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On 19 October 2022, the Advertising Standards Authority (ASA) that two of HSBC UK Bank plc (HSBC)’s advertisements had breached the  rules due to misleading advertising with regard to its environmental claims. The ASA has since told HSBC that the advertisements should not appear again in the same format and that the bank must ‘ensure that future marketing communications featuring environmental claims were adequately qualified and did not omit material information about its contribution to carbon dioxide and greenhouse gas emissions’.

This is the first time that the ASA has banned advertisements by a bank on the grounds of ‘greenwashing’—the practice of using deceptive PR and marketing to convince consumers that an organisation’s products, aims and/or policies are environmentally friendly. This is particularly significant given that HSBC’s 2021 stated that the bank was ‘enhancing…[its] approach to greenwashing risk management’.

The ASA received 45 complaints in relation to the two advertisements, with the complainants arguing that they were misleading due to the omission of information regarding HSBC’s contribution to carbon dioxide and greenhouse gas emissions through the bank’s financing of fossil fuel companies. The bank responded that its ‘financing of greenhouse gas-emitting industries was required during the transition to net zero’ and that doing so ‘was not in conflict with the aims of a transition to net zero’. It also stated that the advertisements did not mislead consumers regarding HSBC’s total environmental impact, as both were in relation to specific environmentally friendly initiatives—namely the US$1trn (£900bn) the bank had promised in financing and investment globally to help its clients transition to net zero and its endeavour to help plant two million trees in the UK.

However, the ASA disagreed with HSBC’s reasoning. The regulator argued that it was unlikely that consumers would be able to comprehend the intricacies of HSBC’s transition to net zero and that the bank would state ‘unqualified claims’ in relation to its environmentally friendly work, while simultaneously also financing companies that were responsible for significant greenhouse gas emissions. It therefore ruled that this latter point was ‘material information’ insofar as it should have been made clear.

One of the complainants, Adfree Cities, had the following to on the ASA’s ruling:

‘This is a significant moment in the fight to prevent banks from greenwashing their image. HSBC can no longer ply us with ads pretending they are green while continuing to bankroll climate breakdown in the background. HSBC and other banks such as Barclays and Standard Chartered must stop funding fossil fuels instead of attempting to buy public favour with deceptive marketing campaigns, before these reputational risks turn into legal ones.’

The ShareAction-HSBC dispute

This is not the first time that the bank has been held to account for its unclear statements and policies in relation to its environmentally friendly initiatives. Back in March 2022, Market Tracker examined a dispute between responsible investment charity ShareAction and HSBC, where the former the bank of ‘breaching the spirit of the agreement’ that the charity had settled with HSBC back in March 2021 (see: The letter versus the spirit—the pitfalls of resolution interpretation). The agreement saw the withdrawal of a shareholder requisitioned resolution, tabled by a consortium led by ShareAction, in favour of a management resolution on the topic of the bank’s climate targets. However, when the bank released the targets in its 2021 , the charity, as well as other , were quick to highlight a number of loopholes, including the omission of capital markets from the climate targets.

Following the outcry, HSBC chief sustainability officer, Celine Herweijer, that the bank hoped to disclose targets for capital markets in the future ‘once the industry standard for financed emissions—the (PCAF)—has launched its methodology for accounting for capital markets activities later this year’. However, this vague promise was not enough for ShareAction, which tabled a new resolution for HSBC’s 2022 AGM calling for HSBC, among other things, to ‘close the loopholes in its coal phase out policy’ and ‘publish a public set of core red lines and decarbonisation expectations for the assessment of the transition plans for major oil and gas producer clients’. Once again, the consortium the resolution following new promises from HSBC, including to ‘update the scope of its fossil fuel targets to cover capital markets activities by Q4 2022 and publish a Climate Transition Plan during 2023’. ShareAction warned that ‘it will take further action in 2023 if unsatisfied with the bank’s implementation of its commitments’.

On 22 September 2022, HSBC that its asset manager arm was to exclude thermal coal companies from its investment portfolio by 2030 in the EU and OECD, and globally by 2040. However, as Q4 2022 rumbles on, there is still no sign of the bank’s updated climate targets to cover capital markets. Not content to wait for the deadline to pass, ShareAction recently waded in on the ASA’s banning of HSBC’s advertisements to highlight the bank’s continued financing of fossil fuel companies.

Greenwashing and FTSE 350 companies

Out of the 276 FTSE 350 companies analysed during the 2022 AGM season, 16 of them (5.8%), including HSBC, mentioned greenwashing in their annual reports. Often this is in relation to possible risks for the company if their approach to climate change is not handled with sufficient care. For instance, Auto Trader plc’s states the following:

‘Carbon credits and environmental projects can support us in achieving our net zero ambitions and SBTi targets. However, if not approached well, they can have negative unintended impacts on humanity and the environment or appear as greenwashing and result in reputational damage for Auto Trader. Therefore we have established a set of guiding principles to adhere to when choosing which projects and initiatives to invest in.’

It seems that companies are becoming increasingly aware of the reputational risks associated with not keeping up with best practice in relation to environmentally friendly initiatives, whether this be policies or disclosures. NatWest Group plc’s provides another good example of a company acknowledging the possible future ramifications of not keeping up with the pack:

‘The Committee was satisfied that appropriate steps had been taken by management to limit the legal liability arising from the disclosure of such non-financial information. It received advice from NatWest Group Reputational Risk Committee as to the risk of reputational impacts in the event of a misstatement or future change in methodology which could give rise to suggestions of “greenwashing”.’

It will be interesting to see in the future if HSBC’s smack on the wrist by the ASA encourages other companies to address this growing area of reputational risk, as more and more companies seek favourable press from their environmentally friendly initiatives.