Committed to the transition to net zero, HSBC is one of the world’s largest banking and financial services organizations, serving customers worldwide from offices in 62 countries. In October 2020, HSBC set its ambition to become a net zero bank by 2050 and published at the beginning of 2024 its first Net Zero Transition Plan, providing an overview of its approach to net zero and the actions needed to help meet this ambition.
The plan sets out how the Bank intends to use its strengths to make financing, facilitation and investment choices that can have a meaningful impact on decarbonization in the real economy. It also lays out its approach to sector transitions, and how the bank is transforming itself, including how it supports its clients, how it embeds net-zero into its business, and becomes a partner for systemic change.
HSBC is working with its clients to help them reduce their emissions and scale up low-carbon solutions, as it strives to reduce its own. This should help businesses and economies to progressively move away from high-carbon activities.
The Bank is also providing finance to accelerate climate change solutions and is participating in multi-stakeholder partnerships to help channel investment swiftly towards sustainable projects.
● 3 questions to Christian Déséglise, Group Head of Sustainable Infrastructure and Innovation, HSBC
1- Christian, you are one of the founders of the FAST-Infra initiative. What are the reasons for creating this framework?
Existing infrastructure – defined broadly as transport, energy, telecommunications, water, and buildings – accounts for almost 70% of global GHG emissions. Moreover, as low- and middle-income countries drive population growth and urbanization, they will account for most of the expected doubling of infrastructure assets by 2050, mostly through greenfield projects. If we want to avoid catastrophic climate change, we must roll out new, sustainable infrastructure at scale, while decommissioning or retrofitting old, unsustainable assets.
Infrastructure needs to be designed, built and operated in a sustainable way otherwise it will lock the world into a high emissions trajectory and not be resilient to climate change.
Private sector finance is not flowing in significant size to fund projects. Multilateral development banks (MDBs) are key participants in the sector, but they have limited balance sheets and infrastructure competes with other areas of lending. Crowding in private capital will thus be key to closing the investment gap. To overcome this hiatus, FAST-Infra was established by HSBC, IFC (International Finance Corporation), OECD (Organization for Economic Co-operation and Development), GIF (Global Infrastructure Facility) and CPI (Climate Policy Initiative) as an industry-led, public-private partnership, to provide practical solutions which will help mobilize private capital for the development and financing of sustainable infrastructure. In our view, the FAST-Infra Label is one of these solutions.
2- How can the FAST-Infra Label change the situation?
The OECD has estimated that investment needs for infrastructure are about $6.3 trillion per year between 2016 and 2030, and about 10% more ($6.9 trillion) in order to limit a temperature the temperature increase to well below 2°C compared to the pre-industrial era.
The FAST-Infra label, now managed by the Global Infrastructure Basel (GIB)-led Secretariat, aims to provide consistency regarding the quality and sustainability of assets in the market, drawing in more institutional investors at the post-construction phase and scaling up private financing volumes for suitable projects globally. It has been endorsed by groups managing trillions of dollars of assets.
The label will facilitate due diligence processes and structuring of investments for sustainable infrastructure assets, thereby reducing transaction costs. Information on all labelled assets will be readily available to market participants via a data repository which Bloomberg is building, and which will provide a transparent platform for the market to disclose, report, and measure performance of sustainable infrastructure assets over time. This will promote consistent reporting under existing disclosure frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD).
A consistent and broadly accepted label defining sustainable infrastructure assets has a catalytic impact in two areas: it serves to draw in private capital, and it encourages host governments and developers to introduce higher sustainability standards into the infrastructure they are developing.
While institutional investors are keen to invest in sustainable infrastructure that can offer stable, long-term returns, there remains a gap in the market to verify which assets are genuinely sustainable at the asset-level. We believe the Label will help address this gap.
3- Can you tell us more about the other actions planned by the FAST-Infra initiative to increase the development of sustainable infrastructure?
After a promising start with the launch of the Label, we believe that the FAST-Infra Group can continue to incubate practical solutions to mobilize private investment by collaborating effectively with the various stakeholders of the infrastructure ecosystem.
One area of focus has been the development of the FAST-Infra Platform. Infrastructure projects need not only to be sustainable, they need to make economic sense, requiring a complex project risk analysis, management, and mitigation, currently available for large projects only. Several public and private institutions led by HSBC have designed and developed an open-source, innovative, collaborative data-centric platform: FAST-Infra Platform (FIP).
FIP is the digital platform redesigning collaboration between stakeholders in preparing, developing, financing and deploying sustainable infrastructure around project data to facilitate and scale project financing and refinancing of infrastructure projects of any size. It aims at becoming the “Market infrastructure for the infrastructure market”. A business plan has been developed, calling for strategic and financial partnerships to further operationalize the platform in 2024.
[1] Source : Bhattacharya, A., Gallagher, K.P., Muñoz Cabré, M., Jeong, M., & Ma, X. (2019) Aligning G20 Infrastructure Investment with Climate Goals and the 2030 Agenda, Foundations 20 Platform, a report to the G20
