Environmental, social and governance review - HSBC Group
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Environmental,
social and governance
review
43 Our approach to ESG
44 Climate
52 Customers
62 Employees
70 Governance
Our ESG reporting
We have changed how we report this
year by embedding the content previously
provided in our stand-alone ESG Update
within our Annual Report and Accounts.
This is to further demonstrate that how
we do business is just as important as what
we do. In response to the feedback from
our investors, we are publishing a more
extensive breakdown of ESG information
in a supplementary ESG Data Pack for the
first time alongside the ESG review, which
can be found at www.hsbc.com/esg.
42 HSBC Holdings plc Annual Report and Accounts 2020
ESG review
Our approach to ESG
We have sought to support our stakeholders through an
unprecedented year, as we set a new climate ambition and
refined our purpose, ambition and values to reflect our strategy.
ESG review
About the ESG review
Our new purpose is: ‘Opening up a world Environmental
of opportunity’.
– We announced our net zero climate ambition and increased our climate
To achieve our purpose and deliver our disclosures under TCFD, but we recognise more work is needed as methods
strategy in a way that is sustainable, we to measure progress evolve.
are guided by our values: we value difference; – We surpassed our goal of reducing CO2 per FTE to 2.0 tonnes in 2020, although we
we succeed together; we take responsibility; acknowledge this was mainly due to the consequences of the Covid-19 pandemic.
and we get it done.
Read more in the Climate section on page 44.
We also need to build strong relationships
with all of our stakeholders, who are the Social
people who work for us, bank with us, own
us, regulate us, and live in the societies we – The customer shift to digital accelerated, with 54% of retail customers digitally
serve and the planet we all inhabit. active in 2020. Mobile app downloads of our core business digital platform,
HSBCnet, rose 146%.
Having a clear purpose and strong values – An increase in complaints in certain markets reflected a challenging year,
have never been more important, with the but we continued to embed new ways of capturing feedback.
Covid-19 pandemic testing us all in ways
we could never have anticipated. Read more in the Customers section on page 52.
We introduced payment relief measures to
– Employees responded to our Snapshot surveys at a record rate, and our
our customers as part of government-backed
employee advocacy rose five points to 71%.
and our own schemes, which impacted
87,000 personal accounts and $5.5bn in – We met our target of 30% women in senior leadership roles, and published ethnicity
balances, as at the end of 2020. We also data in the UK and US. We recognise we need to take action, and aim to at least
provided $35.3bn of lending support to double the number of Black employees in senior leadership roles by 2025.
more than 237,000 wholesale customers.
Read more in the Employees section on page 62.
For our colleagues, we adapted to new ways
of working and provided extra support and
resources to manage their mental and physical Governance
health. We also announced our climate – Our pioneering scheme to help survivors of human trafficking is used as a model
ambition of net zero by 2050, but we know for making financial services more accessible.
this is a journey and that the current means
of tracking emissions globally need improving. – In seeking to safeguard the financial system, we screen over 708 million
transactions each month for signs of money laundering and financial crime.
In this Environmental, Social and Governance
Read more in the Governance section on page 70.
(‘ESG’) review, we aim to set out our approach
to our climate, customers, employees and
governance.
How we decide what to measure
We listen to our stakeholders in a number of Social and Governance Reporting Guide ESG issues become sufficiently important
different ways, which we set out in more detail contained in Appendix 27 to The Rules to our investors and other stakeholders that
within the ESG review. We use the information Governing the Listing of Securities on the they should be publicly reported. We are
they provide us to identify the issues that are Stock Exchange of Hong Kong Limited) also informed by stock exchange listing and
most important to them – and consequently to choose what we measure and publicly disclosure rules globally. We know that what
also matter to our own business. report in this ESG review. is important to our stakeholders evolves over
time and we will continue to assess our
Our ESG Steering Committee and other Recognising the need for a consistent and approach to ensure we remain relevant in
relevant governance bodies regularly discuss global set of ESG metrics, we have committed what we measure and publicly report.
the new and existing themes and issues that to start aligning to World Economic Forum
matter to our stakeholders. Our management core metrics from next year. or further information on our approach to
F
team then uses this insight, alongside the reporting, see the ‘Additional information’
Under the ESG Guide, ’materiality’ is section on page 375.
framework of the ESG Guide (which refers
to our obligations under the Environmental, considered to be the threshold at which
HSBC Holdings plc Annual Report and Accounts 2020 43
ESG review
Climate
We are powering new solutions to the climate crisis and
supporting the transition to a low-carbon future, moving to
carbon net zero ourselves and helping others to do so too.
At a glance Becoming a net zero bank
Our climate ambition To achieve our ambition to be a net zero bank, we can make changes both in
The transition to net zero carbon emissions our own operations and for our customers through our financing portfolio. We
creates a clear opportunity to set the global aim to bring our operations and supply chain to net zero by 2030 or sooner, and
economy on a more sustainable, resilient align our financed emissions to the Paris Agreement goal to achieve net zero by
and inclusive path. We have the ability to 2050 or sooner.
catalyse a resilient, vibrant future by financing
the transformation of businesses and Read more on becoming a net zero bank on page 45.
infrastructure to a low-carbon economy.
We have a strong track record of leadership Supporting our customers through transition
in the transition to a low-carbon economy.
In 2017, we committed that we would provide The most significant contribution we can make to solving the climate crisis
and facilitate $100bn of sustainable finance is supporting our customers to decarbonise, while helping to ensure their
and investment by 2025. Since then, we have ongoing resilience and prosperity. Our aim is to provide between $750bn and
achieved $93.0bn of that goal, launched a $1tn of sustainable finance and investment by 2030 to support our customers
number of award-winning products and to transition to lower carbon emissions.
been recognised as a leading bank for
sustainable finance. Read more on supporting our customers through transition on page 48.
Achieving the scale of change required for the
world to meet the Paris Agreement goal of net
zero by 2050 will require us to go further and
Unlocking climate solutions and innovations
faster. As such, in October 2020, we set out a We need new ideas to increase the pace of the transition to net zero. We are
three-part plan to accelerate financing for the working with a range of partners to increase investment in natural resources,
transition to net zero, underpinned by strong technology and sustainable infrastructure. We also plan to donate $100m to a
governance and risk management. programme that will support climate solutions to scale over the next five years.
summary of our fourth TCFD disclosure can
A Read more on unlocking climate solutions and innovations on page 50.
be found on page 20 in our Strategic Report.
