According to a report in the Straits Times HSBC has decided to discontinue plans for creating a carbon credit desk, following a dramatic drop in the image of the voluntary carbon market.
Accusations of overissuing credits, perverse incentives and general malpractice have led to the market losing a significant portion of revenue, currently representing trades for around $1 billion.
The potential liquidity HSBC’s operation could have provided, as well as the revenue stream for carbon project developers, are also off the table, dealing another blow to the struggling market that has seen companies like Shell and Delta Airlines pulling out.
Tech giant Google also recently announced it will stop purchasing credits from the voluntary market and focus on cutting its own emissions and investing in projects that actively remove carbon dioxide from the air. The company has already started shifting its weight by establishing a dedicated carbon removal market fund with $200 million.
HSBC exiting carbon markets at wrong time?
The move comes after a breakthrough agreement was achieved at COP29, where methodologies and standards for a global carbon market were approved.
Though its details and kick-off are set to be cleared up in the next several years, there is an expectation that the market could begin to fulfill its potential and reach revenues in the tens of billions by the end of the decade and reaching $250 billion by .
Unlike HSBC, Credit Agricole, the second largest bank in France and one with a significant global presence, decided to focus more of its attention on trading on compliance carbon markets.
Read more: Credit Agricole To Prioritize Carbon Markets Instead Of Precious Metals
