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HSBC, StanChart eye coal transition credits

HSBC (0005) and Standard Chartered (2888) are working on a new kind of financial instrument that's designed to monetize the shift away from high-carbon assets.

The so-called transition credits would represent the difference between the emissions that would have been, had a coal-power client continued its business as usual, versus the lower level of emissions achieved by retiring a coal plant early.

The instruments would become an add-on to the wider market for carbon offsets, which remains controversial and unregulated. But both HSBC and StanChart say such instruments represent a realistic way to tackle the world's dirtiest fossil fuel.

StanChart, which has a large client-base in emerging markets that still relies heavily on coal, is now working on how to structure such credits, Marisa Drew, the bank's London-based chief sustainability officer, told Bloomberg.