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Mines, Pipelines and Oil Rigs: What HSBC’s ‘Sustainable Finance’ Really Pays For

8 min read.

The East African Crude Oil Pipeline has been thrown into the spotlight as investors raise concerns about environmentally damaging companies issuing debt labelled “sustainable”.



Mines, Pipelines and Oil Rigs: What HSBC’s ‘Sustainable Finance’ Really Pays For
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In the Campos basin off the south-east coast of Brazil, two ships contracted by a major energy corporation will be used to mine vast quantities of oil in a project that could generate more than 1 billion tonnes of CO2 emissions.

In east Africa, an engineering company is preparing to start work on the construction of an environmentally devastating oil pipeline that threatens to derail vital targets set out in the Paris Agreement. And in the north of India, one of the world’s largest cement companies – which last year emitted more CO2 than Greece – has applied to clear a large swathe of forest less than a kilometre away from a wildlife sanctuary.

All these companies’ operations have not only been facilitated by HSBC – which claims it is “helping to lead the transition to a more sustainable world” – but have benefited from deals that the bank has labelled sustainable finance.

HSBC has committed to contribute up to $1 trillion in sustainable financing and investment by 2030. However, the Bureau can reveal that billions of dollars being counted towards this target are in fact helping to fuel the climate crisis.

Central to the issue is a relatively new financial product known as a sustainability-linked bond (SLB). SLBs are an ostensibly green type of debt, designed for companies to raise money to fund their transition to more sustainable activities.

Companies that raise funds through SLBs do not face tight restrictions on how that money is used; instead they agree to certain targets related to sustainability. But these targets are often remarkably weak and the penalties for failing to meet them can be paltry – leaving SLBs as a way for companies to give the appearance of environmental concern while continuing to worsen the climate crisis.

For instance, the cement company applying to clear woodland in India is UltraTech, which has faced strong opposition in the country over environmental damage caused by its operations and was recently fined for breaching air pollution limits. HSBC has helped UltraTech borrow $400m via an SLB, according to data provided by Refinitiv, with a target for the company to cut emissions by 22% per tonne of cement produced by March 2030.

But should UltraTech fail to meet that target, the penalty would be an increase in the rate of interest on the bonds of less than 1%. And because the assessment date is just six months before the debt is due to be repaid, the total sum would be just $3m – or 0.05% of the company’s revenues last year.

An analysis of the bonds HSBC counts towards its sustainable finance target found at least $2.4bn worth of deals for companies that are worsening the climate crisis. Whether in the form of “green bonds” or SLBs, the bank is helping raise money to fund the expansion of fossil fuels, air travel and deforestation – and labelling it as sustainable finance.

Sean Kidney, chief executive of the non-profit Climate Bonds Initiative, told the Bureau that companies find SLBs particularly attractive because they are easier to issue than green bonds: “Treasurers will try anything that reduces their cost of capital,” he said, adding that the SLB market is “deeply compromised” and bank targets for sustainable finance are “flaky as hell”.

HSBC is already under pressure over greenwashing after a series of adverts about the bank’s environmental initiatives was banned by the UK advertising watchdog. The Advertising Standards Agency said HSBC had misled customers and had to ensure that any future claims did not “omit material information” about its contribution to the climate crisis.

Ulf Erlandsson, chief executive of the Anthropocene Fixed Income Institute, a research body, said sustainable finance is used like a “papal indulgence you buy for your sins”.

He added: “You might subsidise the sustainable part of your business and push on that for your green statements while continuing to be involved with a large oil corporation.” He points to HSBC’s longstanding relationship with Saudi Aramco, the world’s most polluting company, for which the bank is reported to have facilitated billions of dollars in loans.

Destroying the environment in India

As well as its heavy carbon emissions, UltraTech has been repeatedly criticised for its impact on the local environment. People living near its mines in Gujarat say dust from the operations have damaged their crops. Some houses are just 50 metres from UltraTech’s stockyard, which is piled high with surplus cement.