The full TCFD Update 2020 can be found at
www.hsbc.com/esg.
Our approach to sustainability policies
Our sustainability policies help define our appetite for business, and seek to
encourage customers to meet good international standards of practice. In light
of our new net zero ambition, we are undertaking a review of our sustainability
risk policies. We have also removed an exception to our energy policy and are
a signatory of the Equator Principles.
Read more on our approach to sustainability policies on page 51.
Awards and achievements
Euromoney Awards for Excellence 2020 The Banker Investment Banking Awards 2020 Environmental Finance Bond Awards 2020
World’s Best Bank for Sustainable Finance Best Investment Bank for Sustainability Finance Lead Manager for the Year for Green Bond Bank
(second consecutive year) Best Investment Bank for Green/Climate Lead Manager for the Year for Green Bond SSA
Asia’s Best Bank for Sustainable Finance Action Bonds Lead Manager for the Year for Sustainability
Middle East’s Best Bank for Sustainable Finance Best Investment Bank for Sustainable SSA Bond Local Authority/Municipality
Western Europe’s Best Bank for Sustainable Financing Lead Manager for the Year for Sustainability
Finance Bond Bank
Lead Manager for the Year for Social Bond SSA
44 HSBC Holdings plc Annual Report and Accounts 2020
Climate
ESG review
Becoming a net zero bank
Securing the future of our planet – and a fully functional carbon offset market. We are emissions were mainly composed of energy
economic resilience and prosperity – depends working closely with our peers, central banks (approximately 16%), travel (approximately 6%)
on the transition to a net zero global economy. and industry bodies to mobilise the financial and supply chain emissions (approximately
The Intergovernmental Panel on Climate system around these important goals. 78%). We are in the process of reviewing our
Change, a United Nations body, indicated that supply chain methodology and we will be
in order to avoid the worst impacts of climate Reduce, replace and remove updating our 2019 baseline, accordingly. We
change, we need to reduce global greenhouse To achieve net zero carbon emissions in our will take into consideration cabin class in our
emissions by 45% by 2030, and achieve net operations and our supply chain, we are recording of travel emissions, including the
zero by 2050. building on the set of reduction targets that baseline, as it represents a more accurate
we set in 2011 to reduce environmental and representation of our air travel emissions.
Our net zero ambition carbon impacts from our operations by 2020.
In October 2020, we announced our ambition Among other achievements, we reduced Reducing our operational emissions
to become net zero in all direct and indirect carbon emissions from energy and travel per In 2017, we committed to achieving 100%
emissions, known as scope 1, 2 and 3 FTE by 49.6% from the 2011 baseline. For renewable power across our operations by
emissions. We aim to deliver this by achieving further details on our progress, see www. 2030, joining other global companies in the
net zero in our operations and our supply chain hsbc.com/who-we-are/our-climate-strategy/ RE100 initiative. As electricity currently makes
by 2030 or sooner. We also plan to align our becoming-a-net-zero-bank. up 92% of our energy emissions, our aim is to
financed emissions – the carbon emissions reduce electricity consumption by 50% over
of our portfolio of customers – to the Paris For our 2030 ambition, we have three elements the next 10 years. We plan to then transition
Agreement goal of net zero by 2050 or sooner. to our strategy: reduce, replace and remove. the remainder to renewable energy. In 2020,
We plan to first focus on reducing carbon 37.4% of our electricity was renewable, mainly
We have outlined on the following page a set emissions from consumption, and then due to our power purchase agreements of
of metrics and indicators against which we replacing remaining emissions with low-carbon wind and solar energy in the UK, Mexico and
plan to report progress towards our climate alternatives in line with the Paris Agreement India. We plan to continue to build our power
ambition. We continue to make regular goal of limiting global warming to below 1.5°C. purchase agreements portfolio and expand
TCFD-aligned disclosures and have published We plan to remove the remaining emissions our purchase of green tariffs in markets
our fourth disclosure, a summary of which is that cannot be reduced or replaced by procuring where these are available.
on page 20. Our stand-alone TCFD Update high-quality offsets at a later stage.
2020 is available at www.hsbc.com/esg. The majority of our travel emissions
We will compare our success against our are concentrated in air travel, which fell in
We understand that achieving net zero carbon emissions in 2019, including scope 2020 due to the Covid-19 outbreak. As travel
requires not just emissions reduction but 1, 2 and 3 emissions. We will use 2019 figures restrictions are lifted, we expect our travel
investment in carbon offsets for a balanced as a baseline due to the Covid-19 outbreak emissions to rise. However, we will continue to
transition. However, the world currently lacks affecting working behaviours, which helped encourage the use of technological solutions
both a globally consistent, future-proofed to drive further reductions reflected in 2020 where possible to provide connectivity with
standard to measure financed emissions and results. For our 2019 baseline, our operational colleagues and customers.
Explaining scope 1, 2 and 3 emissions Scope 2 Scope 3 Scope 1 Scope 3
To measure and manage our carbon emissions, Indirect Indirect Direct Indirect
we follow the Greenhouse Gas Protocol global
framework, which identifies three scopes
of emissions. Scope 1 represents the direct
emissions we create. Scope 2 represents the
indirect emissions resulting from the use of Electricity,
electricity and energy to run a business. Scope 3 steam
heating and Company
represents indirect emissions attributed to cooling facilities
upstream and downstream activities taking
place to provide services to customers. Our Company
upstream activities include business travel and Employee vehicles
emissions from our supply chain including Supply Business commuting1 Investments and
chain travel financed emissions
transport, distribution and waste. Our
downstream activities are those related to
investments and financed emissions.
