HSBC shelves plans for trading, financing carbon credits

HSBC Holdings has abandoned plans to build a carbon credits desk, according to people familiar with the matter, as Europe's biggest bank cools to a market rocked by repeated allegations of greenwashing.

The decision means the bank is no longer working to build a dedicated unit focused on trading credits in the voluntary carbon market or on financing project developers who sell into the market, according to the people who asked not to be named discussing private information.

A spokesperson for HSBC declined to comment.

HSBC's carbon-desk plans were relatively shortlived. The bank explored moving into the market a couple of years ago, just as it peaked, seeking new hires to build a trading book and offer liquidity to clients.

Then, in 2023, the voluntary carbon market shrank by almost a quarter to roughly US$1 billion (S$1.34 billion) as greenwashing concerns prompted companies keen to offset their carbon footprints to back away.

The HSBC staff assigned to the desk have since been allocated other roles.

A carbon credit is supposed to represent 1 tonne of emissions that have been avoided, reduced or removed from the atmosphere.