The company’s permit requires it to settle the cement dust with water but local residents say this rarely happens. Those who live closest to the plant sweep up mounds of dust every day and have noted a rise in cases of lung disease in recent years.

UltraTech told the Bureau all of its cement manufacturing units are operating in full compliance with all applicable environmental norms and regulations.

Razing reserves in east Africa

Another bond HSBC counts towards its sustainable finance target was raised by Worley, which does most of its business in fossil fuels and petrochemicals. Worley borrowed more than $600m via a sustainability-linked bond last year with the help of HSBC. Under the terms of the bond, Worley has committed to cutting the emissions of its operations and its energy suppliers. But this pales in comparison to the emissions the company facilitates through its work expanding oil and gas production and coal mining.

For example, the company is the engineering contractor for the East African Crude Oil Pipeline (EACOP) – an environmentally ruinous project that will slice through elephant and giraffe habitats and is expected to generate 33m tonnes of CO2 each year. EACOP is expected to pump 216,000 barrels of oil per day from new oil fields in Uganda, a country at the frontline of the climate crisis.

‘We need more rules so in a year’s time, HSBC will find it much harder to put in crap bonds. At the moment it’s an absolute mess’ – Sean Kidney, Climate Bonds Initiative

“Climate change is really a major concern when you look at a project like EACOP,” said Diana Nabiruma from the Africa Institute for Energy Governance, an NGO focused on promoting clean energy. “We are already experiencing climate change and we are one of the least prepared countries to address its impacts.”

More than half a million people are starving in Karamoja, in the north-east of Uganda, a famine that experts blame in part on the harsh drought and damaging floods that have battered the region. Ugandan MP Faith Nakut broke down when describing a recent visit. “A whole family died because they had no food,” she said. “So I came back really heartbroken because … I never imagined we would be at the level where people die because they were lacking food.”

EACOP’s 1,400km route crosses a number of nature reserves and one third of the pipeline runs alongside the vast Lake Victoria, which more than 40 million people depend on for their livelihoods. An Oxfam-commissioned review of its environmental assessment warned that oil spills “will occur” as a result of the project. Erlandsson said he would be wary of any sustainable finance product linked to EACOP because it is so controversial.

Worley, which did not respond to our request for comment, is working on several other projects expanding fossil fuels around the globe. One is the Nigeria-Morocco gas pipeline that will extend to Europe – an estimated $25bn project due to be completed in 2046, just four years before the world is supposed to achieve net-zero emissions according to the Paris Agreement.

The International Energy Agency has said that for global emissions to fall to net zero by 2050, and to limit global heating to 1.5C, new investments in oil and gas need to stop now.

A ‘carbon bomb’ in Brazil

That message has not filtered through to Yinson, a Malaysian company that contracts out FPSOs – vast ships converted into floating oil rigs. It has leased two of its ships to Brazil’s state-controlled energy group, which is amassing the world’s largest fleet of FPSOs, to mine the Campos basin – a project that has been described as a “carbon bomb”. Yinson raised $240m with an SLB arranged by HSBC with targets to reduce the carbon emitted by these ships and increase its production of renewable power.

If it fails to meet these targets, the maximum penalty Yinson will face is just $600,000 – or 0.07% of last year’s revenues. What’s more, the agreement covers the carbon emitted by the ships – but makes no mention of the vast increase in emissions from burning the oil that the vessels will help extract. Yet the money will still be labelled by HSBC as sustainable finance and counted towards its green goals.

Gustavo Pimentel, chief executive of NINT, an ESG research and advisory company, said calling this debt “sustainable” is greenwashing. “Somehow the market converged to call everything ‘sustainability-linked’ and I think this does a poor job of informing investors and society in general of what each transaction actually contributes to society,” he said.

A large part of the problem with SLBs lies in the fact that the second-party opinion providers, which assess the bonds’ sustainability credentials, are hired by the very companies issuing the bonds.

