HSBC Holdings plc Environmental, Social and Governance Update April 2019 - AASTOCKS.com
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HSBC Holdings plc Environmental, Social and Governance Update April 2019
Connecting customers with opportunities HSBC aims to be where the growth is, enabling businesses to thrive and economies to prosper, and ultimately helping people to fulfil their hopes and realise their ambitions. The information set out in this document, taken together with the information relating to environmental, social and governance (‘ESG’) issues in our HSBC Holdings plc Annual Report and Accounts 2018, aims to provide key ESG information and data relevant to our operations for the year ended 31 December 2018. In this context, we have also considered our obligations under the Environmental, Social and Governance Reporting Guide contained in Appendix 27 to The Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (‘ESG Guide’). To the extent that we have not complied with the relevant ‘comply or explain’ provisions in the ESG Guide, it is because we have chosen to focus on issues that we consider are material to our stakeholders, taking into account the nature of our business. This is aligned with the materiality reporting principle that is set out in the ESG Guide. Please see ‘Assessing materiality’ on page 5 for further information on how we determine what issues are material to our stakeholders. We will continue to develop and refine our reporting and disclosures on ESG issues in line with feedback received from our investors and other stakeholders, and in view of our obligations under the ESG Guide. Hong Kong Stock Code: 5 Incorporated in England on 1 January 1959 with limited liability under the UK Companies Act Registered in England: number 617987
Contents
Overview 2 Group Chief Executive’s review
3 HSBC at a glance
An overview of what we do and where, our 4 Our strategy
global reach, our strategy and our stakeholders. 5 Our stakeholders
It is introduced by the Group Chief Executive,
Overview
6 Our approach
and also sets out our ESG approach.
Our values Customers 7 At a glance
8 Our Retail Banking and Wealth
Our values define who Details of how we listen to our customers, act on feedback Management customers
we are as an organisation and respond when things go wrong. The section reports 12 Our Commercial Banking
across our four distinct customer groups: our retail customers
and make us distinctive.
Customers
customers; medium and large-sized corporate customers; 14 Our Global Banking and
global and institutional customers; and high net worth Markets customers
Dependable customers. It also puts a spotlight on conduct and our 16 Our Global Private Banking
customers
approach to technology, cybersecurity and data privacy.
We are dependable, 18 Customer developments across
all global businesses
standing firm for what
is right and delivering
on commitments.
Open Employees 20 At a glance
22 Listening to our people
Details of how we listen to our people, recognise
We are open to different good conduct and set out our whistleblowing policies.
24 A healthy and diverse
workforce
ideas and cultures, and It also includes our approach to diversity and inclusion, 25 Well-being and developing
Employees
value diverse perspectives. and our ambition to create the healthiest human system our people
in our industry.
Connected
We are connected to our
customers, communities,
regulators and each other,
caring about individuals
and their progress.
Supporting sustainable growth 26 At a glance
27 Sustainable finance
ESG As a reminder Details of our approach to sustainable finance, the 29 Our approach to climate
sustainable growth
transition to a low-carbon economy, suppliers and risk management
As a reminder our own operations. It also sets out our second TCFD 30 Task Force on Climate-related
Supporting
disclosure and our partnerships in the communities Financial Disclosures
31 Suppliers
Reporting currency in which we operate.
32 Sustainable operations
We use US dollars. 34 Committed to communities
All figures are accurate
as at 31 December 2018,
unless otherwise stated.
A responsible business culture 36 At a glance
Adjusted measures Details of our corporate governance as well as our
37 Restoring trust
40 Ensuring strong
We supplement our IFRS approach to tax and human rights. It also provides an
business culture
corporate governance
A responsible
figures with alternative update on actions taken in light of past conduct events 41 Safeguarding the
and reports on how we are tackling financial crime. financial system
performance measures 42 Keeping a responsible
used by management approach to tax
internally. These measures 43 Respecting human rights
are highlighted with the 44 Supporting financial inclusion
following symbol:
Additional information 46 Forward-looking statements/
Non-GAAP financial information
Additional information
Further information on our approach to ESG issues. 47 Abbreviations/
It contains links to further content, policies and Certain defined terms
topics discussed in this document. Like any industry 48 Useful links/Photography credits
and company, we have our set of abbreviations and
terminology. Accordingly, we provide an explanation
of the abbreviations used. A glossary of key terms
is available online at www.hsbc.com/investors.
HSBC Holdings plc Environmental, Social and Governance Update, April 2019 1
Overview
Group Chief Executive’s
review
If we can live up to our wider societal obligations, then we believe
we will materially improve all aspects of HSBC’s performance and
safeguard the future of the organisation for generations to come.
There is much in here that we can be proud
of. Employee satisfaction is up, reflecting an
improvement in the way we engage with and
support our people. We have improved the way
we listen to customers and acted on that feedback,
and we have simplified our governance structures
to create clearer and stronger lines of authority.
We have also accelerated our support for the
low-carbon transition.
Yet for all our strides, there are areas where we can
and must do better. Our senior leadership teams
are still not diverse enough. Many of our customers
still find it too difficult to bank with us. On conduct,
John Flint Group Chief Executive we have more to do in adapting to changing
societal expectations.
Addressing these aspects of our performance
Living up to our wider societal obligations will take time. There are no quick or easy fixes.
has always been part of HSBC’s culture and But where there is work to be done, we will do
identity. Our success over 154 years has been so with urgency, conviction and clear purpose.
founded on our ability to build strong and trusted
As Group Chief Executive, my overriding priority
relationships not just with our customers, but
is to create stronger relationships with all our
with the communities and other stakeholders
stakeholders – and it is part of our ambition to
we serve all over the world.
create what we call the healthiest human system
We recognise that there have been times, in our industry. If we can do that, and live up to
particularly in the recent past, where we have our wider societal obligations, then we believe
failed to meet the standards expected of us. we will materially improve all aspects of HSBC’s
performance and safeguard the future of the
organisation for generations to come.
“Our success over 154 years has been All of you reading this are part of that ambition.
Your feedback and your views are important to
founded on our ability to build strong us. We will continue to take them into account,
and to listen, learn and act.
and trusted relationships.”
I hope you find the report useful.
