Climate change is affecting the traditional business model in many industries
André Brandão is a Group General Manager in Global Banking and Markets, HSBC, and Chair of the bank’s Climate Business Council. He talks about HSBC’s approach to climate change.
Why does HSBC have a Climate Business Council?
For businesses, climate change presents a broad range of challenges – as well as some opportunities. HSBC’s Climate Business Council, originally set up in 2010, aims to develop a strategic approach that will enable HSBC and our customers to respond effectively to those challenges and opportunities.
The Council brings together senior leaders and experts from across the bank. They represent teams leading on different areas relevant to climate change, ranging from building smart cities and understanding clean technologies to measuring carbon emissions. We can achieve much more by making connections between teams, sharing knowledge and best practice.
What are the biggest climate change challenges for business?
Some companies that bank with us need support because climate change affects their business model. New regulations may affect the profitability of certain types of high-carbon fuels, for instance. If an energy firm decides to shift towards renewable power, we can provide financing and advice that enables them to make that shift.
Combatting climate change will require trillions of dollars of finance over the coming years
Other challenges posed by climate change apply as much to HSBC as they do to our customers. Societies and shareholders want businesses to reduce the environmental impact of their operations. We regularly publish information about our carbon dioxide emissions and progress on improving our energy efficiency. Expectations are rising, however, with analysts asking businesses to disclose more information about their environmental performance.
We manage trillions of dollars’ worth of assets on behalf of customers as well as holding assets in our own right. Over time, climate change may affect the value of those assets. We have a responsibility to measure that risk, protecting ourselves and our customers. Specific policies informing our lending and investment decisions in particularly sensitive sectors such as forestry and mining must be implemented.
What are the potential opportunities of the move to a low-carbon economy?
Combatting climate change will require trillions of dollars of finance over the coming years. Governments aim to build significant amounts of new green infrastructure, for example, ranging from low-carbon cities to renewable energy plants.
Banks can help by bringing together people who need to raise funding for green projects and people who want to invest. This is a fast-growing market. Green bond issuance rose significantly in 2015 and again in 2016, with more than USD150 billion of green bonds now outstanding.
HSBC has been very active in this area. Launching a green bond of our own in 2015, supporting Poland to issue the world’s first sovereign green bond in 2016, and helping Mexico City raise USD2 billion for a low-carbon airport building are good examples.
Businesses also want to understand what climate change means for them. Our award-winning Climate Change Centre of Excellence produces reports that explain the latest scientific forecasts and policy developments, helping companies plan for the long term.
What are the priorities now for the Climate Business Council?
HSBC has specific targets and goals relating to certain aspects of climate change, including a commitment to reduce our carbon footprint. But I want to set comprehensive targets for the business as a whole so that we can measure and track our progress. To be recognised as leaders in green finance, it is important that we demonstrate our achievements to customers and employees.