Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Community Investment
• Sustainability Risk
• Operations
• Customers
• People

Environmental Achievements

• Reduced paper consumption by 14,000 tonnes to 40,000 tonnes
• Reduced travel carbon emissions by 20,000 tonnes to 138,000 tonnes
• 15% reduction in waste sent to landfill
• Achieved a 1.79 PUE rating in data centers (down from 1.92), saving US$540,000 and 2,400 tonnes of carbon

Social Achievements

• US$100m contribution to the five-year HSBC Water Programme
• US$120m donated to community investment programmes
• 27,000 tonnes of carbon avoided
• 6,594 employees trained in sustainability risk since 2011
• 160,000 employees trained in HSBC values since 2011
• 25% female representation on our Group Management Board
• Launched HSBC Exchange, a new type of team meeting for employee feedback
• Supported 250,000 young people through Future First
• Provided financial education to 35,000 employees in Brazil
• Provided financial support to enable UAE nationals to build homes

Governance Achievements

• Strengthened compliance standards across HSBC
• Established a Financial System Vulnerabilities Committee
• Implemented Global Standards across HSBC
• Removed sales targets from employee scorecards in UK retail banking

Climate Goals & Targets

Environmental Challenges

• Continuing and unprecedented challenges faced by the banking sector
• Major US regulatory and law enforcement investigations
• Serious failings in the application of standards and prevention of misuse of the financial system
• Difficult economic times in many countries
• High youth unemployment in the Middle East
• Water scarcity in China

Mitigation Strategies

• Steps taken to prevent recurrence of past mistakes
• Strengthened new strategy and instilled values throughout the business
• Implemented Global Standards
• Re-trained frontline teams to better address customer needs
• Dedicated teams to deal with customers experiencing financial difficulties
• Removed sales targets from employee scorecards in UK retail banking
• Launched HSBC Water Programme
• Developed detailed strategies to prepare for weather and climate-related risks

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct
• Core Sustainability Assessment

Climate-Related Risks & Opportunities

Physical Risks

• Hurricane Sandy

Opportunities

• Climate Business

Reporting Standards

Frameworks Used: GRI, Greenhouse Gas Protocol, Equator Principles

Third-party Assurance: PricewaterhouseCoopers LLP

Awards & Recognition

• Skoch Financial Inclusion Award 2013
• Best Practice Award in Learning and Organisation Development (Hong Kong)
• ‘Global Action’ award for Leadership Development Programme (UK)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced carbon emissions from 3.5 to 2.5 tons per employee per year by 2020 (target)
• Large-scale recycling program implemented in CHOICe (India)
• All printed customer communication done on recycled paper in CHOICe (India)
• HSBC Insurance Mexico organized a ‘green’ running race benefiting Chapultepec Park, raising over USD 110,000 for park upkeep.

Social Achievements

• Appointed a Global Programme Manager, Sustainable Insurance to oversee sustainability initiatives.
• Fair Value Exchange initiative reviewed over 350 products, modifying aspects of product range to improve customer value.
• Insurance Range Review removed over 120 products worldwide to improve customer experience.
• Needs Analysis initiative developed user-friendly insurance content and protection needs analysis tools.
• Customer Care Commitment project developed guidelines for discussing insurance needs with mortgage customers.
• Customer Insight Research undertaken to understand customer engagement and product needs.
• Incentive Schemes implemented to remove formulaic links to sales volumes and focus on customer needs.
• CHOICe (India) supported education of 40 children at SOS Children’s Villages and launched Project Utkarsh supporting 50 more children.
• CHOICe (India) implemented ‘Let's Change Let's Save’ initiative focusing on reducing, reusing, and recycling.
• CHOICe (India) partnered with GOONJ for waste awareness workshops in schools.
• CHOICe (India) collaborated with WWF India on sustainable forest resource management.
• HSBC Insurance Brazil participated in HSBC’s Water Programme and Christmas Angels Programme.
• HSBC Insurance Hong Kong contributed 776 Corporate Sustainability hours.
• HSBC Insurance UK expanded relationship with Maggie’s cancer charity.
• HSBC Assurances France contributed 5% to an institutional fund investing in French SMEs.
• HSBC Insurance Argentina supported Future First, providing education and life skills training to 250 children annually.
• Diversity and Inclusion (D&I) project initiated to develop a framework and principles for products to avoid discrimination.