Societal expectations are changing, and investors
are placing increasing importance on the wider
impact businesses have on people and the planet.
So over the past few years we have taken steps
to improve all aspects of our non-financial
performance, and to live up to the duty of
care we have to all our stakeholders today. John Flint
Group Chief Executive
This ESG Update – the fourth we have produced
– shines a light on our progress. It covers all the
usual areas, from corporate governance and our
environmental impact, to customer satisfaction
and our approach to conduct. We are continuing
to meet our reporting obligations under the terms
of the UN Global Compact and renewing our
commitment to the Compact’s principles.
2 HSBC Holdings plc Environmental, Social and Governance Update, April 2019
HSBC at a glance
Overview
About HSBC
We hold More than We employ around We have around
$2.6tn 39 million 235,000 200,000
Customers
of assets customers bank with us people around the world (full-time shareholders in 130
equivalent staff) countries and territories
Our global reach
HSBC is one of the world’s largest banking and financial services organisations. The long-term trends outlined on page 10
of our Annual Report and Accounts 2018 reinforce our strategic advantages as a leading international banking and financial
Employees
services organisation, with access to the fastest growing markets and robust balance sheet strength. The map below
represents customer accounts by country/territory at 31 December 2018.
Mainland China
3%
Rest of Europe
8%
sustainable growth
Supporting
North America
10%
UK
29% Hong Kong
35%
Latin America
2%
business culture
Rest of Asia
A responsible
Middle East
10%
Percentage of customer accounts and North Africa
by value by country/territory. (excl. Saudi Arabia)
3%
Additional information
See page 46 of our Annual Report and Accounts 2018 for further information on our customers and approach to
geographical information.
Our global businesses
Our operating model consists of four global businesses and a Corporate Centre, supported by HSBC Operations
Services and Technology, and 11 global functions, including: risk, finance, compliance, legal, marketing and human
resources. An overview of our global businesses is available on page 7.
HSBC Holdings plc Environmental, Social and Governance Update, April 2019 3
Overview
Our strategy
Our international network, access to high growth markets and balance
sheet strength help us to deliver long-term value for our stakeholders.
This strong combination of strategic advantages supports our strategy,
enabling us to connect customers to opportunities.
Return to growth and value creation
We entered the next phase of our strategy in 2018, focused on growth and creating value for our stakeholders. In our June 2018
Strategy Update we outlined eight strategic priorities to deliver growth, improve returns, empower our people, and enhance our
customer experience. Each priority has a target or set of targeted outcomes by 2020.
Strategic priorities1 Targets by end of 2020
Deliver 1 Accelerate growth from our Asia High single-digit revenue growth per annum from
growth franchise; be the leading bank to Asia franchise
from support drivers of global investment:
Market share gains in eight scale markets10
strength China-led Belt and Road Initiative and
the transition to a low-carbon economy No.1 international bank for Belt and Road Initiative
$100bn in sustainable financing and investment11
2 Complete the establishment of the UK Market share gains
ring-fenced bank and grow market share
3 Gain market share and deliver growth Mid to high single-digit revenue growth per
from our international network annum from international network14
Market share gains in transaction banking
Turnaround 4 Turn around our US business US return on tangible equity >6%
of low-return
business 5 Improve capital efficiency Increase in asset productivity
Build a 6 Create capacity for increasing Positive adjusted jaws, on an annual basis,
bank for the investments in growth and each financial year
future that technology through efficiency gains
puts the
customer at 7 Enhance customer centricity Improve customer satisfaction17 in eight
the centre and customer service scale markets10
8 Simplify the organisation Improved employee engagement
and invest in future skills
Empower ESG rating: ‘Outperformer’21
our people
Delivery against Return on tangible equity2 Adjusted jaws Dividends per ordinary
Group financial share in respect of 2018
targets
or further details, see
F
page 17 of the Annual
8.6%
Target: >11% by 2020 (2017: 6.8%)
(1.2)%
Target: positive
$0.51
Target: sustain
Report and Accounts 2018.
1. A full progress update on our strategic priorities is available on pages 12 and 13 of our Annual Report and Accounts 2018.
2. R
eturn on tangible equity (‘RoTE’) is calculated as reported profit attributable to ordinary shareholders less changes in goodwill and present value of
in-force long-term insurance business divided by average tangible equity. A targeted reported RoTE of greater than 11% in 2020 is broadly equivalent
to a reported return on equity (‘RoE’) of 10%, and assumes a Group CET1 ratio greater than 14%.
* For footnotes 10, 11, 14, 17 and 21, see page 67 of the Annual Report and Accounts 2018.
4 HSBC Holdings plc Environmental, Social and Governance Update, April 2019
Our stakeholders
Building strong relationships with our stakeholders will
help enable us to deliver our strategy in line with long-term
Overview
values, and operate the business in a sustainable way.
Engaging with our stakeholders
Our stakeholders are the Customers
people who work for us, bank
Customers
with us, own us, regulate us,
and live in the societies we
serve and the planet we
all inhabit. These human
connections are complex
and overlap. Many of our Communities Suppliers
employees are customers
and shareholders, while our
business customers are often
suppliers. We exist to serve,
creating value for our
Employees
customers and shareholders.
Our size and global reach
mean our actions can have Planet Society
a significant impact, which
is why we want to create
the healthiest human system
in financial services to help
enable our business strategy.
Regulators
sustainable growth
and governments Employees
Supporting
Investors
business culture
A responsible
Assessing materiality
We listen to our stakeholders in a number of different ways, Management tables material issues for discussion at the
from employee and customer surveys to client meetings. ESG Steering Committee and other relevant governance
Investors tell us what matters to them in the annual ESG forums. We use these themes and concerns as a guide
investor survey and in qualitative assessments during investor for our ESG Update. Further information about the ESG
meetings. We are also informed by stock exchange listing Steering Committee is included in the ‘Ensuring strong
and disclosure rules in Hong Kong, the UK and the US. corporate governance’ section of the report on page 40.
Additional information
We use this information to identify what issues are material We acknowledge that material issues evolve over time,
to our stakeholders, taking into account the nature of our and we will continue to assess them to ensure we remain
business. In line with the provisions of the ESG Guide, current in our approach and communications.
an issue is considered to be material when management
determines that it has become sufficiently important to
our stakeholders that it should be publicly reported.
