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Business Commentary While it targets Alberta’s oil industry, HSBC gets back in business with Saudi Arabia

Mark Milke is a contributor to Canadians for Affordable Energy and was the principal policy adviser to Jason Kenney during the Alberta election. His latest book is Ralph vs Rachel: A Tale of Two Alberta Premiers.

Walk down just about any runway ramp to your airplane at Calgary International Airport and HSBC advertisements are plastered everywhere. In some tunnels to the tarmac, posters that trumpet the Hongkong and Shanghai Banking Corp.’s worldwide reach are the only ads on display.

It’s a curious PR campaign, given how in 2018 the bank targeted Alberta’s oil sands for divestment. But HSBC did so proudly as part of its commitment to “fight global warming.” Of course, it takes hubris to make this commitment while also advertising prominently in airports around the world when air travel is a major contributor to carbon emissions. But then, HSBC will try to make money wherever it can.

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That may soon be harder to do in Canada. Alberta has a new premier and Jason Kenney (full disclosure – for whom I recently worked as his principal policy adviser) has vowed the province will end all government business with HSBC given the bank’s virtue signalling on the oil sands.

But HSBC, which self-flatters itself as socially responsible, can always find new markets elsewhere: It recently celebrated resuming business relations with the wealthy Saudi Arabian regime – the world’s largest oil exporter.

Only six months ago, the bank’s chief executive John Flint skipped a Saudi investment conference after Saudi security services close to the kingdom’s Crown Prince Mohammed bin Salman allegedly murdered and dismembered journalist Jamal Khashoggi in Istanbul.

But that was then. In April, Mr. Flint stood on a stage with Saudi officials and said, “It was a privilege to be back in Saudi Arabia.” Mr. Flint noted HSBC’s commitment to the kingdom.

But Saudi Arabia is not the only repressive regime that HSBC prefers to Alberta. It also operates in illiberal Malaysia, autocratic China and other theocratic tyrannies in the Middle East.

According to Human Rights Watch, Malaysia’s government suppresses freedom of expression, permits child marriage and restricts religion, including arresting even children for practising the Shia form of Islam.

The Chinese government harasses human-rights activists and subjects them to arbitrary detention, imprisonment and enforced disappearance. It also restricts religious practices and jails religious minorities. Human Rights Watch also notes that “Beijing’s assault on Hong Kong’s freedoms, particularly the rights to free expression, association and political participation, worsened considerably in 2018.”

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HSBC’s board, shareholders and its senior staff who dreamed up divestment in Canadian energy are free to boycott whomever they want. But hydrocarbons aren’t going anywhere soon. The International Energy Agency forecasts that energy demand will grow 25 per cent by 2040 with oil and gas consumption both rising until at least 2040 under any scenario. This is why denigrating Canada’s oil sands isn’t responsible – socially or economically – especially when compared to the alternatives, such as the Saudis.

And no one should think that alternative energy is yet ready – if it ever will be in our lifetime – to replace the benefits of oil and gas. As Bill Gates pointed out last year, simply wishing in clean energy as a replacement for CO2-emitting activity is a fantasy.

Mr. Gates corrected bankers, who thought they could divest from the energy that actually has the capacity to move ships, transport trucks and airplanes, by pointing out that renewables could not even replace the electricity needed by 27 million people in high-tech Tokyo, as just one example. “There is no substitute for how the industrial economy runs today,” he said.

It may be unrealistic to expect international companies to boycott every country where human-rights abuses occur. But doing business with them while fighting a large part of Alberta’s energy sector, which has a stellar record on everything from the environment to human rights, is duplicitous.

HSBC’s board and staff should revisit their misplaced priorities, or at least, not trumpet their association and enthusiasm for regimes that kill people while the company simultaneously blackens Alberta’s reputation.

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