24. april 2018 sustainable finance · emphasis on using digital innovations and data support...

24. April 2018

Sustainable Finance

Sustainability Strategy at HSBC

Katarin Wagner Head of Corporate Corporate Sustainability, HSBC Deutschland PUBLIC

2

Definition

PUBLIC

Corporate Sustainability and Sustainable Finance

Sustainable finance refers to any form of financial service integrating

environmental, social and governance (ESG) criteria into the business or

investment decisions for the lasting benefit of both clients and society at

large.

Corporate sustainability is an approach that creates long-term

stakeholder value by implementing a business strategy that considers

every dimension of how a business operates in the ethical, social,

environmental, cultural, and economic spheres.

Definition

Corporate

sustainability

Sustainable

finance

3

HSBC’s sustainability strategy: ‘Sustainable Finance’ one of three initiatives

PUBLIC

Sustainability Strategy

1. Includes standards, commitments and practices embedded in HSBC policies such as HSBC sustainability (sector) risk policies; Equator Principles and UN Principles for Responsible Investments; HSBC REDUCE programme; among others

Entrepreneurship

and sustainable networks

Support entrepreneurs to grow sustainable businesses and access international markets

Support the development of sustainable supply chains

Growing new companies

Sustainable supply chains

Sustainable Finance

Directing investment to support environmental, social and governance objectives

Provide financing to enable a low-carbon economy and help clients manage transition risk

Sustainable

investments

Sustainable

financing

Facilitate financial flows to enable a

transition to a low-carbon economy

and other sustainability aims

Country-specific priorities

Foster new business development

and sustainable international

growth

Operating sustainably1

Water programme and global emergency relief fund

Future Skills

Helping people secure their financial futures through building financial capability

Future proofing people for the changing world of work through employment related skills development

Financial capability

Employability

Providing our customers, our

communities and our employees

the skills and knowledge needed to

thrive in the global economy

Training and awareness

4

AgendaSustainable Finance

PUBLIC

Definition and key drivers1

HSBC response and resources3

Business opportunities and risks2

5

Sustainable Finance – Definitions and guiding frameworks

PUBLIC

Definitions and key drivers

Sustainability means meeting the needs of the

present without compromising the ability of future

generations to meet their own needs

Three internationally recognised frameworks help

define sustainability goals

Climate change most urgent sustainability challenge

Sustainable

Finance:

Facilitating

financial flows

to support

sustainability

goalsSustainable

Development

Goals

ESG

framework

Paris

Agreement

6

Global temperatures are rising…

PUBLIC


Source: UK Met Office

13.2

13.6

14.0

14.4

14.8

1851 1866 1881 1896 1911 1926 1941 1956 1971 1986 2001 2016

oC

Globally averaged surface (land-ocean) temperatures have risen 1°C since

pre-industrial levels

7

…attributed to increased greenhouse gas (GHG) emissions

PUBLIC


Source: PRIMAP, Note: GHG emissions data include emission from land use land change and forestry (LULUCF)

0

10

20

30

40

50

60

1850 1859 1868 1877 1886 1895 1904 1913 1922 1931 1940 1949 1958 1967 1976 1985 1994 2003 2012

China US EU India RoWGtCO2e

Carbon emissions from increased energy use are a primary driver

Mitigating global warming requires dramatic de-carbonisation of the

economy

8

Over USD100 trillion investment in infrastructure in next 15 years is required globally under 2°C scenario


Public

Global infrastructure investment needs in next 15 years for a 66% chance of 2°C1

USD trillion, 2016-2030

40,5

15,0

16,5

103,5

9,0

9,0

13,5

Telecoms Power and

electricity T&D

TotalPrimary energy

supply chain

Energy

demand

/efficiency

Water &

sanitation

Transport

39% 13% 8% 14% 9% 16%

9


PUBLIC




10

The reality and threats of climate change are widely acknowledged

PUBLIC

Business opportunities and risks

“Climate change could cut the value of the world’s financial assets by $2.5tn (£1.7tn)”

- The Guardian, April 2016

“2016 is Earth's warmest year, culminating in a remarkable 3-year

streak of record warm years for the globe”

– US National Oceanic and Atmospheric Administration

“Investor pressure grows on ExxonMobil over climate action. Shareholders want

reports on possible impact of global warming policies…”- Financial Times, April 2017

11

The response to climate change is being facilitated through several drivers

PUBLIC


Countries committed to meeting COP21 NDCs

Tax and regulation changes

Disclosure requirements appearing

Key drivers and examples

1. 2015 Cone Communications/Ebiquity Global CSR Study2. Pew Research Center’s spring 2015 survey3. Lazard ‘Levelized cost of energy analysis’ (Dec 2016)

Investors plan to make low carbon or climate-

related investments to lower the portfolio risk

Most investors believe that corporate

disclosures on climate risks were inadequate

Global corporates incorporating sustainability

as key part of corporate strategy

Growing prevalence of sustainability criteria

applied to consumers’ purchase decisions

Public Policy and Regulation

Business /

Consumer

Behavior

Technology

Development

Investor and

Public

Opinion

New technology to enable energy efficiency

Carbon capture technology

Changing economics of renewable energy

France target

carbon tax of €100

per tonne by 2023

Solar energy costs

down 89%

2009 to 2016

75% of investors

to increase climate

related investments

China plans

$360bn investment

in renewable energy

by 2020

12

Climate change presents new opportunities and risks for financial services

PUBLIC


Opportunities

Increased financing demand to enable

shift to low-carbon economy (e.g.

renewable energy, electric vehicles, etc.)