HSBC Holdings plc Environmental, Social and Governance Update, April 2019 5
Overview
Our approach
Reporting on material issues in an open
and transparent way is key to meeting
the expectations of our stakeholders.
Our ESG approach
Environmental Examples:
––We support the global transition to the ––In our ambition to provide $100bn of sustainable financing,
low-carbon economy through our own facilitation and investment by 2025, we have delivered
sustainable operations and by supporting a cumulative total of $28.5bn since 2017, with external
our customers with their transition. assurance of this number provided by PwC using ISAE
––We maintain robust climate-related risk 3000. The full assurance statement is included on page 28.
management, covering sensitive sectors, ––We are a signatory to the Financial Stability Board
such as energy, palm oil and forestry. Task Force on Climate-related Financial Disclosures.
The second year disclosure is available on page 30.
Social Examples:
––We aim to grow in a way that puts the ––In this report, we publish customer information for each of
customer at the centre. our global businesses, including spotlights on conduct. This
––We want to create the healthiest human includes information on the strengthening of our controls,
system in our industry. We are working to and achieving fair outcomes for customers and culture.
create the right environment so everyone ––Our employee surveys give us invaluable insight into our
can fulfil their potential. people. Results in 2018 show that 74% feel able to speak
––We are focusing on diversity and inclusion up when they see behaviour that they consider to be wrong.
in our workforce, and we are striving to ––We are building a diverse workforce and have set a target
put the customer at the heart of everything of 30% women holding senior leadership roles by 2020.
we do. Currently 28% of our senior leaders are women, so while
we are making progress we recognise there is still room
for improvement.
Governance Examples:
––We aim to maintain high standards ––During 2018, we concentrated on the completion of the
of governance across all geographies. final elements of our Global Standards programme, which
––We are committed to protecting our is designed to ensure the management of financial crime
customers and communities through compliance is embedded in our day-to-day management
financial crime risk management and and governance.
cybersecurity due diligence. ––We are committed to applying both the letter and spirit
of the law in all the territories in which we operate.
Our conduct approach
We recognise that we have a responsibility for good conduct delivery of the required Group values and conduct behaviours
through the delivery of fair outcomes for customers and continues to be considered in performance management
behaving in a way that protects financial markets integrity. for our people across the Group. Our conduct is overseen
We have therefore implemented a conduct framework by senior risk and executive committees within each of our
describing the outcomes that must be delivered across the businesses, functions and HSBC Operations Services and
Group and which in turn form a key component of our risk Technology. The Board maintains oversight of conduct
management framework. This means that our decisions should matters through the Group Risk Committee.
consider the impact on customers and markets. In addition,
6 HSBC Holdings plc Environmental, Social and Governance Update, April 2019
Customers
We aim to grow in a way that puts the
customer at the centre by improving
Overview
performance with digital enhancements
while maintaining financial crime standards.
Customers
Employees
At a glance
Our relationship and delivering fair outcomes for them – and if things
go wrong, we need to address complaints in a timely
Our purpose is to be where the growth is, connecting
manner. Operating with high standards of conduct is
sustainable growth
customers to opportunities. We help enable businesses
central to our long-term success and underpins our
to thrive and economies to prosper, helping people fulfil
Supporting
ability to serve our customers.
their hopes and dreams and realise their ambitions.
In this section we report on our customers as four
We create value by providing the products and services
distinct groups: our retail customers; medium and large-
our customers need, and aim to do so in a way that fits
sized corporate customers; global and institutional
seamlessly into their lives. This helps us to build long-lasting
customers; and high net worth customers. These groups
relationships with our customers. We maintain trust by
are serviced by our four global businesses respectively:
striving to protect our customers’ data and information,
Retail Banking and Commercial Banking Global Banking and Global Private
business culture
A responsible
Wealth Management (‘CMB’) Markets (‘GB&M’) Banking (‘GPB’)
(‘RBWM’)
We help 38 million customers We support approximately We serve approximately We serve high net worth
across the world to manage 1.5 million business customers 4,100 clients in more than 50 and ultra high net worth
their finances, buy their in 53 countries and territories, countries and territories. We individuals and families,
homes, and save and invest ranging from small enterprises support major government, including those with
for the future. focused primarily on their corporate and institutional international banking needs.
domestic markets, through clients worldwide.
Our HSBC Premier and to large companies Services provided include
Advance propositions are operating globally. Our product specialists Investment Management,
aimed at mass affluent and continue to deliver a which includes advisory
Additional information
emerging affluent customers Our services include working comprehensive range of and brokerage services,
who value international capital, term loans, payment transaction banking, financing, and Private Wealth Solutions,
connectivity. For customers services and international advisory, capital markets and which comprises trusts and
with simpler banking needs, trade facilitation, as well as risk management services. estate planning, to protect
we offer a full range of expertise in mergers and and preserve wealth for
products and services acquisitions, and access future generations.
reflecting local requirements. to financial markets.
HSBC Holdings plc Environmental, Social and Governance Update, April 2019 7
Customers
Our Retail Banking and Wealth
Management customers
How we listen to our customers
We listen to our customers in a number Customer satisfaction and customer recommendation survey results
of different ways, including through our Customer satisfaction1 Customer
interactions with them, surveys, social recommendation
media and from their complaints. We use Contact Relationship Online scores2
Branch centre1 manager banking
these insights to improve our services.