Upstream activities HSBC Holdings Downstream activities
or further details, see our ESG Data Pack at
F
www.hsbc.com/esg. 1 HSBC-sponsored shuttles only
HSBC Holdings plc Annual Report and Accounts 2020 45
ESG review | Climate
Becoming a net zero bank continued
Working with our supply chain This means making financing decisions solutions to help even the most heavy-
As the majority of our emissions are within with a consideration for climate change, emitting sectors to progressively decarbonise,
our supply chain, we know we cannot achieve and intensifying our support for customers while helping to ensure a just and stable
our net zero goal without our suppliers joining in their transition to lower carbon emissions. transition to maintain economic stability.
us on our journey. Our supplier emissions are
currently calculated using a methodology In 2017, we pledged to provide and facilitate
based on supplier spend. In 2020, we began $100bn of sustainable finance and investment
the three-year process of targeting our largest by 2025 to support our customers as they Included within the $100bn facilitation
suppliers, representing 60% of our annual switch to more sustainable ways of doing total is $2.8bn-worth of advisory services
supplier spend, to encourage them to make business, and by the end of 2020 we had on HSBC-issued green/SDG bonds. Our
their own carbon commitments, and to already achieved $93.0bn of that ambition. green bond report summarises and our
disclose their emissions via the CDP supply In October 2020, we set ourselves a new asset register lists the loans that underpin
chain programme. This programme will allow target of providing between $750bn and our issuances. The latest report includes
us to work with our suppliers to understand $1tn in sustainable finance and investment $1.6bn of balances as at 30 June 2020
their commitment to carbon emission by 2030 (for further details, see page 48). that have been included within the
reduction, to educate those that are starting financing total. The green report and asset
their journey, and to collaborate with those We will work with our portfolio of customers register are available at: www.hsbc.com/
that are leading in this area. to provide expert advice and support them our-approach/esg-information/esg-
on their transition to lower carbon emissions, reporting-and-policies.
Our lending portfolio while taking into account the unique
At the heart of our climate plan is a goal conditions for customers across developed
to align our financed emissions to the Paris and developing economies. To do this, we
Agreement goal of net zero by 2050 or sooner. will increase our portfolio of transition finance
Our carbon dioxide emissions in 2020 where we have operational control and a Carbon emissions (total and FTE)
We report our carbon emissions following small presence, we scale up the emissions
the Greenhouse Gas Protocol, which data from 93% to 100%. 1,000,000 4.0
incorporates the scope 2 market-based
emission methodology. We report carbon We then apply emission uplift rates to
dioxide emissions resulting from energy reflect uncertainty concerning the quality 900,000
3.5
use in our buildings and employees’ and coverage of emission measurement and
business travel. estimation. The rates are 4% for electricity,
CO2 per FTE (tonnes)
Total CO2 emissions (tonnes)
800,000 3.0
10% for other energy and 6% for business
In 2020, we surpassed our carbon emissions travel. This is consistent both with the
target of 2.0 tonnes per FTE, achieving 1.76 Intergovernmental Panel on Climate 700,000 2.5
tonnes per FTE. This was mainly attributed Change’s Good Practice Guidance and
to travel restrictions and the reduction of Uncertainty Management in National
2.0
usage of our buildings due to the Covid-19 Greenhouse Gas Inventories and our internal 600,000
outbreak. We also implemented over analysis of data coverage and quality.
600 energy conservation measures that 500,000 1.5
amounted to an estimated energy Further details on our methodology,
avoidance in excess of 15 million kWh. our third-party assurance report and
relevant environment key facts found 400,000 1.0
In 2020, we collected data on energy in our ESG Data Pack can each be found 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
use and business travel for our operations at www.hsbc.com/esg. Key:
in 28 countries and territories, which
Total CO2 emissions (tonnes)
accounted for approximately 93% of our
CO2 per FTE (tonnes)
FTEs. To estimate the emissions of our
The 2020 target was set at 2.5 CO2 tonnes/FTE until 2017,
operations in countries and territories when the target was stretched to 2.0 CO2 tonnes/FTE
Carbon dioxide emissions in tonnes Carbon dioxide emissions in tonnes per FTE Energy consumption in GWh
2020 2019 2020 2019 2020 2019
Total 406,000 530,000 Total 1.76 2.26 Total Group 928 1,050
From energy 363,000 414,000 From energy 1.57 1.76 UK only 247 281
Included energy
8,000 10,400 From travel 0.19 0.5
UK
From travel 43,000 116,000
46 HSBC Holdings plc Annual Report and Accounts 2020
Climate
Becoming a net zero bank continued
Measuring our progress In 2020, we began to apply PACTA to formalising the qualifying criteria for
We are using several metrics to measure our the relevant segments of our loan book, sustainable finance, and enhancing
progress of our net zero journey, including our starting with the automotive sector, to build reporting on investments.
carbon emissions, renewable energy sourced our knowledge of the tool and improve
ESG review
for our operations, balance sheet exposure to our understanding of its effectiveness and In the following table, we set out our
carbon-intensive sectors and progress made limitations (for further details, see page 18 ambition, the metrics and indicators we
against our sustainable finance commitment. of our TCFD Update 2020). used in 2020 to measure our progress,
and the metrics and indicators we aim to
We intend to develop clear, measurable We know this is a journey and recognise develop in future to measure our progress.
pathways to net zero within our financing that the current means of measurement of
portfolio, using the Paris Agreement Capital financed emissions globally need improving
Transition Assessment (‘PACTA’) tool, which to track reductions better. Over the course
measures the alignment of relevant sectors of 2021, we will be refining our approach
with net zero. to financed and supply chain emissions,
Metrics and indicators to be
Ambition Metrics and indicators used in 2020 developed in 2021
Becoming a net zero bank1 – CO2 emissions per FTE across scope 1, 2 and 3 – Supply chain emissions
Be net zero in our operations
and supply chain by 2030 or – Absolute CO2 emissions across scope 1, 2 and 3
sooner
– Percentage of renewable electricity sourced
Align our financed emissions – Illustrative PACTA results for our automotive book. (For further – Net zero alignment of our
to achieve net zero by 2050 details, see pages 18 and 19 of our TCFD Update 2020.) financing portfolio
or sooner
– Percentage of wholesale loans and advances in high transition
risk sectors. (For a breakdown by sector, see page 9 of our
TCFD Update 2020.)