The consultancy hired by Yinson to assess its bonds, ISS, found the targets to be “relevant, core and material”. ISS came to this conclusion despite noting that Yinson’s “decarbonisation roadmap” appears to involve the company providing FPSOs for oil and gas production until 2050, while the International Energy Agency has called for major reductions in oil and gas production much earlier than that.

Yinson declined to comment.

Greenwashed bonds

HSBC’s sustainable finance target can also be met with green bonds, some of which are fuelling the climate crisis and would be considered greenwashing by one of its own senior bankers.

“For me, greenwashing is an issuer [of a green bond] financing an initiative that’s ultimately not aligned with the Paris Agreement,” Farnam Bidgoli, then head of HSBC’s sustainable bonds group in Europe, told Capital Monitor last year. “The assessment shouldn’t just be on the use of proceeds, but the whole company profile. It’s much more about the holistic issuer strategy.”

HSBC, however, helped the Airport Authority of Hong Kong raise $1bn via a green bond that can be used to fund the expansion of the airport. The proceeds can be put towards various ostensibly sustainable projects – such as developing “green buildings” – but the deal fails to account for the dramatic increase in carbon emissions from the extra flights that will result from the airport’s near doubling of capacity.

HSBC also helped Etihad Airways raise $600m with an SLB, with targets for the company to reduce the CO2 it emits per flight. The second-party opinion provider – paid for by the airline – said Etihad Airways’ 2025 targets were not in line even with the less ambitious 2C scenario target set by the Paris Agreement, but approved them anyway.

Etihad Airways told the Bureau: “By issuing a sustainability-linked [bond], Etihad is voluntarily adding to its existing commitments.” It said the proceeds of the bond will be used to fund investments in its transition to becoming a net-zero company by 2050. Vigeo Eiris, which evaluated the target, said the bond aligned with international standards and that the assessment was accurate at the time it was published.

Other bonds that HSBC puts towards its sustainable finance target include those raised by energy giants Enel, which is expanding the capacity of its gas-fired power stations; and Repsol, which was responsible for an oil spill that has been called Peru’s worst ever environmental catastrophe. Proceeds of the green bond raised by Engie, a French energy company, can be used to convert two power plants from burning coal to burning wood instead. Many scientists say power stations that burn wood add two to three times as much carbon dioxide to the air as those burning fossil fuels.

Enel told the Bureau its overall electricity output is expected to grow but that the proportion generated by burning gas and other fossil fuels will decrease by 2024, in line with its path to net zero by 2040. Repsol declined to comment. Engie disputes the scientists’ analysis of emissions from burning wood for energy compared with fossil fuels.

Elsewhere, HSBC helped raise $600m via an SLB for a financing arm of John Deere, which provides credit lines for buyers of its own heavy machinery. This has been linked to the illegal deforestation of the Amazon, according to a recent report.

John Deere told the Bureau: “We do not condone the use of our machinery in illegal activities on protected or preserved land. Such activity violates John Deere’s values and policies which aim to create sustainable solutions for all customers. John Deere Financial in Brazil meets and/or exceeds all federal regulations for reviewing and approving financing applications.”

HSBC also worked with China Construction Bank (CCB) to raise an SLB with a target that it may have already reached at the time the bond was issued. CCB last year helped thermal coal companies raise $34bn, according to the Global Coal Exit List.

The Beijing-based Asian Infrastructure Investment Bank (AIIB), meanwhile, issued several bonds that will go towards HSBC’s sustainable finance target. AIIB has pledged not to support coal-related infrastructure but in practice the bonds could be used to fund any of its ongoing projects. These include the upgrade of a major coal transport route in Bangladesh that uprooted hundreds of homes and businesses, and the development of a floating offshore gas carrier to be contracted out to BP.

Neither CCB nor AIIB responded to our requests for comment.