88% 76% 80% 80% 75%
Customer recommendation UK
(2017: 86%) (2017: 70%) (2017: 79%) (2017: 71%) (2017: 72%)
In 2018, we surveyed more than two million 93% 74% 47% 71%
Hong Kong 87%
customers on their likelihood to recommend (2017: 87%) (2017: 90%) (2017: 71%) (2017: 49%) (2017: 72%)
HSBC to others and their satisfaction
with our services. We have made some 78% 69% 76% 70% 73%
France
progress, with recommendation scores (2017: 74%) (2017: 68%) (2017: 70%) (2017: 72%) (2017: 74%)
improving in the majority of markets. More 88% 54% 80% 64% 67%
US
customers recommended us for being (2017: 87%) (2017: 72%) (2017: 80%) (2017: 57%) (2017: 65%)
easily accessible, offering good digital
84% 76% 85% 68% 68%
services, and our overall customer service. Canada
(2017: 82%) (2017: 66%) (2017: 85%) (2017: 34%) (2017: 66%)
However, our savings accounts remain an
area of dissatisfaction, with more customers Mexico
89% 80% 78% 78% 91%
telling us they are seeking competitive rates (2017: 90%) (2017: 82%) (2017: 91%) (2017: 81%) (2017: 90%)
and charges. In the UK, the First Direct 74% 87% 71% 47% 75%
brand ranked first for mobile banking Singapore
(2017: 73%) (2017: 88%) (2017: 62%) (2017: 46%) (2017: 69%)
services and second overall in the
76% 65% 72% 61% 78%
Competition and Markets Authority Malaysia
(2017: 71%) (2017: 64%) (2017: 73%) (2017: 61%) (2017: 83%)
rankings in 2018, where banks were scored
by customers on the quality of service. Mainland 94% 92% 74% 54% 84%
China (2017: 93%) (2017: 94%) (2017: 73%) (2017: 46%) (2017: 82%)
In 2018, we changed the way we
report customer recommendation by 74% 68% 67% 69% 87%
UAE
broadening the range of customers we (2017: 70%) (2017: 66%) (2017: 66%) (2017: 69%) (2017: 84%)
survey, and by looking at the full range of
1. Customer satisfaction is calculated by percentage of customers providing an 8 or above on a scale
scores provided. We believe this provides from 0 to 10. For contact centre scores, the exceptions are the US, Canada and Singapore in 2017, and
a more representative and complete Singapore in 2018, where the score shows the percentage of customers rating 4 or above out of 5.
perspective on the customer service 2. T
he index uses the 0–10 rating scale for the customer recommendation question to create a 100 point index.
we offer relative to the market. This survey is run by an independent and global market research agency. Following the reporting change,
2018 and 2017 figures have been restated to focus on the full range of scores provided by customers.
Customer satisfaction
affected markets in 2018, the UK, Canada, the same levels or improved compared
Customer satisfaction in our online banking
US and China, experienced recoveries with last year. We have focused on
services rose in some of our key markets in
in customer satisfaction. However, in improving our customer service training and
2018, following significant declines in the
Hong Kong, our customers were more providing simpler processes with enhanced
previous year. The decline in satisfaction in
dissatisfied by our browser-based banking technology. We also launched our Universal
2017 came after the launch of a new online
experience. We have responded with new Banker programme in five markets,
banking system and enhanced security
initiatives to improve the experience such which helps train our people to be digitally
features. The new platform should help
as adding real-time customer assistance equipped, and empowers them to resolve
enable us to roll out new digital services at
capabilities, and plan to continue more queries themselves. Over 4,000
a faster pace while keeping our customers
enhancements to our capabilities. In 2018, employees are now Universal Bankers.
safe. However, we saw a drop in customer
we focused our efforts on upgrading our Less positively, the satisfaction score of
satisfaction as customers learned how to
mobile banking experience where we have our US contact centres fell and overall
use the new service. By listening to our
seen the highest growth in customer complaints rose, driven by a significant
customers, we improved the way we
usage. See page 18 for more details. overhaul of the banking platform, which
communicated changes and fixed a
led to increased call volumes and customer
number of the issues that were causing In most markets, customer satisfaction
wait times. We addressed this through
the most frustration, such as login and with our branches, contact centres and
increasing headcount and expanding our
payments. Four out of the five most relationship managers has either maintained
chatbot capabilities.
8 HSBC Holdings plc Environmental, Social and Governance Update, April 2019Our Retail Banking and Wealth Management customers
Overview
Acting on feedback
Area of focus Action
Making banking We have expanded rolling out our simplified login process. Apple’s Touch ID is now live in 18 markets and HSBC Voice ID
Customers
accessible is in five markets. Last year, 80% of customer transactions were conducted via mobile or online channels. More than 30%
of loans, cards and deposits sales were through digital channels.
In the UK, we trained our front-line people to become more digitally proficient. In branch or on the phone, they can show
customers how to complete tasks digitally. Last year, 85% of new customers opened accounts through a supported
digital experience.
Making our In the UK, we are simplifying our mortgage process. Applications can be approved within 10 days with the help of
processes easier automatic valuations, improved credit policies and increased underwriter availability.
To make investing more accessible, we equipped our branch employees in Hong Kong, mainland China and Singapore
with mobile tablets, and launched an online financial health check. Customers can now understand their investment
options in their own time, without a specialist appointment. For more information on our digital enhancements, please
see ‘Our investment in technology’ on page 18.
Employees
Making it easy to In Singapore, we simplified our mortgage application forms and offer letters, so customers can be clear about their
understand us and repayment schedule, terms and conditions, and fees and charges.
our fees and charges
Through digital messaging we are raising customer awareness around overdrafts in the UK, Hong Kong, France and the
US. In the UK, we expanded the volume of overdraft alerts, which we first introduced in 2017, sending more than 26 million
alerts in 2018 to help customers save money. Over half (56%) of customers who receive an alert pay in funds to avoid
charges. To help even more customers avoid fees, we are introducing services like our Connected Money app, which
helps people keep track of their spending (see page 11).
sustainable growth
When things go wrong
Supporting
We aim to ensure customers’ complaints introduced in 2018, resulting in complaint RBWM complaint volumes
are recorded so we can understand what volumes declining in the fourth quarter. Our
went wrong and why, and then act upon business in Mexico experienced an increase Complaints per 1,000
customers per month1
the feedback. Complaints are monitored in complaints due to the prevalence of
and reported to governance forums. online fraud transactions leading to service 2018 2017
Senior executives are measured against interruption. We provided refunds to the
complaint-handling performance. customers and strengthened our fraud UK 4.0 3.3
control measures, as well as launching a
The way we handle complaints and how
card control app that allows customers to
fast we respond is important to us and our Hong Kong 0.5 0.7
business culture
manage deactivating controls on online
A responsible
customers. In 2018, we resolved 77% of
card usage. As of September 2018, the
complaints on the same or next working France 4.7 6.0
Financial Services Consumers Protection
day, and 86% within five working days,
Bureau in Mexico ranked HSBC as the best
excluding UK complaints related to US 3.9 3.4
bank among the seven largest banks for
payment protection insurance (‘PPI’).