– Illustrative impacts of climate scenarios on our transition
risk sectors. (For further details of our scenario analysis,
see pages 14 to 16 of our TCFD Update 2020.)
Supporting our customers – Sustainable finance and investment provided ($bn). (For further
Support our customers details of our progress, see pages 48 to 50.)
in the transition to
a sustainable future – Ranking in Dealogic green, social and sustainable bond
with $750bn to $1tn of league tables2
sustainable finance and
investment by 2030
Unlocking new climate – Established HSBC Pollination Climate Asset Management with – Cleantech investment within our
solutions the aim to launch the first fund in mid-2021. (For further details, technology venture debt fund
Help transform sustainable see page 50.) – Philanthropic programme
infrastructure into a global to provide scale to climate
asset class, and create a innovation ventures, renewable
pipeline of bankable projects energy, and nature-based
solutions
1 Our reported CO2 emissions in 2020 related to energy and business travel. For further details on scopes 1, 2 and 3, and our progress on carbon emissions and
renewable energy targets, see pages 45 and 46.
2 Dealogic ranking based on apportioned bookrunner value, excluding self-issuances.
HSBC Holdings plc Annual Report and Accounts 2020 47
ESG review | Climate
Supporting our customers through transition
Our ability to finance the transformation of access to capital markets, and $20.0bn
businesses and infrastructure is key to building in financing and $6.1bn in investments to Sustainable finance
a sustainable future for our customers and support environmental and social goals. We define sustainable finance as:
society. The most significant contribution we
can make to this is supporting our portfolio of Our sustainable finance commitment has – any form of financial service that
customers to decarbonise within the transition enabled sustainable infrastructure and energy integrates ESG criteria into business
to a net zero global economy. systems, financed the transition towards net or investment decisions; and
zero emissions by promoting decarbonisation
– financing, investing and advisory
A leader in sustainable finance efforts across the real economy, and enhanced
activities that support the UN
We are a recognised leader in sustainable investor capital through sustainable
Sustainable Development Goals
finance, helping to pioneer the market for investments.
(‘SDGs’), in particular taking action to
green, social and sustainable bonds and
We recognise that more and faster action is combat climate change. The SDGs,
attaching ambitious environmental targets
needed to achieve the Paris Agreement goal also known as the Global Goals, were
to business loans. We maintained leadership in
of net zero by 2050 or sooner. That is why in adopted by all UN member states in
green, social and sustainable bonds, ranking
October 2020 we announced our ambition 2015 as a universal call to action to
third globally in 2020, according to Dealogic
to provide between $750bn and $1tn of end poverty, protect the planet and
on an excluding self-mandated basis. We
sustainable finance and investment over the ensure that all people enjoy peace
also set up HSBC Pollination Climate Asset
next 10 years. This new commitment builds and prosperity by 2030.
Management, the first large-scale venture
to invest in natural capital as an asset class on our 2017 target. Our new commitment
We have reviewed and updated these
(see page 50). We have been recognised incorporates sustainable finance and
definitions to reflect our updated climate
as the World’s Best Bank for Sustainable investment of $40.6bn in 2020, which also
ambition, which is available at www.hsbc.
Finance by Euromoney in 2019 and 2020. contributed to our initial 2017 target, as
com/who-we-are/esg-and-responsible-
well as additional products of $3.5bn.
business/esg-reporting-and-policies.
In 2020, we continued to expand the horizons
of sustainable finance. We helped the Egyptian Our sustainable finance and investment in
government launch the first sovereign green 2020 for our updated target comprises 23%
bond in the Middle East and supported Henkel, green and sustainability-linked lending to
$93.0bn
a German household goods company, to issue companies, 9% investments we manage and
the world’s first plastics reduction bond (see distribute on behalf of investors, and 68%
page 76). We also issued the first transition facilitating the flow of capital and providing
Islamic bond to enable Etihad, a Middle access to capital markets.
Cumulative progress since 2017
Eastern airline, to become more sustainable on our commitment to provide
(see page 266). As we set out below, we are We have developed and evolved our existing
data dictionary, taking into consideration and facilitate sustainable finance
intensifying our support to customers as they and investment.
transition to lower carbon emissions. the principles we developed with UK Finance
in the white paper ‘Sustainable finance: (Target: $100bn by 2025)
Our vision is to help create a vibrant, thriving Establishing a principles-based framework for
the measurement and reporting of multi-year
3rd
and resilient future that opens up opportunities
for new skills, ideas and jobs to thrive. Providing commitments’. Our progress will be published
transition finance solutions, particularly in each year and will seek to continue to be
emerging markets where the opportunity independently assured.
is greatest, is core to our climate strategy. Dealogic ranking for green, social and
ur revised data dictionary, which includes a
O sustainability bonds globally in 2020.
detailed definition of contributing activities, and
Transition solutions our ESG Data Pack, which includes our third-party (2019: 2nd)
In 2017, we committed to providing and assurance letter and the breakdown of our
facilitating $100bn of sustainable finance sustainable finance and investment, can be found
and investment by 2025. At the end of 2020, at www.hsbc.com/who-we-are/esg-and-
we had fulfilled $93.0bn of this commitment, responsible-business/esg-reporting-and-policies.
comprising $66.9bn through facilitating the For further details of our net zero ambition,
see www.hsbc.com/who-we-are/our-climate-
flow of capital and providing customers
strategy/becoming-a-net-zero-bank.
Our approach to climate risk
We continue to improve the identification, We also formalised our overall approach
oversight and management of climate risk. to climate risk management to integrate
In 2020, we enhanced our climate risk climate risk into the Group-wide risk
appetite statement with quantitative management framework.
metrics to articulate the risks from climate
change, and we plan to develop our risk or further details on climate risk, see our
F
TCFD Update 2020 at www.hsbc.com/esg.
appetite and key indicators iteratively
through 2021.
