A group of institutional investors has asked Britain’s accounting regulator to review HSBC’s 2025 accounts and audit to gauge whether the bank is properly assessing the material risks posed by climate change.
Investors said they also lacked visibility on how HSBC’s auditor PwC had verified the bank’s accounting, a letter to the Financial Reporting Council, copied to the bank and the Prudential Regulation Authority and seen by Reuters showed.
“In light of the ongoing lack of disclosures by HSBC and PwC on matters we perceive to be material to investors’ understanding of the bank’s capital resilience, we are writing to ask the FRC to review HSBC’s accounts and audit to determine whether they meet the required standard,” the letter said.
Signatories included Sarasin & Partners, workplace pension investor NEST, Merseyside Pension Fund and asset managers Lombard Odier Investment Management and Edentree Investment Management.
An FRC spokesperson confirmed that the letter had been received but said the watchdog was unable to comment further. PwC declined to comment and HSBC did not immediately respond to a request for comment.
Investors, accounting and finance experts have long argued that some companies are not disclosing the full risks associated with climate change.
HSBC’s last three financial statements concluded it faces no major hit in the short-to-medium term, despite acknowledging uncertainty about the impact of climate change.
But given the bank’s exposure to physical risks such as floods and wildfires, and transition risks such as changing regulations, investors said they were concerned this might be “excessively optimistic”.
The investors said they had engaged with the bank’s audit committee chair, chief comptroller and auditor since 2023 but had seen “little evidence” of progress.
In talks with the bank during 2025, the group said it had asked the board to review how it assesses climate risks, reflect them in critical accounting assumptions and publish a sensitivity analysis based on more severe climate impacts.
“At a time of rising climate instability and accelerating decarbonisation in key industries, a failure to account for probable losses or liabilities could put investor capital at risk,” the letter said.
The group also said HSBC Chairman Brendan Nelson’s dual position as chair of the audit committee posed a potential conflict of interest and said it would welcome a thematic review of how financial institutions account for climate change.
(Reporting by Simon Jessop and Kirstin Ridley）