Governance Achievements

• Implemented a new incentive framework aligned with putting the customer at the center of operations.
• Developed and implemented a global set of sales principles to ensure appropriate customer advice and product suitability.
• Implemented effective monitoring and quality assurance programs to ensure consistent adherence to sales principles.
• Annual certification process implemented to ensure ongoing alignment with Insurance Range Review.

Climate Goals & Targets

Environmental Challenges

• Mis-selling and treating customers unfairly.
• Insurance access and affordability.
• Trust and reputation.
• Ageing populations and pressure to reduce social spending.

Mitigation Strategies

• Fair Value Exchange initiative.
• Insurance Range Review program.
• Needs Analysis and educational tools.
• Customer Care Commitment project.
• Customer Insight Research.
• Incentive Schemes aligned with customer needs.
• The Future of Retirement research study.
• The Value of Education research study.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: UNEP FI Principles for Sustainable Insurance (PSI)

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Community Investment
• Environmental Sustainability (Water Conservation)
• Employee Well-being

Environmental Achievements

• Launched the 'Catch the Drop Campaign' in its second year, aiming to reach every student in Malta and Gozo over three years, supported by a €500,000 grant from the HSBC Group under the HSBC Water Programme. Installed 483 photovoltaic panels at 10 branches and offices, generating enough energy to power offsite ATMs and electric vehicles.

Social Achievements

• HSBC Malta Foundation continued its work in education, environmental protection, and heritage safeguarding (Notarial Archives, restoration of the Church of Our Lady of Victories). Actively participated in introducing The Prince’s Trust to Malta, becoming the first international partner in Prince’s Trust International. Launched initiatives to help employees achieve better work-life balance, implemented flexible working, and organised well-being events. Rolled out high-quality training programs ('At our Best') for all employees. Held annual Employee Excellence Awards.

Governance Achievements

• Successfully completed regulatory compliance processes for Capital and Liquidity Regulation, BRRD, Depositor Guarantee Scheme Directive, Solvency II, international tax regulations (CRS, FATCA), EBA guidelines, Markets and Consumer Protection Regulation, Mortgage Credit Directive, Market Abuse Directive and Regulation, MiFID II, Insurance Distribution Directive, and the Fourth Anti-Money Laundering Directive. Performed well in European Central Bank regulatory assessments and strengthened Common Equity Tier 1 capital ratio above regulatory requirements.

Climate Goals & Targets

Environmental Challenges

• Challenging operating environment for Eurozone banks with record low interest rates, higher operating costs due to new regulations, and deflationary pressures.
• Long-running industrial dispute (resolved in early 2016).

Mitigation Strategies

• Decisive action to reduce costs.
• Key leadership appointments.
• Restructuring of HOST teams for simpler, better, and faster ways of working.
• Migration of paper statements to electronic format to reduce costs.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Customer Care
• Diversity and Inclusion
• Protection Gap and Needs Analysis
• Fair Value Exchange
• Sustainable Finance, Operations and Communities
• UN Principles for Responsible Investment (PRI)
• Partner Collaboration
• Government, Regulator and Stakeholder Engagement
• Ageing Populations and Retirement
• Education

Environmental Achievements

• Committed to cut carbon emissions from 3.5 to 2 tons per employee per year by 2020.
• HSBC Assurances France invested 20 million euros in a renewable energy infrastructure fund and 25 million euros in SME development funds.

Social Achievements

• Launched a new high-end medical product in Hong Kong offering family discounts to diverse relationship structures.
• Expanded the definition of children in Mexico to include adopted children as beneficiaries.
• Developed and piloted a Diversity and Inclusion framework for insurance products.
• Published two global protection reports covering 12 countries, generating over 200 pieces of media coverage.
• Repositioned protection messaging from fear to optimism about the future.
• Launched simple term life products online in Hong Kong and the UK.
• Implemented global sales principles in Commercial Banking Insurance markets to ensure appropriate customer advice.
• Organized a ‘green’ running race in Mexico City benefiting Chapultepec Park.
• Supported educational programs in Argentina aimed at preventing school dropouts and improving employability.
• Supported water quality monitoring initiatives in Argentina.

Governance Achievements

• Implemented a globally consistent approach to assessing insurance product prices for fair value.
• Completed almost all planned enhancements to improve customer value of specialist life insurance products.
• Jim Costello, HSBC Insurance CEO, China, served as a PSI board member.

Climate Goals & Targets

Environmental Challenges

• Global protection gap for general insurance and mortality protection.
• Customer association of protection with fear, hindering engagement.
• Misalignment in insurance cover for diverse relationship statuses in some markets.
• Need to improve customer awareness of protection needs and available products.
• Need for collaboration with partners to implement D&I initiatives.

