A group of powerful HSBC shareholders have written to the bank’s CEO, John Flint, urging him to close a loophole in its energy policy that allows the lender to bankroll coal projects in certain emerging markets.

Investment management firms Schroders, EdenTree and stewardship provider Hermes EOS have also called on HSBC to impose a ban on corporate loans, underwriting and advisory services to bank clients that are highly dependent on coal. The letter, which was coordinated by campaign group ShareAction, stresses that HSBC must adopt a “clear, timebound plan” to phase out its existing exposure to the dirty fuel.

HSBC was commended by activist groups including Greenpeace last year after releasing an energy policy that aimed to phase out lending for new coal-fired power plants in high income countries and cut its commitment to oil sands “over time”. But that policy also left a loophole that allows the bank to finance new coal-powered plants in three countries – Bangladesh, Vietnam and Indonesia – until 2023.

Flint defended the move at last year’s annual meeting, saying that it was a “short window” of time and covered areas where many people “don’t have access to any electricity” and there may not be a reasonable alternative.

But the shareholder letter says that coal power has “received too much credit historically for poverty reduction” and that 84% of the world’s electricity-poor households live in rural areas out of reach of coal-powered electricity. That challenge needs to be solved by extending grid infrastructure or installing decentralised energy systems which may be best served by renewable technologies, the letter says.

Roland Bosch, the Hermes EOS associate director, said: “We expect that financing new coal-fired power will prove to be highly risky, given the increasing competitiveness of renewables, and [it] is incompatible with the goals of the Paris agreement. Although HSBC has not financed any new coal-fired power plants since the release of its new energy policy, we want to see the bank evolve its policy to rule out all investment in coal and instead to focus on financing low-carbon energy across emerging markets.”

ShareAction noted that HSBC is lagging behind peers, including Standard Chartered and Barclays, which now have blanket exclusion policies for coal power financing.

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HSBC said it was “committed to help our customers make the transition to a low-carbon economy in a responsible and sustainable way” and that Vietnam, Bangladesh and Indonesia had a “targeted and time-limited exception until 2023 in order to appropriately balance local humanitarian needs with the need to transition to a low-carbon economy, but only if independent analysis confirms that there is no reasonable alternative to coal and any new plant complies with the highest efficiency standards”.

However, Sonia Hierzig, a senior projects manager at ShareAction, said: “Coal’s time is up. The time for forceful investor action on climate change is now. Whether targeted at high-carbon companies or at the financial institutions keeping them alive, investor engagement is working. It is time HSBC listened to its shareholders and faced the facts: coal poses a climatic and financial risk too great to bear.”

Swiss pensions fund consortium the Ethos Foundation is also a signatory to the letter, but is not an HSBC shareholder.