Environmentally, that's a pretty big footprint. HSBC may not be responsible for the kind of carbon emissions of, say, Big Oil, but producing the energy sucked up by the bank and its airborne execs resulted in the emission of some 606,300 tons of CO2 in 2003. This year that figure will top 771,630 tons. Unlike its bottom line, that's not a figure the bank is proud of.
Nor is it willing to let it stand. In late 2004, HSBC committed itself to becoming carbon neutralthe first major bank to do soby January 2006. The principle is simple: the bank spends its cash on green energy projects that reduce CO2 emissions by the same amount the bank creates. "We realized we had to go above that 'business as usual' scenario," says Francis Sullivan, HSBC's adviser on the environment, speaking from the corporation's towering London HQ. The bank was already spending $7 million annually to boost the energy efficiency of its buildings but, says Sullivan, "we cannot generate all the electricity, heating, cooling and lighting we need from CO2- free sources. Buying other people's reductions seemed to be the right way forward."
In a dry run during the last quarter of 2005, the bank could well have met its target. For each of the approximately 187,400 tons of CO2 HSBC generated, it sent $4.43 to four projects that reduced greenhouse-gas emissions by the same amount. Among the projects: a wind farm that powers up to 45,000 homes in New Zealand and a project in Germany that reduces emissions of methane gas by converting pig and cattle manure into heat and electricity. An independent auditor will report this month on whether the bank can officially call itself carbon neutral.
The plan is not without its flaws. For one thing, it's not easy to be certain the reductions being offered are real. "You could end up spending a lot of money on something that didn't exist, or had been sold to somebody else already," Sullivan says. Besides, carbon neutrality in itself is not going to head off global warming. The steps HSBC has taken are a good start, says Mike Childs of Friends of the Earth in London. "But what are they going to do to minimize the impact of their operations?"
Sullivan has an answer for that. Under the Carbon Management Task Force he set up in 2004, HSBC plans to boost investment in energy efficiency to cut emissions by 5% by 2007, using measures like automatically switching off staff PCs after hours. The bank will also be buying more of its electricity from green sourcesthe kind not generated from fossil fuels. Once it has come to grips with its own direct impacts, Sullivan suggests, HSBC may start offering advice to other firms interesting in offsetting their own emissions.
Meanwhile, HSBC has already set its sights even higher. "There's nothing to stop us being carbon negative," says Sullivan, comparing HSBC's CO2 emissions to a monthly paycheck and offset credits to monthly expenses. "We could make purchases from time to time that will either take us back down to zero, or will take us negative for a bit and then we would come up again," he says. "Sometimes you're in credit, and sometimes you're in deficit." Now that's a bank talking.