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 - AASTOCKS.com
HSBC Holdings plc
Environmental, Social and
Governance Update
April 2019
HSBC Holdings plc Environmental, Social and Governance Update April 2019 - AASTOCKS.com
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
HSBC Holdings plc Environmental, Social and Governance Update April 2019 - AASTOCKS.com
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
HSBC Holdings plc Environmental, Social and Governance Update April 2019 - AASTOCKS.com
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 Holdings plc Environmental, Social and Governance Update April 2019 - AASTOCKS.com
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
HSBC Holdings plc Environmental, Social and Governance Update April 2019 - AASTOCKS.com
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
HSBC Holdings plc Environmental, Social and Governance Update April 2019 - AASTOCKS.com
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
HSBC Holdings plc Environmental, Social and Governance Update April 2019 - AASTOCKS.com
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
HSBC Holdings plc Environmental, Social and Governance Update April 2019 - AASTOCKS.com
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
HSBC Holdings plc Environmental, Social and Governance Update April 2019 - AASTOCKS.com
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 2019
Our 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                           9
Customers | 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 2019
Our 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                     11
Customers

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 2019
Our 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                                13
Customers

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 2019
Our 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                          15
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