HSBC publishes 2003 CSR report - FAQ

How do you justify the salaries paid to senior executives?
There do not seem to be many women in senior management or on your Board. Why?
What is HSBC doing to combat money laundering?
Why are you transferring work from the developed countries to Asia?
Banks do not have a good reputation when it comes to customer service. What are you doing about that?
What are HSBC’s views on animal testing?
Are you financing the export of armaments?
Does HSBC have a code of good ethical conduct?

How do you justify the salaries paid to senior executives?
We recognise that this is a sensitive issue and that is why we are transparent about our remuneration policy. Compared with many people, senior HSBC executives are well paid. However, they are responsible for a multinational organisation, some 223,000 staff and over 110 million customers in 79 countries and territories. High salaries are necessary to compete for the best people in this international market-place. HSBC’s eight executive Directors have worked in 17 different countries. Compared with senior executives in other international companies around the world, HSBC’s top people remain relatively moderately paid, a fact borne out by survey after survey.

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There do not seem to be many women in senior management or on your Board. Why?
HSBC believes in diversity based on merit, and we recruit employees solely on merit and suitability. It is true that we have relatively few women in senior managerial positions. This reflects the social and employment practices of the past, because HSBC tends to recruit people for long-term careers.

However, we do have more women on our Board than have most of the world’s largest companies. We are committed to providing equality of opportunity to all staff, regardless of gender, race, nationality, ethnic origin, age, disability, religion or status. Exactly the same principles apply to senior management and Board appointments. Individuals are promoted or invited to become Directors not because they are men or women, but because they are the best people for the job.

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What is HSBC doing to combat money laundering?
HSBC has comprehensive anti-money laundering standards and controls that we implement across our business worldwide. We work closely with the appropriate authorities in each of our markets where, in some cases, our controls exceed local requirements. Our global policies and procedures form our money-laundering deterrence programme. These include careful identification procedures for account opening, close monitoring of transactions and a worldwide network of control officers for tracking and reporting.

In addition, HSBC conducts money-laundering awareness programmes for every new member of staff and comprehensive refresher training for all relevant employees. We are a founding signatory to the Wolfsberg Principles on anti-money laundering for international private banks and a member of the UK group of six banks that have committed to a voluntary exercise to improve their anti-money laundering procedures.

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Why are you transferring work from the developed countries to Asia?
HSBC is an international company operating in a global economy. We must remain competitive to be successful. We perform different tasks in various locations around the world according to where it is most efficient for us to do so. This means, for example, that in the UK we do work for our offices in the Middle East, in Turkey, in Malta and elsewhere in Europe. Similarly, we have staff in Canada, the UK, the United States and Hong Kong working on systems used throughout the world. Equally, the UK, the United States, Canada and many other parts of our worldwide operations do part of their work in our new Group Service Centres in India, Malaysia and mainland China. This allows HSBC to remain competitive so we can provide top quality service for our customers, reasonable returns to our shareholders, and job security for our employees. If we did not operate in this way, our competitors would eventually take away our business. From another perspective, HSBC also has obligations to the communities we serve around the world. We believe creating jobs in emerging markets makes a positive contribution. Our staff working around the world enjoy attractive terms and conditions and a working environment that is of the highest international standard.

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Banks do not have a good reputation when it comes to customer service. What are you doing about that?
There is a tendency to see all banks as the same in terms of performance and customer service. Nevertheless, there is good evidence from the product and service awards that we win in many parts of the world, and from customer surveys, that HSBC is trying to be different and is succeeding. However, we are not complacent and continue to focus strongly on defining HSBC through the quality of service we give to our customers. We remain strongly committed to putting our customers at the heart of everything we do and, in so doing, create long-term mutual value.

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What are HSBC’s views on animal testing?
This is a sensitive subject. Our understanding is that many informed people support the use of animals in scientific research, where no alternative exists, provided that such research is conducted under very strictly observed government regulations, that it is as humane as it can possibly be, and that it manifestly serves the advancement of human and animal welfare.

However, we also recognise that this view is not universally held and that there are still a number of difficult areas, including the use of primates. We also note that many of our individual customers are opposed to animal testing and that some of our major business customers place strict limitations on the sale of animal-tested products. We know that the law in the UK and elsewhere requires drugs to be tested on animals before they can be brought to market, but we share the hope of many in the medical research field that ways can be found of reducing the use of animals in the future.

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Are you financing the export of armaments?
We have always taken a cautious approach to the financing of defence equipment sales by applying strict internal controls and ensuring that all necessary government licences and approvals relating to the transaction were in place. However, we decided some time ago to withdraw from this type of business progressively and in a manner which recognises our proper responsibilities to our customers. As a result, we have made our customers and potential customers aware that we have no appetite for lending for the manufacture and sale of military hardware.

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Does HSBC have a code of good ethical conduct?
Yes. HSBC has long espoused high ethical standards in the conduct of its business. Honesty, integrity and a strong sense of responsibility have been our hallmarks in dealings with our stakeholders. Our Group Standards Manual, an internal document, sets out the company’s policies and procedures in this vital area. So ingrained are these standards that for much of our history it was considered unnecessary to articulate them. However, the Group’s international expansion and higher profile around the world has coincided with increasing public scrutiny of multinational companies. We have therefore decided to make explicit what was previously implicit. Although in 1998 we published our statement of Business Principles and Values, we consider it to be in the company’s best interests to provide additional evidence of our adherence to internationally accepted standards of conduct. That is why we have expressed our support for the Global Sullivan Principles and the United Nations Global Compact. In addition, we are members of the Institute of Business Ethics and of the anti-corruption organisation Transparency International (UK).

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