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HSBC Showcase

HSBC innovates and plans ahead. They influenced the global objective of net zero by financing ESG projects.

Introduction

HSBC has developed frameworks for funding plans. They provided awareness on how financial institutions can impact climate change through investing$^1$. This article will detail HSBC’s leadership, their contributions, approach, and how 15Rock can help you become a leader.

Prestigious HSBC

A founding member of the Climate Finance Leadership Initiative, HSBC was one of the firsts in this field to initiate climate efforts$^1$. They helped companies, governments, and institutions issue initiatives in an effort to protect the planet$^1$:

  • Green, social, and sustainable bonds.
  • Environmental goals to business loans.
  • Establishing joint venture programs.

In 2020, HSBC has been named the World's Best Bank for Sustainable Finance for the second year in a row$^2$. in 2021, out of 31 asset management teams, HSBC was one of the five to earn the advanced level leader$^3$.

April 2022, HSBC was awarded the lead manager of the year in environmental finance for their green, social, and sustainability bonds$^4$. They won awards from a number of financial institutions, local and municipal authorities, supranational, sub-sovereign, and agency groups. In February, HSBC won several sustainable capital market awards, including best renewable energy, transportation, debt, liability management, and acquisition finance adviser$^4$.

HSBC’s efforts had led to many impacts on a global scale. From managing clients' investment capital to funding sustainability projects, to their employees and community impact.

HSBC’s Large Contributions

HSBC impacted clients and employees globally. In 2021 HSBC reported their ESG impacts compare to a metric for a target year$^5$:

  • An increase of 187% from $44.1 billion for sustainable finance investment, since 2020. This is impressive compared to CIBC, who has currently funded $77 billion since 2021$^{15}$.
  • An increase of 4.6% from 30.3% of women in senior leadership roles, since 2020.

HSBC implemented over 700+ energy conservation measures, saving 14.9 million kilowatt/hour (kWh) in an effort to reduce energy use and waste during travel and building operations$^5$. In comparison on average, NYC uses 8 million kilowatts a day, 11 million kilowatts during the summer$^{16}$. They had successfully reduced their greenhouse gas (GHG) emissions cumulatively by 50.3% with 2019 metrics as their baseline$^6$

Following the GreenHouse Gas Protocol, HSBC has conducted a study to identifying scope 1, 2, and 3 emissions for 2020, 2021, and years proceeding$^6$.

According in their HSBC’s Annual report of 2021, HSBC plans to invest $100 million in climate technology$^7$. They expect to reach their goal by the end of the first quarter in 2022. They have increased their budget by 150% to $250 million.

HSBC has supported the growth of blue and green bonds, investing in sustainable projects. Highlights include$^7$:

  • Co-led $90 million to Instar Asset Management, to buy PRT Growing Services, North America's largest producer of container-grown forest seedlings.
  • Launched the world's first broad-based biodiversity screening equities indices to test trading and investment strategies based on biodiversity.
  • HSBC’s asset management team published a biodiversity policy to address nature-related issues.
  • Advised food manufacturers on how to manage their suppliers' influence on biodiversity.

HSBC expanded their climate strategy across the UK, supporting renewable electricity projects. After buying their fourth project, HSBC's UK locations uses about 90% renewable energy$^8$. The renewable power source will benefit their customers and the wider community. Additionally, they had provided USD $28.4m to NGO shareholders since 2020 in an effort to create a resilient and sustainable future and a goal to reach net zero.

HSBC: How Did They Do It?

In 2015, HSBC helped create the Green Bond Principles, developing the set of rules for how "green" money is raised and spent$^1$. They financed businesses and projects to promoting low-carbon, climate resilience, and sustainable economy$^{9}$. HSBC determines a company's eligibility based on its activity in an approved sector, with a minimum of 90% of their income must come from environmentally-friend initiatives$^9$. Eligible sectors include:

  • Renewable Energy: Production of renewable energy and renewable energy technology components.
  • Energy Efficiency: Product or technology development that reduces the energy consumption.
  • Efficient Buildings: Building projects or renovations that meet recognized environmental standards.
  • Sustainable Waste Management: Products, technologies, and solutions for waste minimization
  • Sustainable Land Use: Forestry, agricultural, palm oil certifications in accordance to HSBC’s commodities policy.
  • Clean Transportation: Low-emission transportation systems, components, and services
  • Sustainable Water Management: Technologies for water collection, treatment, recycling, and reuse.
  • Climate Change Adaptation: Flood protection systems and infrastructure.