Mitigation Strategies

• Initiatives to improve discussions with customers regarding protection needs.
• Publication of reports to raise awareness and change perceptions of insurance.
• Repositioning protection messaging to focus on future optimism.
• Development of online term life products for easier access.
• Implementation of global sales principles and risk monitoring.
• Product development and approval processes aligned with Fair Value Exchange principles.
• Collaboration with partners to review existing products and develop new ones.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: UNEP FI Principles for Sustainable Insurance (PSI)

Sustainable Products & Innovation

• Online term life products

Environmental Metrics

ESG Focus Areas

• Water scarcity
• Climate change
• Biodiversity
• Pollution
• Health
• Gender equality
• Conflict and migration

Climate Goals & Targets

Environmental Challenges

• Water scarcity impacting various sectors and regions
• Supply chain disruptions due to water scarcity and pollution
• Climate change exacerbating water scarcity through floods and droughts
• Water pollution from various sources
• Lack of water infrastructure in many regions
• Overexploitation of aquifers leading to saltwater intrusion
• Insufficient financing for water-related projects

Mitigation Strategies

• Improved water management
• Greater use of AI and technology for water management
• Desalination (with caution regarding brine generation and emissions)
• Water trading and pricing mechanisms
• Government regulation to limit pollution
• Investment in water infrastructure
• Corporate water risk disclosure and reporting

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Floods
• Droughts
• Wildfires
• Extreme temperatures
• Sea level rise
• Saltwater intrusion

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Investment in water infrastructure
• Development of water-efficient technologies

Reporting Standards

Frameworks Used: TCFD

UN Sustainable Development Goals

• SDG 6 (Clean Water and Sanitation)

Water scarcity and pollution impact various aspects of SDG 6.

Environmental Metrics

ESG Focus Areas

• Climate Change
• Customer Satisfaction
• Employee Well-being
• Diversity & Inclusion
• Governance
• Financial Crime
• Human Rights
• Financial Inclusion
• Sustainable Finance

Environmental Achievements

• Provided and facilitated $126.7bn of sustainable finance and investment (towards a $750bn to $1tn goal by 2030)
• Published thermal coal phase-out policy
• Set targets to reduce on-balance sheet financed emissions in oil & gas and power & utilities sectors
• Achieved a 50.3% reduction in own operations emissions compared to 2019 baseline

Social Achievements

• Improved customer satisfaction scores in many markets
• 31.7% women in senior leadership roles (target 35% by 2025)
• Employee engagement remained at 72%
• Launched initiatives to support female and Black employees in senior leadership

Governance Achievements

• Monitors over 1.1 billion transactions monthly for financial crime
• Published thermal coal phase-out policy
• Implemented a refreshed assurance framework for ESG risks

Climate Goals & Targets

Environmental Challenges

• Improving customer satisfaction ranking against competitors
• Limited opportunities for power purchase agreements in key markets
• Data limitations in assessing financed emissions
• Addressing increased voluntary employee turnover

Mitigation Strategies

• Investing in digital platforms and customer service improvements
• Exploring alternative sourcing strategies for renewable energy
• Developing financed emissions methodology and expanding data collection
• Focusing on employee career development and well-being initiatives

Supply Chain Management

Supplier Audits: 51.2% of total supplier spend completed CDP questionnaire (2021)

Responsible Procurement

• Supplier ethical code of conduct
• ESG reputational risk assessment for high-value contracts
• Inclusion of carbon emissions questions in new commercial engagements

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Wildfires
• Windstorms
• Extreme heat
• Drought
• Sea level rise

Transition Risks

• Carbon pricing
• Regulatory changes
• Shifting consumer behavior
• Macroeconomic disruption

Opportunities

• Sustainable finance
• Sustainable investment
• Sustainable infrastructure

Reporting Standards

Frameworks Used: TCFD, UN Global Compact, WEF Stakeholder Capitalism Metrics

Third-party Assurance: PwC

Sustainable Products & Innovation

• Green bonds
• Social bonds
• Sustainability-linked bonds
• Green mortgages
• Green SME Fund

Awards & Recognition

• Euromoney Best Bank for Sustainable Finance in Asia and the Middle East (2021)
• Hong Kong Equal Opportunities Commission Gold Awardee (2021)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity & Inclusion
• Responsible Governance
• Customer Inclusion & Resilience
• Community Engagement