New products and propositions to meet

climate related requirements (e.g. green

loans)

New growth areas and sectors (e.g.

cleantech, energy efficiency products)

Renewed engagement with clients,

employees and shareholders

Brand and reputational advantages as

leaders in sustainable finance

Rapid decline in asset values (equity and

debt) linked to fossil fuel use (e.g. stranded

assets)

Physical destruction and economic

disruption from extreme weather patterns

Increased regulation and disclosure

requirements

Changing investor expectations and

investment criteria (ESG)

Brand and reputational damage for

financing activities deemed environmentally

harmful

Risks

13


PUBLIC




14

HSBC to provide our customers, our communities and our employees with the skills and knowledge needed to thrive in a global economy

PUBLIC

HSBC response and resources

UN Sustainable

Development

Goals

40% of employers said lack of skills was the main reason for entry-level job vacancies. This

lack of employability (i.e., to have a set of attributes that make them more likely to gain

employment and be successful) creates long-term social inequalities

Only 33% of adults globally are considered to be financially literate. Not having the right

skills to manage their financial lives makes people vulnerable, in particular in increasingly

stressed social systems

Improve ‘financial capability’:

Embed the building of financial capability into our products and services – with an emphasis on using digital innovations and data

Support programmes (e.g. JA ‘More than Money’ programme) that build financial capability

Raise people’s ‘employability’:

Support community programmes that improve employability

Work with HR to develop policies with the aim to reduce employability barriers within HSBC

Thought leadership and opportunities for employees to volunteer for financial capability and employability programmes within the community

Embed the building of financial capability into HSBC’s products and services

Deliver financial capability education to the communities in which we operate and materially increase the level of employment in our communities

Detailed targets to be defined

What are our priorities?

What are our aspirations?

HSBC is present in c.70 countries and maintains strong relationships with the communities

in which we operate

Securing financial literacy and supporting employability is a priority for HSBC to provide

people with the tools to improve their standards of living

Why is ‘Future Skills’ relevant?

Why HSBC?

15

HSBC to drive new business development and facilitate transitioning of businesses and supply chain towards sustainable growth

PUBLIC


The UN Global Compact estimates that 80% of global trade pass through supply chains;

they are one of the most important leavers for business to create positive impact in the world

SME’s and entrepreneurs are key contributors to global economic growth and job creation

Entrepreneurship - Support new businesses through our commercial and charitable activities to drive job creation and economic growth:

Provide access to capital and non-funding financial services to support entrepreneurs to grow new businesses (e.g. scale-up up of BB and launch of RBB, support ‘Business Growth fund’)

Provide donations / volunteering services to charities which drive social enterprises

Sustainable Networks - Facilitate businesses and supply chains to transition to a sustainable business model:

Create partnerships with NGOs / corporate partners (e.g. with ‘Endeavour’, palm oil industry) to drive thought-leadership, organise events and provide advice to medium and small businesses

Launch sustainable supply chain initiatives (e.g. focusing on apparel industry) across products / segments (e.g. provide mentoring as part of the Supply Chain Finance proposition, client network banking segment focus)

Contribute to economic growth and job creation

Help entrepreneurs grow sustainable businesses and help existing businesses prosper

Support the creation and growth of new companies and support MMEs / SMEs to transition

towards sustainability

Detailed targets to be defined

HSBC is the world’s leading trade bank and is in a privileged position to improve the

sustainability of global supply chains

Our leading commercial banking franchise supports companies around the world and has the

financial capacity and capabilities to support the creation of new companies and jobs



Why is ‘Entrepreneur-ship and ‘Sustainable Networks’ relevant?

Why HSBC?

UN Sustainable

Development

Goals

16

Our aspiration is to become the leading bank for sustainable finance, supporting the transition to a low carbon economy

PUBLIC


A shift towards a low-carbon economy requires an estimated USD100 trillion investment

until 2030 across sectors, geographies and customer groups

Companies, institutions and investors are increasingly incorporating climate change and

other sustainability goals in decision-making and seeking financial products and risk

management capabilities to support them

HSBC has the capabilities, reach and ambition required to become a leader in sustainable

finance building on good progress in creating internal governance and establishing a strong

external reputation

Our global network enables us to connect investors with investment opportunities in

the low carbon economy across the world

Establish HSBC as the leading partner to finance the transition to the low carbon

economy

Position the bank as the recognised thought leader in sustainable finance

Leading research house and think tank for climate change

Proactive engagement with government, NGOs, investors and academia

Drive innovation in the industry

Be the industry benchmark for disclosure and climate risk

Develop industry leading sustainability risk policies

Actively engage with clients to support the transition to a low carbon economy

Provide USD100bn of sustainable financing by 2025

Achieve a No.1 ranking for climate change research and Top-3 ‘share of voice’ for

traditional and social media

Be recognised for our approach to risk, disclosure and shift in portfolio mix towards low

carbon industries



Why is ‘Sustainable Finance’ relevant?

Why HSBC?

UN Sustainable

Development

Goals

17

HSBC external commitments announced with ESG supplement published Nov 2017

PUBLIC


Provide $100bn of sustainable financing and investment by 2025

Source 100% of our electricity from renewable sources by 2030, with an interim

target of 90% by 2025

Reduce our exposure to thermal coal and actively manage the transition path

for other high carbon sectors

Adopt the recommendations of the Task Force on Climate-related Financial

Disclosures (TCFD) to improve transparency

Lead and shape the debate around sustainable finance and investment

1

5

4

3

2

18HSBC

PUBLIC

19HSBC

This presentation has been drawn up by HSBC Deutschland (“HSBC”). It is exclusively for information purposes and may

not be forwarded to third parties without HSBC’s express written permission.

Disclaimer

PUBLIC

24. april 2018 sustainable finance · emphasis on using digital innovations and data support...

Documents