'It may be the only bank in Clitheroe but it supports fossil fuels'

Ribble Valley Borough Council
-Credit: (Image: LDRS)

Ribble Valley Council’s bank and investment arrangements should be reviewed regarding banks links to fossil fuel industries, a Green Party councillor has said.

Green Coun Malcolm Peplow raised questions about the council’s bank account with HSBC, said to now be the only bank with a physical branch in Clitheroe, at the latest Policy & Finance Committee meeting. He said some banks were still investing in the fossil fuel industry years after the international Paris Agreement desifned to address climate change.

His comments came in a treasury management update on where the council’s money is placed and its returns on investments. The report said £1.9 million was with HSBC in May this year and £25million with the government-backed UK Debt Management Office, where the government guarantees debts.

Regarding returns from investments, Ribble Valley Council generated almost £224,000 during the April to May period this year, compared to £161,00 for the same period in 2023 when interest rates were lower. The council report also listed the latest credit ratings for banks and building societies. Fitch credit ratings are used to show the probability of organisations defaulting on council investments.

Coun Peplow said: “I know this report is for information, rather than decisions, but I want to speak about the importance of who we, as a council, use for important services. We send out a signal about this but we also have an obligation to look at our plans and ambitions. We have an obligation to be net-zero by 2030 and have to look at our investments.

“Some money goes to HSBC. Sadly it now seems to be the only bank branch in Clitheroe so I say this with due regard. I’m referring to a report by Which? magazine. It reported we are now several years on from the Paris Agreement on climate change but banks are pumping huge funds into fossil fuels. Several UK banks are mentioned regarding financing fossil fuels. Sadly, HSBC is among them.”

Coun Peplow said HSBC provided $144.93billion (Dollars) in fossil fuel financing between 2016-22, according to the report by Which? He added: “I would like to see us, as a council, thinking long and hard about our service providers and suppliers. Although Lloyds and NatWest are not whiter-than-white, their investment in fossil fuel is massively lower. Can we look at this over the next year or ask if we can revisit our banking and use our power?”

Conservative Coun Stephen Atkinson, leader of Ribble Valley Council, said: “HSBC has the highest credit rating of the banks. That must be at the fore-font of what we do with public money. We have taken the decision to put the majority of our finances with the Debt Management Office.”

He added: “”I have seen some banks attacked regarding Gaza. I think that when we start basing the banks we use as a council on political grounds, that is a big step. If you want to change it, it’ s an option to put to the council.”

The treasury report said banks are reviewed annually to consider their long-term and short-term credit ratings. Ribble Valley Council has a policy to only use institutions with a short-term Fitch rating of F2 or above. The banks on its approved list meeting this requirement at May this year were Santander, Barclays, Bank of Scotland, HSBC Lloyds, NatWest and Royal Bank of Scotland. They all had F1 ratings except HSBC, which had a higher F1+.

Regarding building societies, council investments are limited to the top eight based on their total assets, provided they have Fitch ratings. The report listed the Nationwide, Yorkshire, Coventry, Skipton and Leeds societies as having F1 ratings. They had slightly lower ratings than banks for long term investments – at A- compared with A+ or AA- for the banks. HSBC was top.

Coun Peplow added: “I understand what people say about HSBC’s rating. But if we can find an alternative bank that fits the standard, but can show it is divesting in fossil fuels or making moves towards that, I would welcome that.”

Coun Atkinson added: “There will be opportunities to talk about treasury management in future discussions.”

In reply to the Which? report, HSBC said it was one of the first banks to set a net-zero ambition in 2020. It would no longer provide new finance or advice for new oil and gas fields, or the most carbon-intensive oil assets.