48 HSBC Holdings plc Annual Report and Accounts 2020
Climate
Supporting our customers through transition continued
Sustainable infrastructure analysts, led to ESG issues being raised in to build our sustainable investment portfolios
Good infrastructure is the backbone of any engagements with over 2,300 corporate and to support the UN SDGs and the Paris
successful society and economy. However, non-corporate issuers in 78 markets in 2020. Agreement. During 2020, we expanded
addressing climate change requires the world We voted on more than 86,000 resolutions at the assets in scope of the policy with full
ESG review
– particularly emerging markets – to develop over 8,200 company meetings in 70 markets. compliance due in early 2021.
a new generation of sustainable infrastructure
quickly. The OECD estimates that up to At HSBC Global Asset Management, nearly Embedding ESG into our engagement
$6.9tn each year is needed through to 2030 89% of total assets under management were Our vision is to support our customers’
to achieve this. While many institutions invested according to at least one of the seven aspirations to make a positive change in the
have been engaged in mobilising finance strategies defined by the Global Sustainable world through wealth value creation. We are
for this purpose, there remains a significant Investment Alliance, as at December 2020. embedding ESG across client engagement
investment gap and lack of adequate, and investment solutions in our wealth
bankable projects. Stronger standards are We define sustainable investing as: inclusion, management and private banking businesses.
also needed to bring investors to the table. which involves strategies that enhance
portfolio exposure to better ESG performers; We offer a comprehensive range of
To help solve for this, we are leading thematic, where strategies provide exposure sustainable investment products to help
the Finance to Accelerate the Sustainable to transformative environmental or social clients marry their sustainability and financial
Transition-Infrastructure (‘FAST-Infra’) initiative. trends; and impact, which are strategies goals. These include green, social and
This was established in partnership with the linked to tangible societal or environmental sustainability bonds, investment funds,
International Finance Corporation (‘IFC’), the outcomes/impact. ETFs, discretionary mandates, private market
OECD, the World Bank’s Global Infrastructure investments, structured products and green
Facility and Climate Policy Initiative under the We launched the Real Economy Green certificates of deposit. Our advisory offering
auspices of the One Planet Lab to develop a Investment Opportunity (‘REGIO’) fund with also covers securities with substantial
consistent, globally applicable labelling system the IFC, and at December 2020 had raised exposure to environmental themes.
for sustainable infrastructure investment. $475m to fund green projects in developing
This will aim to ensure that governments and economies that reduce emissions and meet To help customers understand the topic and
project developers embed high ESG standards the UN SDG Goals. Through our HGIF Lower the benefits of investing sustainably, a range
into new infrastructure to access this label. We Carbon Equity and Bond Funds, which are of educational materials, thought leadership
also co-chair the Coalition for Climate Resilient available in nine Wealth and Personal Banking publications, and articles on sustainability
Investment, launched at the UN General markets and seven Global Private Banking themes are distributed regularly. We partnered
Assembly’s Climate Action Summit in 2019, markets, we aim to help investors generate with the Principles for Responsible Investment
bringing together institutional investors, banks, long-term total return with a lower carbon to develop a training programme for our
insurers, rating agencies and governments footprint than reference benchmark indices. advisers, covering ESG fundamentals,
to develop risk-informed frameworks and tools We expanded our investment offering for investing strategies and client engagement.
to integrate and price physical climate risks private banking and wealth clients, including:
in decision making. TPG Rise, an impact fund linked to the UN We provide our customers with ESG insights
SDGs; structured products and certificates of and foster industry development. HSBC Global
Responsible and sustainable investment deposit where proceeds were used to fund Research published over 200 climate and
We offer a broad suite of ESG capabilities green and sustainable development projects; ESG-related reports in 2020, accompanied
across asset management, global markets, and various thematic solutions such as gender by approximately 500 client meetings and 15
research, wealth, private banking and equality and energy transition. client webcasts. Our ESG team works in close
securities services, enabling institutional collaboration with analysts from other asset
and individual investors to manage risk As a signatory of the United Nations classes and across markets, embedding
and pursue ESG-related opportunities. Environment Programme Finance Initiative’s sustainability into research and offering
Principles of Sustainable Insurance, our a deeper integration approach to a global
Our endeavour is to influence the market insurance business has continued to investor client base. The team released
through active engagement on ESG issues. implement its sustainability policy. The policy four episodes of the ESG Brief podcast.
We have a dedicated Responsible Investment includes restricting investments that may ESG Insights from HSBC Global Research
team across developed and emerging have adverse impacts on people and the are also repackaged for retail investors as
markets. The team’s activities, along with environment, and incorporating ESG principles a series known as #WhyESGMatters.
portfolio managers and other investment into our investment governance. We continued
Laying the foundations for a sustainable future
Cement is one of the world’s most socially We helped LafargeHolcim towards its goals
and economically important materials – by playing a major role in the world’s first
and also among the most highly carbon building materials sustainability-linked bond.
intensive. Long-term change is needed We acted as joint bookrunner on the €850m
to help cement producers reduce their sustainability-linked bond, whose terms
environmental impact. Switzerland-based mean LafargeHolcim must pay a premium
LafargeHolcim, one of the largest global if it does not meet its target to reduce the
cement producers, aims to lead its industry carbon intensity of the cement it produces
in becoming greener. by 17.5% – from 2018 levels – by 2030.
HSBC Holdings plc Annual Report and Accounts 2020 49
ESG review | Climate
Unlocking climate solutions and innovations
We understand the need to find new solutions Backing new technology and innovations
to increase the pace of change if the world is Addressing climate change requires innovative Our charitable
to achieve the Paris Agreement’s goal of being ideas. By connecting financing with fresh
net zero by 2050. We are working closely with thinking, we can help climate solutions to contributions
a range of partners to accelerate investment in scale to support sustainable growth. Formed
natural resources, technology and innovations, in 2020, our $100m philanthropic climate In 2020, our charitable giving totalled
and sustainable infrastructure to reduce programme aims to do this and truly transform $112.7m, including our $25m Covid-19
emissions and address climate change. the way we protect our planet, overcoming donation fund. We also encourage our
barriers to addressing climate change. We people to volunteer time and share their
Working with our partners provided $7.1m to our non-governmental skills, offering paid volunteer days. In
We know that many investors want to organisation partners during the year to get 2020, our colleagues gave over 82,000
invest in companies that can demonstrate the programme underway. hours to community activities during
their ESG credentials. Through philanthropy, work time.