Kidney of the Climate Bonds Initiative said so-called sustainable finance warrants serious scrutiny from media and NGOs. “We’ve got to put up more guidance and more rule sets, then we’ll start shooting people down more aggressively, including the banks. So in a year’s time, HSBC will find it much harder to put in crap bonds. It is, at the moment, an absolute mess.”

This article was first published by The Bureau of Investigative Journalism.

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Defend the Freedom of the Press



Defend the Freedom of the Press
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We, The Elephant, stand with our fellow journalists against the attacks meted during the coverage of the recent demonstrations. An independent, impartial, and objective media is a pillar of our democracy and crucial to both the state, the opposition, and the wider public. Freedom of the press is a non-negotiable.

Going by recent events, we are quickly sliding down a precarious path as regards freedom of the press. The spike in disinformation, influence peddling, hostility and attacks blurs the ability for the media sector to deliver, timely, critical and credible information necessary to help the public make informed decisions and hold meaningful conversations.

We are also particularly concerned by the targeting of specific media persons, media institutions, international journalists, and media industry practitioners.

In March 2023 alone, we have witnessed at least 45 reported cases of attacks, theft, harassment, and arrests by both sponsored state and non-state actors with some of the journalists affected suffering direct attacks and bodily harm.

The genesis of these attacks can be linked to the publication of the photos and issuance of summons by the Directorate of Criminal Investigations (DCI) linked to the demonstrations on the 20th of March. The publication on the state agencies social media platforms was an exercise in error that included false, misleading and misconstrued claims against participants in the demonstration.

The unintended outcome has been the formulation, and instrumental-ization of hostility and violence against members of the 4th estate. So far we have witnessed the targeting of reporters, videographers, freelance practitioners, and photographers by police, hooligans, hired goons, and looters who’re kin to cause mayhem and evade justice.

Journalists as chroniclers of societal events, scribes of the evolution of political demands, and recorders of the unwarranted, gross violations, have a solemn duty to inform the public on matters of public interest. They therefore ought to be accorded their respect in time, their place in the political contestations as neutral arbiters, and respected as repositories of current and historical memories.

We urge our colleagues while out in the field to prioritize their safety, assess the risk factors, coordinate with their newsrooms, and the law enforcers, and review media ethics and the legal ramifications in the course of their work during demonstrations.

We urge freelance journalists to coordinate, liaise, and embed with their colleagues for safety purposes. We also urge for urgent investigations into the theft, assault and detainment of journalists, and call for speedy prosecution of the perpetrators.  We also ask for refrain by public figures from spotlighting specific media persons and media houses, and ask aggrieved parties against media persons and institutions, to channel their complaints through the respective legal channels as provided by law.

The Elephant Desk

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Addressing the Information Disorder: Building Collaboration

In deploying measures to address the information disorder, the trend is towards the establishment of multi-stakeholder collaboratives.



Addressing the Information Disorder: Building Collaboration
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In a recent article, I discussed the need to address the information disorder (defined as mis- and disinformation) through collaborative multi-stakeholder collectives such as Fumbua Kenya. In this article, I take the next step of envisioning the ideal composition for such collectives. However, before doing so, I briefly explore other similar collectives with a view to drawing lessons on building collaboration.

A tried and tested concept? 

For several years now, numerous stakeholders have attempted to address the information disorder in different ways such as fact-checking and conducting media literacy trainings. These solutions were often used in isolation. More recently, stakeholders recognized the importance of collaboration in deploying measures to address the information disorder. As a result, there has been a growing trend towards the establishment of multi-stakeholder collaboratives to address the information disorder as it relates to issues such as the pandemic or democratic processes such as elections.

