing emissions across global supply chains.

While the bank remains committed to sustainable finance and reducing its direct emissions, its revised approach reflects the difficulties of transitioning entire economies towards greener energy and business models.

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