HSBC will stop funding new oil and gas fields and will seek more information from energy clients about their carbon-cutting plans, the banking giant announced on Wednesday as part of a broader update to its sector policy.

Activists who have been critical of HSBC in recent years have mostly praised the move by one of the world’s largest lenders to energy companies as a long-awaited update that will drive companies toward a cleaner future.

“HSBC’s announcement sets a new minimum level of ambition for all banks committed to net-zero,” said Jeanne Martin, a campaigner at Share Action.

HSBC is one of the largest banks to confirm that it will not support oil and gas projects that receive final approval after the end of 2021, a move that the International Energy Agency says is required for the world to achieve net-zero emissions by 2050.

Others who have committed to this include Lloyds Banking Group, the largest domestic bank in the United Kingdom (LLOY.L).

HSBC stated that it would continue to finance energy companies at the corporate level in order to help them revamp their businesses and drive the development of cleaner energy sources, and that it would evaluate their strategic plans on an annual basis.

The policy, which covers everything from biomass projects to hydrogen, nuclear, and thermal coal, was designed to drive progress across regions with different energy systems, according to Celine Herweijer, HSBC’s Chief Sustainability Officer.

In the midst of Russia’s invasion of Ukraine and the resulting surge in energy prices, she said the policy was also “pragmatic,” and the bank would continue to finance existing oil and gas fields to ensure supply fell in lockstep with demand.

“It’s not no new fossil fuel investment as of tomorrow. The existing fossil fuel energy system needs to exist hand-in-hand with the growing clean energy system,” Herweijer said.

“The world cannot get to a net-zero energy future without energy companies being at the heart of the transition.”

She added that the bank would now request new information, including production levels beyond 2030, to ensure oil and gas companies are on track.

Barclays also announced on Wednesday that it would increase its sustainable and transition finance target to $1 trillion by 2030 and would invest more of its own money in energy startups.

(Adapted from EconomicTimes.com)