partnerships and new initiatives our aim is We intend to expand our technology venture
to help them invest in protecting the planet, debt capabilities to provide $100m of financing In 2018, we set out a three-year
with HSBC Global Asset Management to companies developing clean technologies goal to help two million people in our
offering a range of funds for clients to invest that can be deployed at scale to support communities be more employable and
in businesses and projects that have strong businesses and households to transition to a financially capable through providing
ESG track records and ambitions. low-carbon economy. We will provide further more than $100m in charitable
updates on cleantech investment and the donations. Current projections from our
HSBC Global Asset Management also created philanthropic programme in 2021. charity partners indicate our support
a joint venture in 2020 with Pollination, a reached more than four million people
specialist climate change advisory and Skills for a sustainable future through donations of over $115m. This
investment firm. The joint venture, HSBC We have a responsibility to invest in the funding helped marginalised young
Pollination Climate Asset Management, aims long-term prosperity of the communities people prepare for and secure their first
to be the world’s largest manager of capital where we operate. We recognise that jobs, supported indigenous people to
invested in natural resources (see box below). technology is developing at a rapid pace and complete their education and gain
that a range of new and different skills are now employment, and helped migrant
To encourage more investment in building needed to succeed. For this reason, much of workers avoid financial fraud. The
sustainable infrastructure, we are at the our focus is on programmes that develop increased reach from our initial
forefront of an initiative that gives investors employability and financial capability. We also projection is due in part to increased
greater confidence about where their money is back climate solutions and innovation, and reach from programmes moving online.
going. Working with the IFC, OECD, the World contribute to disaster relief efforts based on
Bank’s Global Infrastructure Facility and the need (see panel on the right).
Climate Policy Initiative, under the auspices
of the One Planet Lab, we helped conceive We also continue to increase knowledge
the FAST-Infra initiative. Our collective aim on sustainability issues with our people.
is to turn sustainable infrastructure into We developed a seven-part online course
a mainstream asset class. We will aim to exclusively for our employees in partnership
achieve this by establishing a global labelling with the University of Cambridge Institute
system that clearly shows investors the for Sustainability Leadership. In 2020,
infrastructure in which they are investing our colleagues completed more than
is sustainable and contributes to achieving 36,700 modules.
the UN’s SDGs.
Investing in nature-based projects with Pollination
A key part of our strategy is to unlock new investment firm, intends to set up funds that
climate solutions, helping to transform will invest in a range of nature-based
sustainable infrastructure into a global asset projects that protect and enhance nature
class. As part of this ambition, we launched over the long term, and reduce greenhouse
HSBC Pollination Climate Asset emissions. The intention is to launch a series
Management in August 2020, with the of natural capital and carbon credit funds for
vision to create the world’s largest institutional investors, with the aim to
dedicated natural capital investment launch the first fund in mid-2021.
manager. The joint venture with Pollination,
a specialist climate change advisory and
50 HSBC Holdings plc Annual Report and Accounts 2020Climate
Our approach to sustainability policies
We recognise that businesses can have To accelerate the global transition to net
an impact on the environment, individuals zero, we also want to unlock climate solutions,
and communities around them. We have such as cleantech innovation, sustainable
developed, implemented and refined our infrastructure and nature-based solutions.
ESG review
approach to working with our business These will help smooth a transition and shift to
customers to understand and manage a more sustainable economy in the long term.
these issues. As we move closer to 2050, we expect our
portfolio of financed emissions to reflect this
Our sustainability risk policies seek to ensure and our customers’ business activities to be
that the financial services that we provide to less carbon intensive.
customers do not contribute to unacceptable
impacts on people or the environment. We In that light, we are undertaking a review of
seek to analyse the impact of ESG issues
and follow international good practice in
our sustainability risk policies to ensure that
they will reflect this need to transition and
Our energy policy
these areas. the phased reduction of carbon-intensive When we last updated our energy
business activities. policy in 2018, we stated that we
We believe that the key to managing would not finance any new coal-fired
sustainability risk is creating partnerships Governance power plants, with the potential
with our customers, assisting them on their Within our Global Risk function, we targeted and time-limited exceptions
transition path to a more sustainable and have reputational and sustainability risk in Bangladesh, Indonesia and
low-carbon economy. specialists who are responsible for reviewing, Vietnam, recognising the need to
implementing and managing our sustainability balance local humanitarian needs
Our policies risk policies as well as our application of the with the need to transition to a
Our sustainability risk policies cover Equator Principles. Our global network of low-carbon economy.
agricultural commodities, chemicals, more than 75 sustainability risk managers
defence, energy, forestry, mining and supports the implementation of these We therefore agreed that any
metals, UNESCO World Heritage Sites policies. In 2020, these local sustainability risk funding of new coal-fired power
and Ramsar-designated wetlands. managers were further supported by regional plants in those three countries would
reputational risk managers across the Group only be considered subject to certain
These policies define our appetite for business who have taken on additional oversight strict criteria. It is important to note
in these sectors and seek to encourage responsibilities for sustainability risk. that we have not provided any
customers to meet good international
project finance for any new coal-fired
standards of practice. Where we identify We have also established a Sustainability power plants anywhere in the world
activities that could cause material negative Risk Oversight Forum, made up of senior since then, including those countries.
impacts, we will only provide finance if we can members of the Global Risk function and
confirm customers are managing these risks global businesses across the Group. In April 2020, we removed these
responsibly. Such customers are subject to exceptions and will not finance
greater due diligence and generally require Equator Principles any new coal-fired power plants
additional approval by sustainability risk The Equator Principles provide a risk anywhere globally. We continue
specialists. We will not provide finance if management framework for determining, to support the other needs of our
the business activities are not aligned to our assessing and managing environmental and customers in these countries and
aims and values. social risk in projects. We were an early continue to support their
adopter of the principles in 2003. governments.
Our sustainability policies are being aligned
with our approach to climate risk as well as In October 2020, the revised Equator Within the power and utilities, and
our net zero commitments, and will be Principles framework came into effect, after metals and mining sectors shown
enhanced during 2021. consultation with member banks and external in our TCFD disclosures on page 19,
stakeholders. In response to the launch of the our direct exposure to thermal coal
further details on how we manage
For revised framework, we are rolling out updated
sustainability risk as well as our full policies, is 0.2% of the wholesale loans and
see www.hsbc.com/our-approach/risk-and-
training for staff in 2021 to ensure that Equator advances figures.
responsibility/sustainability-risk. Principles transactions are properly identified
and managed.