Collaborative efforts have largely been dominated by media practitioners. For example, in Brazil, during the 2018 elections, a collective of journalists drawn from twenty-four different local media companies was established to debunk rumours, fabricated content, and manipulative content aimed at influencing the polls. This collective is known as Comprova. In the same year, a similar collective was established in Mexico with the same mandate. It was known as Verificado. A year later, Uruguay followed suit and established a collective under the same name. However, Uruguay’s iteration of Verificado broke the mould by incorporating academics, universities, and civil society professionals. With the examples of Brazil, Mexico, and Uruguay, Argentina was able to pull together a collective of more than 100 news organizations under the Re-Verso banner. Much like Uruguay, Argentina’s Re-Verso took the collaboration further by including other disciplines such as forensic scientists who were able to assist the journalists in fact-checking audio messages.

With the experiences of these collectives, recent multi-stakeholder collectives have become increasingly diverse in their composition. For example, the BBC recently launched the Trusted News Initiative which brings together journalists, social media platforms and technology companies, and researchers. The mandate of the Trusted News Initiative is to increase media literacy, develop early warning systems, engage in voter education, and provide a platform for stakeholders to share lessons. Similarly, the Credibility Coalition, which is comprised of researchers, journalists, academics, policymakers, and technologists, aims to foster collaboration around developing common standards for information credibility. One of Fumbua’s members—Meedan—is also a member of the Credibility Coalition.

When these collectives were initially established, they were primarily driven by the recognition of the importance of collaborative journalism, and the need to reach broader audiences. As a result, their composition was heavily biased towards the media. However, subsequent iterations recognized the importance of broadening the pool of collaboration to factor in other disciplines. Some have articulated this importance explicitly. For example, Nordis, a consortium of researchers and fact-checkers funded by the EU Commission, explains that the diversity in their composition is aimed at developing new insights, technological solutions, recommendations for journalistic practice and tools educators can use. Perhaps most importantly, they hope to have concrete policy recommendations for legislators.

Extrapolating the basics 

Based on the examples of multi-stakeholder collectives around the world, one can discern common trends. For one, most collectives seem to be centred around journalistic practice and as such are dominated by media organizations. While there has been a recognition of the role played by other stakeholders such as academic researchers and cognitive scientists, their involvement has not been as robust and deliberate. These collectives also often crop up in response to a major socio-political/socio-economic event such as an election, and this influences their composition and activity.

Most collectives seem to be centred around journalistic practice and as such are dominated by media organizations.

Fumbua has largely conformed to these trends, being comprised of a large number of media organizations, and having been established to address the information disorder around the 2022 general election in Kenya. However, Fumbua’s experience is unique in several ways. For one, Fumbua included a pre-bunking initiative which was the first of its kind in Kenya—StopReflectVerify. Fumbua also relied on social media personalities and performing artists to repurpose some of the core messages developed by the journalists within their collectives. The use of multimedia content enabled the collective to engage audiences in ways that align with the nature of information consumption on social media. Perhaps most crucially, Fumbua was able to use its network to engage with policymakers and regulators to attempt to impact public policy.

One size does not fit all

When one considers the experience of the diverse collectives around the world, it is clear that each iteration was significantly influenced by several factors which were unique to each situation. From the social issue the collective was designed to respond to, to the available resources and organizations willing to participate, it is clear that one cannot define, in absolute terms, what these collectives should look like.

However, what remains clear is the importance of such collectives being intentional about defining the scope of collaboration, the role of each member, and how each member’s activities will feed into the larger collective’s work. In building collaboration, such collectives should also be mindful of the information value chain in their ecosystem. For example, in Kenya, one would be remiss to exclude vernacular radio stations which remain a consequential player in the media ecosystem.

The diversity of these collectives should be informed by the unique issues they are responding to. Fumbua for example was able to engage a large cross-section of its audiences in a way that was familiar to them by deliberately including stakeholders at all levels of the media ecosystem and supporting these stakeholders by amplifying their content and helping them repurpose it. However, at a broader level, these collectives should be designed around changing how the populace interacts with and consumes information. It no longer suffices to raise awareness around the existence of the information disorder, or to flag information as false or misleading. For this reason, these collectives ought to be focused on impacting how information systems are designed. This goal, considered in the context of the particular collectives, should then inform their composition.