complaint resolution and quality of service
The most common complaints related to Canada 3.1 2.7
on their Customer Care Performance Index.
process and procedures (39%), service
Complaints at our UAE business fell 18%,
(25%), and fees and charges (9%).
but remained relatively high. Complaints Mexico 5.3 4.5
In 2018, we received approximately 1.2 were primarily due to manual processes,
Additional information
million complaints from retail customers service delays, staff knowledge and clarity Singapore 1.4 1.6
in our large markets referenced in the of our communication to customers. These
adjacent table, a 16% increase compared continue to be addressed through a Malaysia 0.4 0.5
with 2017, primarily driven by the UK and customer experience programme.
Mexico. The increase in UK complaints 1. A complaint is defined as ‘any expression Mainland China 0.7 0.7
mainly related to PPI, which is consistent of dissatisfaction, whether upheld or not, from
across the UK industry, and to digital (or on behalf of) a former, existing or prospective
registration issues. An improvement customer relating to the provision of, or failure to UAE 5.6 6.8
provide, a specific product or service activity’.
programme for non-PPI complaints was
HSBC Holdings plc Environmental, Social and Governance Update, April 2019 9Customers | Our Retail Banking and Wealth Management customers
Spotlight: Conduct
We recognise we have a responsibility The range of products offered in our Oversight and governance of our
to deliver fair outcomes for our retail markets is managed globally. Any newly fair value assessments and product
customers and behave in a way that developed product goes through a safety is provided by the Global Wealth
protects financial market integrity. We review process with global oversight for Management Oversight Committee,
manage this through a range of activities, different or complex products. During chaired by the Global Head of Wealth
from working to ensure products are this process, products are tested to help Products, and the Retail Banking
designed fairly to endeavouring to ensure they are suitable and offer fair Management Committee, chaired
meet customers’ financial needs. value to customers. by the Global Head of Retail Products.
The RBWM Global Incentive Committee,
We have put in place clear policies, Ongoing monitoring is also a critical
which reports to the Chief Executive
frameworks and governance to protect component of our product governance
Officer of RBWM, oversees front-line
our customers. Our conduct and risk programme. Regular in-depth reviews
employee incentives.
frameworks describe the outcomes that recognise a product or service may
must be delivered across the Group. In become unsuitable over a period of time, Meeting our customers’ needs
performance management, we consider whether it is after a significant event
In order to meet customers’ needs
whether behaviour is in line with our or following an accumulation of
effectively, we have robust oversight of
values. Conduct is overseen by senior risk multiple changes.
the sales process, including reviewing
and executive committees, while the Board
Product design key principles: the suitability of the products we offer,
maintains oversight of conduct matters
sales quality monitoring, and how we
through the Group Risk Committee. Our products should remain relevant
incentivise our staff.
in each country they are offered.
Product design and fair value
We consider our customers’ financial
Good product design helps provide the We offer a consistent, simple and needs and personal circumstances to
right outcomes for our customers. We carefully selected range of products. assist us in offering suitable product
provide training through the Product We act on feedback from customers recommendations. This is achieved
Management Academy. To date, more to provide better and more accessible through:
than 1,000 of our people have completed products/services. ––a globally consistent methodology
training on topics including customer
Products that no longer meet our to rate the riskiness of investment
insight, customer-focused design,
high standards or customer needs products, which is customised for
making communications simple, product
are withdrawn from sale. local regulatory requirements;
development, management oversight
and governance. ––a robust customer risk profiling
We also conduct regular product reviews methodology to help assess
Customer insight is the foundation of and fair value assessments in each of the customers’ financial objectives,
the design process, so we work with markets we operate in, to help ensure we attitude towards risk, financial ability
customer research groups to co-create deliver fair value. to bear investment risk and their
solutions. This involves checking in knowledge and experience;
with customer panels and user labs Pricing key principles:
––goal projection tools and calculators
throughout the process to understand All products and services must meet to help customers plan for their future
customer reaction, so we can dynamically a minimum set of design standards. in line with their overall investment
adapt designs to meet changing needs. objectives; and
We carry out regular comparisons
In Mexico, we launched our Stilo ––consistent global advisory standards to
of HSBC pricing with those of local
banking service, which includes a money follow when we make recommendations
competitors and with our own fair
management tips app, filling a gap in to our customers, while taking into
value standards, considering the total
service that our customers had told us account local regulations.
charges and features of a product.
about. In Hong Kong, we worked with
more than 3,000 customers to design We review the usage levels of product From a service perspective, our goal
and test our PayMe services and features features to assess if customers’ is to empower our people to resolve
before launching them, including peer-to- behaviours and responses demonstrate issues. In the UK, we embedded a
peer payments for customers and they are receiving value. programme to give front-line employees
non-customers. PayMe reached a a means to raise and contribute towards
milestone of approximately 1.5 million solving customer issues and to escalate
users in 2018.
10 HSBC Holdings plc Environmental, Social and Governance Update, April 2019Our Retail Banking and Wealth Management customers
Overview
Spotlight: Conduct continued
larger issues to executive management. Aligned to our customer experience Managing fraud
Since introducing the programme in standards, the incentive framework
Fraudulent activities are a risk and
Customers
late 2017, over 8,000 issues have been assesses how our people listen to our
a concern for our customers. We
raised, and in 2018 more than 6,500 customers to understand their needs
are committed to mitigating and
were resolved. so that they can provide appropriate
reducing their impact through a
solutions. Should an individual
Sales quality range of actions, including new fraud
demonstrate behaviours that do not
prevention systems, improvements to
To assure the quality of our sales process align with our core values, there is a
our internal processes and procedures,
and employees’ behaviour in each of our disciplinary process that again can
as well as communications to raise
markets, we either conduct a mystery affect reward payments.