Supporting the transition We report annually on the transactions
At the heart of our net zero plan is an aim completed under the principles. Our latest
to align our financed emissions – emissions Equator Principles report is available at: www.
produced by our portfolio of customers – to hsbc.com/who-we-are/our-climate-strategy/
the Paris Agreement goal of net zero by 2050 sustainability-risk/equator-principles.
or sooner. The most significant contribution
we can make is to support our customers’ or further details of our approach to human
F
transition to lowering carbon through rights, see page 71.
transition financing, which is financial support For further details of our approach to risk
that helps heavy-emitting companies take management, see page 37.
action to become more environmentally
sustainable over time.
HSBC Holdings plc Annual Report and Accounts 2020 51ESG review
Customers
We are bringing the benefits of connectivity and a global
economy to more people around the world.
At a glance Digital and technology
Our relationship Our retail and wholesale customers are using digital services more than
We create value by providing the products ever before, with the Covid-19 outbreak accelerating the shift to digital banking.
and services our customers need and aim We have continued to invest in digital and technology to help make banking
to do so in a way that fits seamlessly into simpler and safer, and have launched new products and platforms to assist
their lives. This helps us to build long-lasting and support our customers.
relationships with our customers. We maintain
trust by striving to protect our customers’ data Read more on digital and technology on page 53.
and information, and delivering fair outcomes
for them. If things do go wrong, we aim to
take action in a timely manner. Customer satisfaction
Operating with high standards of conduct Through a series of surveys, we aim to listen to our customers to put them at
is central to our long-term success and the centre of our decision making. We continued to redesign how we receive
underpins our ability to serve our customers. feedback to create a consistent measure of the customer experience and act on
customers’ feedback. While the roll-out of the full programme was slowed during
In this section, we report on our customers as the Covid-19 outbreak, we continue to embed the new ways of working.
three distinct groups: our wealth and personal
banking customers; medium and large-sized Read more on customer satisfaction on page 54.
corporate customers; and our global and
institutional customers. These groups are
served by our three global businesses
respectively: Wealth and Personal Banking
How we listen
(‘WPB’), Commercial Banking (‘CMB’) and We aim to be open and consistent in how we track, record and manage
Global Banking and Markets (‘GBM’). complaints. In 2020, complaints fell across our WPB and GBM businesses
and were up overall in CMB. Complaint resolution was impacted by staffing
challenges from the Covid-19 pandemic, while corporate complaints were
focused on account opening and operations due to increased demand
for finance.
Read more on how we listen on page 56.
Conduct
We responded to the changing environment and sought to help our customers,
particularly the most vulnerable, with payment relief measures, lending support
and improvements to our products and services. The conduct of our people is
linked to the way we work. We adapted our global training and support for
our colleagues, updated how we design products and deliver fair value, and
continued to help customers transition from interbank offered rates.
Read more on conduct on page 58.
52 HSBC Holdings plc Annual Report and Accounts 2020Customers
ESG review
Digital and technology
The Covid-19 outbreak meant that many of For our clients with wealth management
our customers needed to increasingly use our needs we launched a simplified version of
services remotely. The significant technology Wealth View, an online platform enabling
investments we made in the years before easier analysis of their holdings and
the pandemic to make digital banking easier transactions. It is available in Hong Kong,
meant we could support the accelerated shift Singapore, Luxembourg, the UK, Channel
to mobile and online channels during 2020. Islands and the US.
In 2020, more than nine out of every 10, Our improved global online Business Banking
or 92.7%, of our global personal banking Experience, used by more than 49,000
transactions were done digitally, an increase businesses across nine markets, helps
of four points year-on-year. At the same time, customers to complete everyday banking
54% of our retail customers were digitally
active, an increase of five points from 2019.
tasks themselves and run their businesses
remotely. It has an average customer
Harnessing the
satisfaction score of 9 out of 10. benefits of blockchain
Our corporate customers also increased
their use of our digital services, with mobile Helping businesses to grow We are implementing distributed
app downloads of our core business digital We continue to transform our digital platform ledger technology, including
platform, HSBCnet, growing 146% in 2020. for Global Trade and Receivables Finance, blockchain, to improve efficiency,
HSBC Trade Solutions. We launched trade transparency and security for clients.
Throughout the Covid-19 outbreak, we finance and risk mitigation solutions to 2,100 In global trade, we are using the
continued to invest in technology to help customers in Hong Kong in November 2020, technology to replace the previously
our customers to do more of their everyday making trade simpler, safer and faster. paper-driven letter of credit process,
banking online, and we rolled out new which are the documents
functionality to support them through the In the UK, HSBC Kinetic, a new mobile guaranteeing the seller will be paid.
pandemic and provide digital solutions for proposition for SMEs, had 2,899 customers It offers a fast and secure alternative,
their growth ambitions. onboarded by the end of 2020. Launched which is helping reduce letters of
in June 2020, it enables customers who need credit processing time from between
Making banking simpler and faster a business current account or a Business five and 10 days to a matter of hours.
During 2020, we completed the initial roll-out Bounceback loan from the UK Government
of new online banking and mobile platforms to apply online and do their day-to-day
for our retail customers, replacing legacy banking digitally.
technology across 16 markets, which will
151%
let us innovate more quickly in the future. In GBM, we are investing heavily in digital
and data capabilities to support our clients’
In 2020, the retail mobile banking app achieved growth ambitions and accelerated digital
an average Apple rating of 4.8 in the UK and needs. In Securities Services, we are
Year-on-year increase in
4.7 in Hong Kong, and an average Android developing solutions to provide clients with
wholesale customer mobile
rating of 3.8 in the UK and 3.5 in Hong Kong. fast access to data, and more control of their
payments during 2020.
assets and transactions. The monthly usage
We helped many customers in need of of our API suite, which gives on-demand
support during the economic slowdown.