Environmental Achievements

• Reduced energy consumption by 24% against a 2019 baseline (aiming for 50% by 2030)
• Increased renewable energy share to 48.3% (aiming for 100% by 2030)
• Provided and facilitated $210.7 billion of sustainable finance and investment towards a $750 billion to $1 trillion goal by 2030
• Reduced own operations' emissions by 58.5% compared with 2019 baseline

Social Achievements

• Increased employee engagement score to 73% (3 points above benchmark)
• 33.3% of senior leadership roles occupied by women (aiming for 35% by 2025)
• Launched a $1 billion lending fund to invest in female-owned businesses
• Improved Inclusion index score to 76% (4 points above benchmark)

Governance Achievements

• Updated energy policy and thermal coal phase-out policy
• Conducted a review of salient human rights issues
• Improved customer satisfaction performance in many markets
• Reduced customer complaints by 23.4% compared to 2021

Climate Goals & Targets

Environmental Challenges

• Data limitations and evolving methodologies for financed emissions reporting
• Challenges in fully identifying and disclosing thermal coal exposures
• Limited international alignment on green taxonomies
• Need for enhanced governance, processes, systems, controls, and data for climate ambition
• Data gaps in reported emissions for the shipping sector

Mitigation Strategies

• Investing in climate resources and skills, developing data and analytics capabilities
• Reassessing data reliability and reviewing basis of preparation for thermal coal exposures
• Engaging with regulators, standard setters, and industry bodies to shape financed emissions approach
• Developing an ESG data utility tool
• Deferring setting a baseline and target for shipping sector until sufficient reliable data is available

Supply Chain Management

Supplier Audits: 93% of contracted suppliers confirmed adherence to code of conduct (2022)

Responsible Procurement

• Supplier code of conduct (revised in 2022)
• Sustainable procurement procedures (introduced in October 2022)

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Extreme heat
• Extreme winds
• Wildfires
• Riverine flooding
• Soil movement due to drought
• Surface water flooding

Transition Risks

• Regulatory changes
• Market shifts
• Changes in policy, technology, consumer behavior, and stakeholder perception

Opportunities

• Sustainable finance
• Sustainable investment
• Sustainable infrastructure
• Development of energy-efficient products

Reporting Standards

Frameworks Used: TCFD, WEF Stakeholder Capitalism Metrics, SASB

Third-party Assurance: PwC (limited assurance)

Sustainable Products & Innovation

• Green bonds
• Social bonds
• Sustainability bonds
• Sustainability-linked loans
• Green mortgages
• Electric vehicle loans
• Energy efficiency loans
• HSBC Global Investment Fund (HGIF) Global Equity Circular Economy fund

Awards & Recognition

• Six awards at the Environmental Finance Bond Awards
• ESG Financing House of the Year (IFR Awards 2022)
• Best Bank for Sustainable Finance in Asia (Euromoney)
• Best Bank for Sustainable Finance in the Middle East (Euromoney)

Environmental Metrics

ESG Focus Areas

• Transition to net zero
• Building inclusion and resilience
• Acting responsibly

Environmental Achievements

• 57.3% reduction in absolute greenhouse gas emissions from a 2019 baseline
• $294.4bn of sustainable finance and investment provided and facilitated since January 2020

Social Achievements

• 34.1% of senior leadership roles held by women (target of 35% by 2025)
• Improved employee engagement score to 77%

Governance Achievements

• Published first net zero transition plan
• 98% of employees completed conduct training in 2023

Climate Goals & Targets

Environmental Challenges

• Continued economic uncertainty, rising interest rates and inflationary pressures
• Geopolitical tensions (Russia-Ukraine and Israel-Hamas wars)
• Distressed commercial real estate conditions in mainland China
• Complex and evolving sanctions and trade restrictions

Mitigation Strategies

• Increased size and duration of structural hedges to reduce sensitivity of banking net interest income to interest rate movements
• Close monitoring of commercial real estate portfolio risk in mainland China
• Enhanced coverage of interest rate risk metrics
• Active engagement with regulators to meet expectations regarding support for economies during market volatility

Supply Chain Management

Responsible Procurement

• Supplier code of conduct

Climate-Related Risks & Opportunities

Transition Risks

• Reputational concerns
• Legal and/or regulatory action for failing to meet net zero targets

Opportunities

• Financing the transition to net zero

Reporting Standards

Frameworks Used: TCFD, SASB, GRI, UNGPs, OECD Guidelines

Third-party Assurance: PwC (limited assurance)

Awards & Recognition

• 11 awards in 2023 for digital accessibility work