António Guterres

HSBC’s secretive loan to a coal company bulldozing a village

Original article from The Bureau of Investigative Journalism republished under Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

HSBC made a secretive multimillion-dollar loan to an energy company that is bulldozing a village in western Germany to expand a huge coal mine, just three months after the bank pledged to stop funding coal.

HSBC, which claims it is “helping to lead the transition to a more sustainable world”, approved the $340m deal with energy giant RWE after internal discussions in which senior figures at the bank recommended that its involvement should not be publicised.

Violent clashes broke out at the site of the mine on Wednesday as riot police tried to drag away protesters to make way for the bulldozers under the glare of the world’s media. Hundreds of environmental activists have set up camp in Lützerath, the last of several villages to be sacrificed for the 35 km2 Garzweiler mine, which is owned by RWE, one of Europe’s largest energy companies.

HSBC bankers raised concerns about the expansion of the mine and the demolition of the villages but ultimately greenlit the deal. The disclosure of the loan will mark a further blow to the bank, which has raised at least $2.4bn in so-called “sustainable finance” for companies worsening the climate crisis and recently had a series of adverts banned by UK regulators for greenwashing.

According to data from Refinitiv, RWE borrowed a total of $5.4bn in loans arranged by a group of 25 banks including HSBC, Barclays and Santander. All three have committed to aligning their financing and investments with net zero by 2050.

At COP27 last year the UN secretary general, António Guterres, said that it was reprehensible to use “bogus net-zero pledges” to cover up “messy” fossil fuel expansion. “It is rank deception,” he added. “This toxic cover-up could push our world over the climate cliff. The sham must end.”

HSBC told the Bureau: “Details of this [deal] and all its participating banks are in the public domain, as is normal. We have processes to ensure our financing aligns with our policies, which include an expectation on clients to produce and implement credible transition plans.”

Barclays declined to comment on the RWE loan but said it is phasing out financing of thermal coal mining and coal-fired power generation. Santander declined to comment.

Image: Mike Langridge 2008

‘We don’t want our name associated with it’

At the end of 2021, HSBC committed to withdraw financing from clients that are expanding the production of thermal coal and phase out funding for coal-fired power and thermal coal mining.

Bankers asked internally whether lending money to RWE would comply with this policy and raised concerns about RWE’s plans to demolish several villages. The Garzweiler mine produces 25m tonnes of lignite – the dirtiest form of coal – every year.

After several meetings, the sustainability and reputational risk department approved the deal but said that RWE should not publicise HSBC’s involvement.

An HSBC banker, who asked to remain anonymous, said of the deal: “We’re saying, ‘We don’t want our name to be associated with it, but here are the funds and please don’t tell anyone that we gave you the funds.’ I acknowledge that this approach is questionable.”

The deal was initially structured as a sustainability-linked loan, meaning its terms include a commitment from RWE that it will hit certain climate targets by 2025. But the penalty it would face for failing to do so is a tiny increase in the interest it pays on the loan. This would come to $86,700 a year for a company whose most recent annual revenues were $26bn.

Sustainability-linked loans are meant to encourage polluters to transition to more environmentally friendly operations, but companies that raise funds through the loans do not face any restrictions on how that money is used.

The HSBC banker said: “There is no guarantee that the [RWE loan] won’t be used to help pay a supplier, or pay salaries of contractors involved in the coal mine project.”

Protesters near Lützerath in January 2023. Photo: Lützi lebt/Unwisemonkeys CC BY-NC 2.0.

A condemned village

The vast Garzweiler open-cast mine has already swallowed 13 villages, according to Friends of the Earth Germany. Thousands of residents have been resettled and churches, schools and village halls have all been bulldozed to satisfy the voracious demand for energy in a heavily industrialised area.

Local residents and environmental activists across Germany have campaigned to protect another six neighbouring villages that were slated for demolition and appear to have had some success. RWE recently said that it would stop using coal in 2030 and so would drop its plans to raze five of the villages.

That just leaves Lützerath, where police are battling to evict hundreds of activists who have been living in abandoned buildings and makeshift treehouses for the past two and a half years. They have built a skate hall, farmed their own food and run workshops on climate justice.

Eckardt Heukamp was Lützerath’s last remaining resident until he moved out last year. “You saw how the church was torn down and dug up, how the villages have vanished,” he told the Times. “At some point you just say to yourself that it can’t keep going on like this, being subjugated and driven into a corner all the time.”

The showdown between the authorities and occupying activists escalated on Wednesday as riot police armed with batons moved in to evacuate the area, hauling out protesters and making arrests as fires burned in the streets of the village.

Just a few hundred metres away, one of the world’s largest land vehicles continues to carve away at the earth, bringing the edge of the mine ever closer to Lützerath.