92.7%
access to data, grew 2,716% in the year to
On average we deployed digital lending December 2020, with a significant increase
portals within six days for business customers in committed customers.
to be able to apply for government lending
schemes in the UK, the US and Hong Kong. To help make HSBC even more secure, Retail banking transactions
we provide a front-end digital know-your- globally that were digital at
As it has been more difficult to meet in person, customer solution via our SmartServe the end of 2020.
we introduced customer video meetings for platform, which has been launched in 20
all business areas across 47 markets. We also countries and territories, including the UK,
119,782
continued to expand the use of chatbots to UAE, the US, Hong Kong and France.
support customers with day-to-day queries.
In WPB, we launched online and in-app chat or further details of our digital satisfaction
F
services across eight new markets and there scores, see page 54.
Downloads of the HSBCnet
were more than 10.5 million chat For further details of new features we introduced mobile app in 2020, a 146%
conversations in 2020. to give people more control over their financial
lives during the Covid-19 outbreak, see page 58. year-on-year increase.
HSBC Holdings plc Annual Report and Accounts 2020 53ESG review | Customers
Customer satisfaction
We are continuing to redesign how we receive How we fared performance below expectations in France,
feedback from our customers to put them at In 2017, we set ourselves the strategic where we have ongoing action plans to
the centre of decision making. targets to improve customer satisfaction in improve communications and drive more
our WPB and CMB global businesses by 2020. proactive contact with customers.
In 2019, we said we wanted to measure the Both businesses achieved high levels of
likelihood of customers to recommend HSBC satisfaction in the majority of their respective In our private bank, our global net promoter
across our global businesses, and we now ‘scale markets’, although were unable to score fell to nine in 2020, compared with 24 in
have this consistent measure of our customer fully achieve their 2020 ambitions to be the previous year, largely due to a decline in
experience to help engage our people and either ranked as top three against relevant Hong Kong and Switzerland. However, our
improve how we benchmark our performance competitors in these markets, or to have scores improved in Singapore and in France.
internally and against our competitors. improved by at least two ranks compared We achieved strong scores for our relationship
with their 2017 baselines. management services, and our approach to
Our transition to a new feedback system coping with the Covid-19 outbreak was
What we are trying to achieve goes beyond Our WPB business, which surveyed more than commended in many markets. Key areas
just a measure. It is a way of systematically one million customers on their likelihood to where our clients would like us to improve
collecting, analysing and acting on our recommend HSBC and their satisfaction with were our digital and advisory offerings, on
customers’ feedback. Across our global our services, achieved its target in seven of which we are focusing significant investment.
businesses, it will help us get better our eight scale markets in 2020. Overall, our
insight from our customers, build stronger ranking fell below ambition in Malaysia, In CMB, five out of eight tracked markets
relationships with them, and identify and despite our rank position improving during met targets by improving their rank position by
prioritise areas where we can improve 2020. Our lower performance than target was two places from 2017 or being in the top three
the experience they have with us. largely due to ‘the ease of banking with us’ against competitors, which were Hong Kong,
compared with our competitors. We are the UAE, the Pearl River Delta, Singapore and
Through a series of surveys, we ensure we carrying out several initiatives to improve its Saudi Arabia in 2020. We declined to fifth
are listening to our customers and creating performance, including the release of new position in the UK, as we deployed staff to
insights at all levels of the relationship. We digital features, staff training and a refresh of Covid-19-related lending schemes impacting
create more transparency of the customer our customer propositions. customer experience in telephony and
experience by sharing feedback directly with specialist availability in branches. Our rank in
our customer-facing teams and allowing them In surveys that we largely conducted of Mexico remained unchanged at fifth. Similarly,
to respond directly to those customers to customers’ views of our specific services and in Malaysia, our position remained unchanged
address specific feedback. channels, increased market attention, at sixth, notwithstanding improvement in
geopolitical tensions and market volatility underlying satisfaction scores.
The metric that underpins this new system is impacted scores in mainland China. This trend
the net promoter score based on the question: began to reverse due in part to enhanced In GBM, our aim is to outperform the average
‘On a scale on 0 to 10, how likely is it that customer communications and a greater competitor score. To measure this, each year
you would recommend HSBC to a friend emphasis on digital assistance. For our we partner with Greenwich Associates to
or colleague?’ The score is calculated by relationship manager scores, we noted conduct a relationship level satisfaction
subtracting the percentage of ‘detractors’, survey. In 2020, we achieved an overall net
who provide a score of 0 to 6, from the promoter score of 48, outperforming our
percentage of ‘promoters’, who provide a competitors’ score of 39. We scored 49
score of 9 to 10. It can range as low as -100 in Asia-Pacific, compared with 32 for our
to as high as 100. competitors, and 44 in the Europe and Middle
7 out of 8
East region, compared with 41 for our
Although the roll-out of the full programme competitors. However, we scored 54 in North
was slowed during the Covid-19 outbreak, America, below our competitors’ score of 73.
as we redirected resources to ensure our WPB markets sustained top-three rank
front-line teams could focus on delivering and/or improved in customer satisfaction. Digital channels
for our customers, we continue to embed Our customers have increasingly turned to our
the new ways of working. In 2020, WPB digital services in recent years, a trend which
launched more than 157 new surveys across was accelerated in 2020 due to the Covid-19
15 markets. In CMB, we launched elements outbreak. We launched new capabilities and
5 out of 8
of our programme in the UK, the US, Canada, digital enhancements in each of our global
Mexico and India, with more than 30 markets businesses to be closer to our customers and
planned for 2021. Our GBM business is also support them during the pandemic.
CMB markets sustained top-three rank
continually working on ways to collect
and/or improved in customer satisfaction.
valuable feedback and improve customer In WPB, we were able to maintain robust
experience. In 2020, we started conducting performance in our digital channels, with an
post-implementation assessments through improvement in scores in online banking in
questionnaires, which provide useful insights
on our performance. 48 almost all markets compared with 2019.
This reflects the success of new mobile app
GBM’s overall net promoter score,
functionality in the UK, including balance after
outperforming competitors’ score of 39.
bills forecasting, direct debits and standing
orders cancellation and in-app overdraft limit
54 HSBC Holdings plc Annual Report and Accounts 2020You can also read
