Corporate clients are willing to ‘vote with their feet’
Dr Ioannou says corporate clients are ready to ‘vote with their feet’ after bank loses business from green-minded firms
HSBC’s decision to exit the Net-Zero Banking Alliance (NZBA) has triggered a backlash from sustainability-focused corporate clients, with several cutting ties over what they view as a retreat from climate commitments. But beyond the headlines, the move may signal a deeper shift in corporate behaviour, one that London Business School's Dr Ioannis Ioannou says could have far-reaching consequences.
“This is a noteworthy development,” said Dr Ioannou, Associate Professor of Strategy and Entrepreneurship in a recent article which has appeared in Bloomberg. “It demonstrates that corporate clients are willing to ‘vote with their feet’ when their bank’s commitments misalign with their values.”
He added: “Ultimately, this could trigger cascade effects, prompting other corporates to reconsider their banking relationships, regardless of their particular motivations.”
His comments come as green businesses including Ecotricity, Empire Engineering, and TerraLigo announce they are moving their business away from HSBC. Ecotricity founder Dale Vince confirmed the company has taken its £600 million turnover to Lloyds, citing growing public and business demand for climate-aligned financial services. “People care where their pension money goes and who they bank with,” he said. “That is the start of a lot of grass roots power.”
HSBC’s exit from the NZBA, which followed similar moves by major US banks, has drawn criticism despite the bank’s assertion that it remains committed to achieving net-zero financed emissions by 2050. The bank continues to finance major oil companies such as BP, Aramco, and Chevron, even as it increases allocations to green projects. According to BloombergNEF, HSBC allocated $1.49 to green projects for every $1 provided to fossil fuels in 2023—above the industry average, but well below the 4:1 ratio needed to meet the 1.5°C climate target.
The bank's move comes amid broader political pushback against net zero, particularly following the re-election of Donald Trump in the U.S. and shifting domestic politics in the UK. In April, the NZBA eased its requirements, no longer demanding members align with the 1.5°C target—prompting HSBC’s departure.
As Dr Ioannou suggests, the reputational and commercial fallout may just be beginning. For banks seeking to balance fossil fuel clients with green pledges, credibility in the eyes of corporate customers may now be just as important as compliance.
To read the complete article, HSBC Hit by Backlash From Green Clients After Net Zero Exit, Bloomberg UK 16 July. click here