Meaningless targets

In order to secure the loan, RWE committed to reducing its carbon emissions per unit of power generated, across all its energy sources. This means that, as long as it adds enough wind and solar power into the mix, the company could in fact increase its emissions from coal – and its planet-warming emissions overall.

It also committed to increasing the proportion of energy it generates from renewables and the amount it is investing in sustainable energy.

The penalty if RWE fails to meet all three targets is an increase in the interest it pays on the loan of less than 0.03 percentage points.

“It’s almost meaningless,” said Tariq Fancy, BlackRock’s former chief investment officer for sustainable investing. “Because the only thing that really changes behaviour in financial markets is when you change incentives. And you can’t change incentives with something so miniscule.”

Critics say RWE – which is Europe’s largest emitter of CO2 – could single-handedly stop Germany meeting its climate targets. Catharina Rieve of the German Institute for Economic Research said this will be the case if the company follows through with its plan to burn 280m tonnes of coal from the Garzweiler mine before 2030.

RWE told the Bureau it disputed this projection because the EU’s emissions trading system means that “if one company emits less, other companies elsewhere can emit more”.

The company added: “In the current energy crisis, ensuring security of supply is vital. At the same time, protecting the climate remains one of the key challenges of our time. RWE supports both. The company invests billions of euros into accelerating the energy transition.”

The HSBC banker said it was questionable to view a company as transitioning to net zero while it was expanding coal extraction, and that the bank’s attempts to challenge polluters on their transition plans was minimal.

HSBC decided the loan should not be classified as “sustainability-linked” internally, even though environmental targets remained part of the agreement. The bankers agreed it should not count towards HSBC’s target to contribute up to $1tn in sustainable finance by 2030 because of RWE’s plan to expand the Garzweiler mine and demolish several villages.

Barclays and Santander declined to comment on whether they are counting their parts of the RWE loan package towards their internal sustainable finance targets.

HSBC told the Bureau: “We have been clear we will finance energy companies who are taking an active role in transitioning to a net zero energy future, and we remain committed to this goal amid the double challenge of tackling climate change and an acute energy crisis in Europe.”

RWE is not the only company expanding fossil fuel production that has borrowed money under the guise of sustainable finance. Refinitiv data shows that Chrysaor – now part of the UK North Sea’s biggest producer of fossil fuels – raised $4.5bn with a sustainability-linked loan arranged by HSBC, Barclays, Lloyds, Natwest and a number of other banks.

One of the biggest oil producers in the US, Occidental Petroleum, raised $4bn, and the world’s biggest oil services provider Schlumberger raised $912m, also with sustainability-linked loans arranged by HSBC and other banks.

Tony Burdon, chief executive at Make My Money Matter, which campaigns for greener investments, said: “HSBC took an important first step in ceasing direct finance towards fossil fuel expansion projects. But as this report so clearly shows, they haven’t gone far enough.

“By continuing to provide sizeable corporate loans to companies involved in fossil fuel expansion such as RWE, HSBC is not just damaging the environment and displacing communities, they’re undermining their own climate targets.”

Lead image: Riot police stand in front of burning barricades as activists stage a protest in Lützerath. Credit: Bernd Lauter / Getty

Reporter: Josephine Moulds
Environment editor: Robert Soutar
Impact producer: Grace Murray
Global editor: James Ball
Editor: Meirion Jones
Production editors: Alex Hess and Frankie Goodway
Fact checker: Andrew Wasley

This reporting is funded by The Sunrise Project. None of our funders have any influence over the Bureau’s editorial decisions or output.

Original article from The Bureau of Investigative Journalism republished under Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

Continue ReadingHSBC’s secretive loan to a coal company bulldozing a village

Rebellious Climate Scientists Have Message for Humanity: ‘Mobilize, Mobilize, Mobilize’

Scientists in the Netherlands blocked an entrance to the Ministry of Economic Affairs and Climate Policy in The Hague on Wednesday, April 6, 2022. (Photo: Scientist Rebellion / @ScientistRebel1)

In face of the “escalating climate emergency,” the advocacy group Scientist Rebellion warns that IPCC summary to global policymakers remains “alarmingly reserved, docile, and conservative.”

Republished from Common Dreams under a Creative Commons licence (CC BY-NC-ND 3.0). 

KENNY STANCILApril 6, 2022

Amid a weeklong global civil disobedience campaign to demand climate action commensurate with mounting evidence about the need for swift decarbonization, Scientist Rebellion is highlighting specific gaps between what experts say is necessary and what governments allowed to be published in the United Nations’ latest climate assessment.

“We need a billion climate activists…The time is now. We’ve waited far too long.”

The landmark report on mitigation by Working Group III of the Intergovernmental Panel on Climate Change (IPCC)—part of the U.N.’s sixth comprehensive climate assessment since 1992 and possibly the last to be published with enough time to avert the most catastrophic consequences of the planetary crisis—was compiled by 278 researchers from 65 countries.