awareness. We introduced an automated
shopping programme or a sales quality
Building financial capability customer contact solution, which uses
programme, or both. Issues identified are
two-way SMS messaging, in the second
treated seriously. Action is taken to help Delivering fair outcomes for customers
half of 2018. Since its introduction,
Employees
achieve a fair outcome for customers. also involves providing tools and content
around 4,000 customers per day are
that help customers have the confidence
Where concerns are found, we will able to respond instantly to our fraud
and competence to make the most of
contact the customer to explain and enquiries to either unblock their card
their money. In 2018, we made public
remediate. Depending on the severity or report fraud. Approximately half of
commitments around building financial
of the issue, the relevant employee will all card fraud-related queries are now
capability, and we took a number of
be given enhanced training to improve resolved without the need of a phone
actions to deliver on these commitments:
their behaviour and they may become conversation, which has saved
ineligible for an incentive reward ––In the UK, we launched the HSBC customers approximately 87,000 calls
payment. Where a case of misconduct Connected Money app, which helps every month. We plan to introduce this
sustainable growth
occurs, disciplinary action may be users see all their banking relationships service to more of our customers
taken, which can lead to dismissal. in one place and keep track of how throughout 2019.
Supporting
they spend their money. It has been
Front-line employee incentives Operational resilience
downloaded 240,000 times. One
In 2013, we changed our front-line recent new feature allows users to HSBC invests in the reliability and
incentives to create a discretionary keep track of savings goals using resilience of our systems to help prevent
framework rather than a straight formula virtual savings pots. disruption to customers. During 2018,
between sales and reward. Our people ––We introduced card control features we continued to upgrade our IT systems,
are now recognised for demonstrating in the UK, Hong Kong and Mexico, simplifying our service provision and
our values and behaviours as well as so customers can control their replacing older IT infrastructure and
meeting customers’ needs through card spending and receive real-time applications. These enhancements led
products and services. The framework alerts on their activity. In Mexico, to continued global improvements in
business culture
A responsible
exists to recognise our front-line customers can set spending limits service availability during the year for
employees who go above and beyond and block spending categories, both our customers and employees.
for the customer, to deliver fair outcomes such as online shopping and or further details on how we aim to maintain
F
and support the sustainable growth of entertainment, including gambling. and continually improve our operational
our business. resilience capability, see page 19.
or further details on how we support
F
building financial capability and inclusion,
see pages 34 and 44.
Additional information
HSBC Holdings plc Environmental, Social and Governance Update, April 2019 11Customers
Our Commercial Banking
customers
How we listen to our customers
We are committed to improving customer Areas of focus include the ease and
satisfaction for all our business customers, speed of the account opening process, Case study: Customer-centric
from start-ups to large corporates. our efficiency in dealing with queries payments review
and our range of products.
We have introduced additional governance A customer-centric review was
to embed a customer-led approach into We still have some way to go to achieve launched to improve the efficiency
our decision making. In 2018, we created our ambitions, but our rank position against of our payment processing across
the new role of Global Head of Customer competitors for customer satisfaction either Asia-Pacific. We created a smoother
Experience, and appointed customer remained flat or improved compared with authentication process through
champions in key business areas. last year in seven of our eight key markets.1 a one-time password issued
to customers by text message.
New tools have been introduced to help Moments of Truth
This avoided three authentication
us understand our customers. These
In 2018, we fully embedded our Moments questions, which customers told
include customer journey mapping, which
of Truth programme, surveys which allow us were difficult to use. Customer
aims to take a holistic approach to assess
us to continually capture feedback from queries are now handled faster by
customers’ current experiences and
customers about interactions we know are giving wider access to the payment
design ideal ones. More than 350 of our
important to them. We have surveyed over systems to our employees. These
people globally have been trained in its
18,000 customers across 40 markets and changes contributed towards a
use. New artificial intelligence (‘AI’) tools
have driven improvements through more 70% reduction of payments-related
used by our insight and analytics teams
than 100 actions taken to address the complaints, from their highest point
also allow us to scrutinise more open-
feedback. Key performance metrics across in 2017, and a fall in average call
ended feedback from customers quickly
all these key events, such as opening handling time from 11 to seven minutes.
and accurately.
an account, calling our contact centres,
Customer satisfaction setting up internet banking, applying for
credit or changing relationship manager,
We use syndicated research, feedback
have improved in 2018. We actively
from social media, and operational data
review the interactions we measure to
to help us identify what areas are most
make sure we continue to focus on the
important to our customers, and where
issues that matter most to our customers.
our performance could be improved.
1. Eight key markets: Hong Kong, UK, Pearl River Delta, Singapore, Malaysia, Mexico, Saudi Arabia and UAE. Customer satisfaction metrics for Pearl River Delta will
be available from 2019. In Hong Kong, Singapore, Malaysia, Mexico and UAE, CMB performance in 2017 is based on the bank that the customer defines as their
main bank, while CMB performance for these markets in 2018 is based on the bank that the customer defines as the most important. Surveys are based on a
relevant and representative subset of the market. Data provided by RFi Group, Kantar and another third-party provider.
Acting on feedback
Listening to customers and acting on their feedback has helped us to drive improvements to the customer experience.
Here are some of the main issues raised and how we responded.
Area of focus Action
Improving the In the UK, we created a new welcome journey for small businesses. This resulted in improved customer satisfaction
ease and speed of and increased use of self-service digital tools. In France, we sped up the opening of accounts by simplifying the
account opening process. In Singapore, new customers are now assigned a single point of contact to help them. A customised video
also introduces customers to their service team and helps them to get started with online banking.
Customer query We want to make sure our people are fully equipped to answer customer enquiries efficiently and effectively. We
handling provided additional training for customer service managers in our Global Trade and Receivables Finance business
in Singapore and Hong Kong, as well as for our HSBCnet telephone teams to improve their technical and soft skills.
In the UK, a query escalation process was introduced to improve our ability to resolve queries quickly and accurately.
Easy channels In order to help make sure our products and services meet customers’ needs, we have more than 200 customers
to communicate as active members of online panels in the UK, Hong Kong, mainland China, Australia, UAE, Mexico and the US. These
feedback provide fast feedback, allowing us to test changes directly with customers. In 2018, they helped us redesign our online
banking platform and provided input into developments around integration of third-party accounting software.
