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Now expects 40% cut in emissions by 2030

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Says pace of change in real economy is proving slow

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Also cites updated guidance on carbon credits

(Recasts, adding background and context throughout)

By Simon Jessop and Tommy Reggiori Wilkes

LONDON, Feb 19 (Reuters) - HSBC ( HSBC ) is ditching its

target of reaching net-zero carbon emissions across its business

by 2030 because of slow change in the real economy, it said on

Wednesday.

Europe's biggest bank said it expects to record a 40% drop

in emissions across its operations, business travel and supply

chain by 2030 and aims to hit the more ambitious net-zero target

by the middle of the century. It also announced an internal

review of targets on emissions linked to its loans.

The bank, in its annual report, said it had limited

influence on companies over issues including technological

advancements, market demand and effective policy influencing the

pace of change.

HSBC ( HSBC ) also said its original target was based on an ability

to use carbon credits to offset some of its supply chain

emissions, which would not align with recent guidance from the

Science Based Targets Initiative, which assesses and approves

corporate climate targets.

The bank's chief sustainability officer stepped down several

months ago after Chief Executive Georges Elhedery removed the

role from the bank's executive committee in a management

reshuffle.

Activists said they were concerned the decision signalled a

pull back from HSBC's ( HSBC ) climate ambition, compounding fears that

the wider banking sector is rowing back on emission reduction

pledges.

Morgan Stanley ( MS ) in October lowered expectations for

emissions cuts from its corporate lending portfolio and a number

of U.S. banks have left a climate coalition.