As we begin to turn the corner in the fight against COVID-19, one clear way to honor the extraordinary sacrifice of the millions who have put the common good ahead of their own interests is to deliver a healthier, more resilient, and more sustainable future. To do that, we need to reboot the economy in green mode.
We, alongside many of our peers in the energy, industry, finance and civil society sectors, are joining the Energy Transitions Commission (ETC) in calling for economic stimulus to be invested in the transition to a low-carbon, net-zero-emissions economy. The global recovery presents a huge challenge, but a historic opportunity. Temptation to focus efforts – and stimulus packages – on the quickest path back to growth is inevitable. But this is likely to result in significant short-term investment in high-carbon industries and hard-to-abate sectors, particularly in emerging markets. It could put the targets of the Paris Agreement far out of reach and leave us facing a more profoundly damaging climate crisis in future.
By instead using the trillions of dollars our governments have pledged for the recovery well, and accelerating the transition to the low-carbon economy, we can create the future we choose: one with more sustainable and inclusive long-term economic growth. We have an opportunity to fund advances in environmental technology at scale, and to work to cover the large upfront costs needed to take renewable and low-carbon energy fully mainstream. This will also create greater resilience in the global economy, by reducing exposure to climate risk, which represents the greatest threat to the stability of the real economy. Building resilience against future shocks must be a priority in recovery plans.
The challenge I outline is not one to view from the sidelines. HSBC is choosing to use its scale, network and influence to play a leadership role in building more sustainable, and more inclusive, economic growth. Though we don’t yet have all the answers to plot this course, we know the only way we’ll make our greatest contribution is by saying: “We are in.” We support the ETC’s seven priorities to embed the low-carbon transition into the economic recovery response. We too believe the most effective way to stimulate the green economy is to significantly reduce the cost of funding environmentally sustainable projects, and to focus investment in areas that will have the greatest impact on the low-carbon transition, such as renewable power systems, green infrastructure, and innovative low-carbon activities.
Crucially, we also recognise the importance of supporting higher-carbon sectors to make the transition to low-carbon without adding instability. So – aligned with the priorities outlined by the ETC – we will focus particular effort on supporting, and accelerating, the transition in harder-to-abate industries, such as automotive and fossil fuels. We will work with governments and other banks to together identify the most viable opportunities to focus the recovery on the low-carbon transition, and offer subsidised funding to accelerate their success.
We’ll use our global trade and supply chain solutions to connect financing flows from all over the world to sustainable projects, and help build local financial centres as green financing hubs. In emerging markets, which face the most challenging transition, we will focus where the global benefit will be greatest. And we’ll help our business customers map the path to their own low-carbon transition, or identify sustainable investment opportunities at attractive rates.
We want individuals to see us as a facilitator of their own contributions to the transition too. We’ll work to support individual recovery, and continue to find new ways to help our customers grow their wealth and wellbeing while their money works to build a greener future.
COVID-19 has extracted a terrible price, but has bought us a chance to pause and consider our options. Our future social and economic welfare depends on a healthy environment, one that requires a significant level of investment, and a longer-term outlook. In banking, we consider risk and reward. It is clear to me that this investment offers the ultimate return: a cleaner, fairer, more prosperous and more sustainable future. If we reboot into a green economy, we not only set the stage for renewed growth, we set the stage for sustained growth. We are in.