The authors, who synthesized thousands of peer-reviewed studies published in the past several years, make clear over the course of nearly 3,000 pages that “without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5°C is beyond reach.”

Meanwhile, a 64-page Summary for Policymakers (SPM) of the report—a key reference point for governments—required the approval of all 195 member states of the IPCC and was edited with their input.

Following a contentious weekend of negotiations in which wealthy governments attempted to weaken statements about green financing for low-income nations and fossil fuel-producing countries objected to unequivocal language about the need to quickly eliminate coal, oil, and gas extraction, the IPCC document was published several hours later than expected on Monday.

“Despite the escalating climate emergency and the total absence of emissions cuts, the framing of the final version of the SPM is still alarmingly reserved, docile, and conservative,” Scientist Rebellion, an international alliance of academics who are advocating for systemic political and economic changes in line with scientific findings, said Tuesday in a statement.

“The science has never been clearer: to have any chance of retaining a habitable planet, greenhouse gas emissions must be cut radically now,” the group continued. “Limiting warming to 1.5°C and responding to the climate emergency requires an immediate transformation across all sectors and strata of society, a mobilization of historic proportions: a climate revolution.”

“The IPCC [has] avoided naming the major culprits for 30 years, which is one reason for the absence of real emissions cuts,” the group added. “Facts detailing the complicity of the world’s richest countries in fueling the climate crisis have been watered down by the IPCC’s political review process.”

Scientist Rebellion proceeded to contrast the final version of the SPM—”the document that garners almost all attention”—to an early draft of a summary of the Working Group III report on mitigation that IPCC authors associated with the group leaked last August out of concern that their conclusions would be diluted by policymakers.

Peter Kalmus, a Los Angeles-based climate scientist and author who is participating in this week’s direct actions, told Common Dreams that the shortcomings of governments and policymakers have driven him to act.

Kalmus said he was willing to engage in civil disobedience and risk arrest this week, “because I’ve tried everything else I can think of over the past decade and nothing has worked. I see humanity heading directly toward climate disaster.”

With humanity “currently on track to lose everything we love,” he said, the scientific community must intensify its efforts.

“If we don’t rapidly end the fossil fuel industry and begin acting like Earth breakdown is an emergency, we risk civilizational collapse and potentially the death of billions, not to mention the loss of major critical ecosystems around the world,” said Kalmus. “This is so much bigger than me. Expect climate scientists to be taking such actions repeatedly in the future and in large numbers.”

On Wednesday, direct actions by scientists took place in Berlin, Germany; The Hague, Netherlands; Bogata, Colombia, and other cities.

In its Tuesday assessment, Scientist Rebellion documented how the political review process weakened or eliminated language about carbon inequality and the need for far-reaching socio-economic transformation to slash greenhouse gas (GHG) pollution in the final SPM:

Example 1: Section B6 of the report originally stated that “institutional inertia and a social bias towards the status quo are leading to a risk of locking in future GHG emissions that may be costly or difficult to abate.” This has been replaced with “global GHG emissions in 2030 associated with the implementation of nationally determined contributions… would make it likely that warming will exceed 1.5°C during the 21st century.” The final version also no longer mentions that “vested interests” and a focus on an “incremental rather than a systemic approach” are limiting factors to ambitious transformation.

Example 2: The leaked SPM stated that “within countries, inequalities increased for both income and GHG emissions between 1970 and 2016, with the top 1% accounting for 27% of income growth,” and that “top emitters dominate emissions in key sectors, for example the top 1% account for 50% of GHG emissions from aviation.” Neither statement appears in the final version.

“While the SPM—being approved line-by-line by all governments—is reserved, docile, and conservative, the situation is clear,” said Scientist Rebellion.

The group went on to quote U.N. Secretary-General António Guterres, who said Monday that “we are on a fast track to climate disaster.”

As Common Dreams reported Monday, more than 1,000 scientists in at least 25 countries on every continent in the world are expected to participate in strikes, occupations, and other actions this week to highlight “the urgency and injustice of the climate and ecological crisis,” and several demonstrations are already underway. 

Guterres, for his part, said Monday that “climate activists are sometimes depicted as dangerous radicals, but the truly dangerous radicals are the countries that are increasing the production of fossil fuels.”

For his part, Kalmus acknowledged it was going to take much more than a series of direct actions by scientists to turn the tide against inaction.

“We need a billion climate activists,” Kalmus said. “I encourage everyone to consider where we’re heading as a species, and to engage in civil disobedience and other actions. The time is now. We’ve waited far too long.”

“Mobilize, mobilize, mobilize,” he said, “before we lose everything.”

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Continue ReadingRebellious Climate Scientists Have Message for Humanity: ‘Mobilize, Mobilize, Mobilize’