12 HSBC Holdings plc Environmental, Social and Governance Update, April 2019Our Commercial Banking customers
When things go wrong
We support our people to help make the payment processes and the way an increase in complaints. In France,
Overview
sure they handle customer complaints we handle queries reduced complaints rapid business growth during early 2018
effectively, with a training module significantly in Asia-Pacific. We are keen resulted in higher than expected account
available to all relevant employees. to learn from these events to improve opening requests, increasing the time
A new global complaints management customer experience in other markets. taken to open accounts. Additional
procedure was delivered in the first resources were employed and changes
Account opening complaints reflected
quarter of 2019 to help make sure we implemented to streamline the process,
the third largest in volume (7% of total
continue to manage complaints in an resulting in a reduction in complaints later
complaints). In the UK, challenges with
equitable and timely way, in an effort in the year.
the introduction of a new system led to
to provide effective and fair outcomes
for our customers.
CMB annual complaint volumes Top complaint categories
In 2018, we resolved a total of 77,892
Customers
corporate customer complaints, which Complaint categories
Complaints (000s)1
was a 35% year-on-year increase, with
81% coming from customers in the UK, 2018 2017
2018 2017
3% in France and 2% in the US.
We have stepped up our financial crime UK 62.8 43.1 Processes and
27% 12%
prevention procedures due to increased procedures
scrutiny in this area, but as a result this Hong Kong 4.9 4.1
has led to increased complaints from Operations 25% 26%
our customers, representing more than Asia-Pacific 0.9 1.1
a quarter (27%) of total complaints. Account opening 7% 5%
Employees
Dissatisfaction was often due to requests Europe 3.0 4.8
for additional personal and business Contact centre 6% 12%
information to help us guard against Middle East and
fraud and money laundering. Without 1.5 1.8 Fees, rates and
North Africa 6% 7%
those details, services were sometimes charges
restricted and, in certain circumstances, Latin America 2.3 1.2
accounts were closed. After reviewing Internet banking 4% 6%
customer communications, we have US 1.8 1.2
improved the content and layout of letters, Branch 4% 8%
making the process clearer and simpler.
sustainable growth
Canada 0.7 0.4
Others 21% 24%
Operational complaints were the
Supporting
second highest in volume (25% of total
1. Volumes for the UK are received complaints from eligible complainants to align with the current FCA
complaints), reflecting the most frequent reporting. Volumes of complaints for the rest of the markets are based on resolved complaints.
customer transactions. Improvements in
Spotlight: Conduct
We regularly review a list of all products executive pricing steering committee This has resulted in a significant input
sold to our corporate customers so they has been improving our existing pricing of ideas and concerns that have allowed
remain appropriate and relevant to framework to help make sure we our leaders to shape their own conduct business culture
our customers. To help make sure all price products and services fairly, agendas and communications. For
A responsible
our products meet customer needs, communicate transparently, and have further details of our Exchange forums,
we have a rigorous governance and robust controls in place. Following our see the Employees section on page 22.
approval process for any new product focused efforts, complaints around fees The scorecards for front-line employees
or significant changes to existing ones. and charges have fallen by 20% over are now balanced with a maximum
We operate sales outcome testing the last two years. of 50% being related to performance.
in 12 key markets designed to ensure We are increasingly seeing instances of
We have put a strong emphasis on
customers have understood the features role model behaviours driving upward
communicating to our people on how
of their chosen products, such as pricing, adjustments in variable pay from 1%
we should behave. We broadcast videos
mechanics, risk and benefits. In 2018, in 2015 to 8% in 2017.
of senior leaders speaking about what
Additional information
we identified 132 issues through the
conduct means to them and why it is Fraud is a growing problem and we strive
CMB outcome testing programme, such
important. We feature examples of to protect our customers from financial
as documentation, sales process, and
employees making the right decisions crime. In Mexico, we introduced training
pricing issues. Actions are underway to
in the interests of customers in global for our relationship managers focused
address these issues.
employee communications. Countries, on business email compromise and
We recognise it is important to provide regions and global operations all held malware fraud so they can pass on this
our products at a fair price and in a conduct-themed workshops, informal knowledge to customers and take the
transparent way. Since late 2017, an Exchange sessions and town halls. right action if a customer is affected.
HSBC Holdings plc Environmental, Social and Governance Update, April 2019 13Customers
Our Global Banking and
Markets customers
How we listen to our customers
We provide financial services and standardised, automatically populated we collect and store KYC information,
products to governments, companies credit documentation that can be signed technology solutions and data access.
and institutional clients around the world. digitally. This service, now available in the We reduced onboarding times for our
Listening and reacting to customers UK, has reduced the time it takes for our corporate customer base by 8% by the
is one of the most important ways of customers to receive financing. end of 2018. There is still a lot to do and
improving our business. One of the our target is to reduce this by a further
We are simplifying our know your
primary ways we do this is through our 20% by 2020.
customer (‘KYC’) questionnaire and
annual customer engagement survey.
worked with compliance to streamline For more information on some of the
Customer satisfaction the KYC aspect of customer onboarding. ways we have made it easier and safer
This improved our risk management for customers to access our services
In this survey, 94% of our customers felt
process and reduced verification times digitally, see page 18.
our overall service and our commitment
by 25%. We are also streamlining how
to their business either improved or
stayed the same in 2018. Each aspect
of the survey is carefully reviewed to Customer survey results
63% 46%
consider which actions can be taken
to improve customer perceptions of
us and the service we offer. of customers considered of customers felt our people are
HSBC as one of their more likely to initiate a strategic
One area where customers were top three banks in 2018 conversation than 12 months ago
dissatisfied was our account opening
(2017: 64%)
requirements and how we update
customer information. Some customers
felt that these were too cumbersome
and time-consuming.
94%
of customers felt our service
95%
of customers felt they had
As a first step, our credit and lending had either stayed the same a good or very good rapport
or improved in 2018 with GB&M
team is rolling out a digital credit platform,
(2017: 96%)
a service that provides customers with
Acting on feedback
Responding quickly and efficiently to customers’ feedback
and complaints helps to build trust. We are placing a strong Case study: Improving payments processing
emphasis on this, and reviewing the formal complaints
In 2018, we were approached by a potential customer
process in place for customers across all of the GB&M
who was looking for a new banking provider to resolve
business lines to improve its effectiveness.
problems they had faced regarding delayed payments.
