HSBC is among the biggest banks to confirm it would not support oil and gas projects that received final approval after the end of 2021, a move the International Energy Agency has said is needed for the world to reach net-zero emissions by 2050.
Covering everything from biomass projects to hydrogen, nuclear and thermal coal, the policy was aimed at driving progress across regions with different energy systems, Celine Herweijer, HSBC's Chief Sustainability Officer, told Reuters.
Amid Russia's invasion of Ukraine, and a resultant surge in energy costs, the policy was also "pragmatic" she said, and the bank would continue to finance existing oil and gas fields to ensure supply fell over time with demand.
"It's not no new fossil fuel investment as of tomorrow. The existing fossil fuel energy system needs to exist hand-in-hand with the growing clean energy system," Herweijer said.
"The world cannot get to a net-zero energy future without energy companies being at the heart of the transition."
To ensure oil and gas companies are on-track, the bank would now ask for new information, including production levels beyond 2030, she added.
"HSBC's announcement sets a new minimum level of ambition for all banks committed to net-zero," said Jeanne Martin, a campaigner at Share Action.
Activist groups that have been critical of HSBC in recent years mostly hailed the move by one of the biggest lenders to energy companies in the world as a keenly awaited update that will drive companies towards a cleaner future.
HSBC said it would continue to finance energy companies at the corporate level to help them overhaul their businesses and drive development of cleaner energy sources, and would assess their strategic plans annually.
Others to have committed to this include Britain's biggest domestic bank, Lloyds.