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The Roots of Toxic Masculinity in South Africa

In South Africa and elsewhere, toxic masculinity is an outcome of modern individualism rather than tradition.



The Roots of Toxic Masculinity in South Africa
Photo: Manenberg. Image credit Christopher Morgan via YWAM Orlando on Flickr CC BY 2.0.
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As I stepped into the nightly streets of Cape Town’s most dangerous neighborhoods, I sensed that my journey would be an initiation. The goal of my research project was to document the lasting impact of apartheid racism and gender inequalities on tough and street-smart men. Little did I know that I would make every effort to become invulnerable in my own kind of way, trying to prove my masculinity and academic prowess through ethnographic fieldwork.

Just like many of the men I met in South Africa, I was attempting to shed my vulnerability. However, it never fully worked, even for a privileged European white man like me. Ethnography is an art form rather than a science and it makes researchers vulnerable as they continuously affect and are affected by the research subjects. Moreover, the pressure I put on myself to produce something exceptional to gain respect and impress others took a toll on me.

The paradox of (in)vulnerability made both my research participants and I complicit, although on vastly different terms. For me, attempts to become an invulnerable individual with fixed gender identity led to relationship problems, substance abuse, irritability, and suicidal thoughts. The more I sought invulnerability, the more vulnerable I felt. This (in)vulnerability has received little attention in research, which often disregards the gendering of behavior or turns masculinity into both the cause and solution for a range of social, psychological, and medical problems.

Over the course of more than 10 years of research, I could feel the pulse of (in)vulnerability; the throbbing between disconnection and connectivity, rigidity and disorder, closure and openness. Perhaps this pulse is a fundamental aspect of life for everyone, regardless of social and cultural differences. But the struggle for invulnerability takes on different rhythms based on circumstances. I have been witness to the pain and struggles of the men I interviewed. Some committed suicide, others were murdered, had fatal accidents, or died from infectious disease before they reached their 40s.

Although I stayed in contact with some of these men, I retreated to my safe haven after completing my doctoral research. Writing my dissertation and book was draining, filled with anger and shame over my inability to support the people whose stories I documented, and my own shortcomings. I was not living up to the ideals of a compassionate human rights advocate or a productive academic who could be sharp, unyielding, and daring at all times. But the survivor’s guilt was just another manifestation of me believing that I could be an individual savior.

As I delved deeper into my research, I realized I had fallen into a well-worn pattern—a white European male traveling to Africa to prove his masculinity. It dawned on me, most of the behaviors that are associated with toxic masculinity are an outcome of modern individualism rather than tradition in South Africa and elsewhere. White men imported the gendered ideal of a self-made individual. The trope can be traced back to 17th-century English philosophers who defined the individual as the “owner of himself,”” who owes little to others, with a core identity composed of seamless traits, behaviors, and attitudes, rather than an assemblage of contradictory elements adopted through ongoing exchanges with others.

South African psychologist Kopano Ratele argues that well-meaning critiques of gender ideologies tend to homogenize and retribalize African masculinities as if they had no history. From this perspective, contemporary heteronormativity and male power are not necessarily a matter of “‘tradition”’ as a single and fixed structure. Yet, gender development work in Africa often uses the term “toxic masculinity” interchangeably with “traditional masculinity” particularly among low-income Black men.

During my doctoral research, I found that my own assumptions about the dark ages of patriarchy and their continuing effects on South Africans were based on a teleological model of progress that obscures how modern individualism creates toxic masculinity. My pursuit of invulnerability through ethnographic research was an attempt to “be somebody” in a world in which personhood is seemingly no longer defined by mutuality in relationships. For the most marginalized men I met in Cape Town, this pursuit was by far more distressing, in part, because these men were aware of the fact that they always depended on others for their very survival.

This post is from a partnership between Africa Is a Country and The Elephant. We will be publishing a series of posts from their site once a week.

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