New tools have been adopted to better record complaints and Staff salary payments had been repeatedly delayed, due
track their resolution. In November 2018, we created a new to a screening process that banks are required to carry
global team to look specifically at customer experience. With out to comply with regulations. This was an increasing
a broad mandate, it focuses on careful analysis of feedback reputational risk for the firm. When we looked into the
and rapid resolution of complaints. problem for them, it focused our attention on similar
issues faced by our existing customers. Not only did
One of its immediate tasks is to consolidate customer
we win this firm as a new customer, we also proposed
feedback and complaints across multiple business lines,
to take a proactive approach to screening payments
geographies and products. This should help us improve the
for existing clients, which notifies customers of any
customer experience, and identify any areas for collaboration
delays and obtains additional information needed to
or early detection of potential issues.
identify and release blocked payments within a target
Customer experience meetings are now scheduled regularly of 48 hours. By making sure we collect information on
with our top management. These bring together senior people regular beneficiaries upfront and use it effectively, we have
to look closely at customer concerns and produce consistent, significantly reduced payment delays for our customers.
business-wide solutions.
14 HSBC Holdings plc Environmental, Social and Governance Update, April 2019Our Global Banking and Markets customers
When things go wrong
Overall, the number of complaints in part due to improvements to how GB&M annual complaint volumes1
Overview
increased in 2018, mainly in Global we record feedback. Previously, many
Liquidity and Cash Management complaints that were related to the range
2018 2017
(‘GLCM’) due to a number of significant of products and services offered by
systems upgrades and issues throughout HSBC were recorded by Global Banking,
the year. In most other GB&M where the overall customer relationship Global Markets2 201 273
businesses, the number of complaints is managed. In 2018, we have aimed,
either reduced or remained stable from where possible, to record specific Global Banking 330 417
2017. In Global Markets, we had a complaints in relation to products and
reduction in complaints resulting from services against their specific product Securities Services 360 349
human error and processing issues in line such as GLCM and Global Trade
our operations team. In Global Banking, and Receivables Finance products. Global Liquidity and
1,251 474
Customers
the number of recorded complaints fell, Cash Management3
1. A ‘complaint’ is defined as any expression of dissatisfaction, whether upheld/justified or not, from Total 2,142 1,513
(or on behalf of) a former, existing or prospective customer relating to the provision of, or failure to
provide, a specific product or service activity.
2. Global Markets also includes research.
3. G LCM excludes complaints relating to payment operations.
Spotlight: Conduct
Improving employee conduct remains one change. We have led region-specific Group, and training has commenced
Employees
of GB&M’s core priorities as we continue to conduct weeks, where we highlighted for Global Markets sales employees.
pursue the highest standards across every examples of conduct in action across the ––In our Exchange meetings on conduct
aspect of our business. The way in which business, and produced and updated and culture in 2018, our people provided
we conduct business helps us fulfil country-specific conduct handbooks. feedback that they wanted more support
our purpose of connecting clients to ––We have a complex footprint across understanding how pricing is determined
opportunities and helping economies to different businesses, countries and desks. to support conversations with customers
grow, while staying true to our values. This can lead to a number of different and ensure consistency. New guidelines
Customers rely on us for our financing, cultures – some of which will have issues on pricing and transparency have
advisory and research expertise. They know that need to be addressed. In 2018, since been agreed and published.
we can access global debt, equity, currency we began a series of pilot exercises to
sustainable growth
and commodity markets. It is vital that they examine the root causes of employee Reinforcing our controls
Supporting
trust us to manage their liquidity, keep their and team behaviour, and to help design framework
assets safe, and finance their trade. interventions. This will continue in 2019. ––During 2018, our businesses ran
In 2018, we took a fresh look at how ––We introduced a new hiring guide exercises to encourage a deeper
to help deliver fair outcomes for our for managers to support the assessment understanding of the conflicts of interest
customers, and help ensure we do and selection of candidates, and that can occur in investment banking.
not cause disruption to the orderly and strengthen our interview process These captured a more granular view of
transparent operation of financial markets. with a broader inclusion of values the potential situations that our people
We worked with third-party experts to and behavioural measures. need to be aware of and actively manage.
highlight areas that needed improvement, ––Our management and staff wanted more Over 100 workshops have been held to
which led to a comprehensive new training on conduct and how it applies create an inventory of conflicts of interest
business culture
A responsible
programme to improve our conduct. The to them and their roles. We continue that could arise within GB&M, bringing
key areas of focus are highlighted below: to improve our conduct curriculum to business lines and regions together.
Culture and environment meet this demand, including coverage ––We reviewed all our Global Banking
of behavioural drivers, conflicts, grey locations to assess whether they are
––We are expanding the dialogue areas and specific technical training. segregated from other business lines
on conduct to help ensure we are from the perspective of information
supporting our people to make values- Embedding conduct in core control and managing conflicts of interest.
based judgements in situations they business processes
––We work in an environment where we are
face every day, and feel safe raising ––We have created a Global Markets entrusted with privileged information that
concerns. In the first half of 2018, 5,200 product risk function and appointed we have a critical responsibility to protect.
Additional information
of our people attended 650 Exchange co-Heads of Product Governance in It is vital that high levels of information
meetings to discuss our conduct and Global Markets to improve product controls are in place. Improvements in
culture, with further Exchange meetings governance. Product due diligence controls and procedures have been
held through the rest of 2018. templates used across GB&M have been introduced during 2018. Over 31,000
––We have developed a network of conduct enhanced in an effort to ensure conduct HSBC employees across all GB&M offices
champions across the business to help is more carefully considered. Sales completed a bespoke training module on
drive conduct awareness and provide a suitability procedures have been information control procedures.
group of enthusiastic, committed people developed for people working in Global or further information on our approach to conduct
F
to act as local sponsors for behavioural Banking and the Institutional Client and the steps we have taken, see pages 37 to 39.
HSBC Holdings plc Environmental, Social and Governance Update, April 2019 15You can also read