HSBC implemented a multilayer framework, deploying an active, passive, or systematic approach in their ESG investment processes. Their framework includes$^{10}$:

  • Responsible Investing (RI) Normative Screening: Screens for categories which produce a worse ESG score. Such categories includes weapons of any kind.
  • Proprietary ESG Analysis: Identifies which ESG issues have the greatest financial impact on each sector.
  • Deep Fundamental Research: ESG assessment of risks and opportunities with investments.
  • ESG Reporting & Tools: Dedicated ESG team creates tools for investment teams.
  • Active Ownership: Regular meeting with management team to monitor active holdings.
  • Enhanced Due Diligence: More communication and limitation of sales or purchase for higher risk issuers.

According to HSBC’s annual report, their asset management was in charge of over $630bn assets$^{11}$. When deciding on ESG-integrated strategy, HSBC’s asset management team considers climate change as a key part of making investment decisions$^{11}$. All areas of HSBC live the ESG values: banks, employee pensions, asset management, and insurance. Resulting in a thermal coal phase-out policy, increasing women in senior leader roles, to safeguard the financial system, and many more$^{14}$. These measures reduced power and utility use by 75% by 2019, increased the number of women in senior leadership by 10.4% by 2025 from 31.7%, and continue to report financial crime.

HSBC aims to financially contribute to a low-carbon economy while increasing climate resilience in their client’s investments - all while maintaining strong returns for their clients. To achieve this, they outlined five sections of contribution$^{12}$:

  • Deliver: Low-carbon investing options that fulfil our clients' risk and return requirements
  • Identify & Integrate: Use of data, analytics & research to influence our investment decisions.
  • Engage: To better understand & manage the risks & opportunities associated with climate change and climate policy.
  • Disclose: Public reports and to clients of initiatives & progress in tackling climate risks & investing in solutions.
  • Advocate: Encourage large-scale capital investment with legislators. Finance low-carbon economy & increase climate change investment.

Building on the frameworks above, HSBC believe Task Force on Climate-related Financial Disclosures (TCFD) provides an important framework for understanding climate-related risks, regularly publishing annual reports on financial and ESG data. HSBC is a member of multiple guidelines per topic$^{13}$. Including:

Achieve World-Leading Results

HSBC paves the way through experimentation and careful planning. Careful assessment and planning allowed them to influence the global goal of net zero through financing ESG projects. HSBC creates a clear relationship between ESG to investors, ensuring an investment of one will benefit the other. Their efforts establish a connection, providing a steady stream of investment towards climate initiatives. HSBC continues this flow by seeking and funding climate-centric companies, starting new projects and helping communities.

15Rock can helps you in a similar way. 15Rock can you understand environmental impacts. Combining ESG data, consultations, and machine learning, we help you understand and mitigate ESG risks. By tracking your company’s environmental footprint, we set clear goals. Capturing scope 1, 2, and 3 emissions, we map out progression towards a goal. This way, we can provide ESG data to investors, ensuring confident investing.

15Rock keeps track of the amount of funding provided for goals and projects, tracking progression financial and emission progression.

HSBC is a member to numerous climate oriented frameworks, each with different subtopics and data points. Whether your goals follow alignment with HSBC or not, we provide reporting and alignment to various standards, including:

  • CDSB - Climate Disclosure Standards Board
  • CDP - Carbon Disclosure Project
  • GRI - Global Reporting Initiative
  • IIRC - International Integrated Reporting Council
  • SASB - Sustainability Accounting Standards Board
  • TCFD - Taskforce on Climate Related Disclosures

Additionally, 15Rock provides different project types, each with their own goal and investment.

By using our tools, you can achieve world leading results all towards the goal of net zero. So what are you waiting for? To learn more on how 15Rock can help, contact us here for a quick demo. If you have any suggestions, ideas, or concerns, leave a message!

Royal Bank of Canada (RBC) is another financial institution leader. They have impacted numerous communities globally through their robust frameworks and set out clear achievable goals. To learn more about RBC, click here.

Emma Chiu

Product Analyst

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