At HSBC, we define sustainable finance as any form of financial service which integrates environmental, social and governance (ESG) criteria into business or investment decisions.
Sustainable finance covers both the financing and the investment activities needed to support the UN Sustainable Development Goals, and in particular focuses on combating the threat of climate change.
A rapidly changing climate represents a potent, unprecedented and irreversible threat to habitats, societies and economies around the globe. In 2015 almost 200 leaders signed the Paris Climate Agreement, committing countries to transition to a lower carbon economy and limit the global average temperature rise to 2 degrees Celsius above pre-industrial times.
An estimated USD100 trillion of investment is needed in new green infrastructure over the next 15 years to provide a 66 per cent chance of meeting this goal. We recognise the critical role finance has to play and HSBC aspires to be a leading global partner in financing, managing and shaping the transition to a low carbon world.
Our key Sustainable Finance commitments include:
Providing USD100 billion of financing and investments by 2025 to develop clean energy, lower-carbon technologies, and projects that contribute to the delivery of the Paris Climate agreement and the UN Sustainable Development Goals. This means playing a lead role in the development of financial products for customers advancing renewable energy and low carbon business activities
Committing to source 100 per cent of our electricity from renewable sources by 2030, with an interim target of 90 per cent by 2025. This means sourcing 100 per cent renewable energy via direct investment or direct purchase agreements that in turn help the financing of new renewable energy projects
Reducing our exposure to thermal coal and actively managing the transition path for other high-carbon sectors. This means discontinuing financing new thermal coal mines or new customers dependent on thermal coal mining
Adopting the recommendations of the Task Force on Climate-related Financial Disclosures report 2018. This will help us identify and disclose climate-related risks and opportunities across our businesses
Establishing a Centre of Sustainable Finance to provide thought leadership on climate change and the role of the financial services sector. This will help unlock the capital flows needed to address the world’s major sustainability challenges
A key objective for HSBC is to provide financing to enable the transition to a low-carbon economy and to help clients manage transition risk. Sustainable financing includes providing credit and lending facilities, as well as advisory services or access to capital markets.
Sustainable finance helps businesses transition from carbon intensive activities, as well as develop the new energy sources, technology and infrastructure needed for a cleaner future. It also means providing the funding needed to help retail customers to become energy efficient in their homes or invest in renewable energy sources such as domestic solar panels systems.
Our Global Research Climate Change Centre of Excellence team was recognised as number one for Integrated Climate Change in the Extel Survey 2017.
To provide the finance to develop climate and environmental projects, HSBC is playing an important role in shaping the fast-developing green bond market. We are a member of the International Capital Market Association’s Executive Committee for the Green Bond Principles, which are a set of voluntary standards for issuers of green bonds.
In 2015, the Group issued a green bond for the first time when HSBC France raised EUR500 million to fund customers and projects in the following sectors: renewables, energy efficiency, sustainable waste and water management, sustainable land use, climate change adaptation, and clean buildings and transportation. Our green bonds page contains further detail.
In 2017 HSBC was announced as Global Capital’s #1 Most Impressive Bank in Asia Pacific Green/SRI Capital Markets, #2 for EMEA and #3 for Americas. We were the only bank to be ranked in the top three for all global markets by Global Capital (September 2017). HSBC was also awarded Best Underwriter in the Environmental Finance Green Bond Awards 2017 (April 2017).
Investors and investment managers are increasingly applying environmental, social and governance (ESG) criteria to financial decisions. At HSBC, we are developing the investment products and services to meet this growing client demand and enable sustainable investments to flow.
We have increased our range of socially responsible investment funds as demand for climate-related investments continues to build. In October 2017 we launched two lower-carbon funds that meet the needs of clients who want to address climate change risk in their investments.
Elsewhere our own HSBC Bank (UK) Pension Scheme has announced that GBP1.85 billion will be transferred into a new fund which excludes companies failing to meet minimum environmental standards, including those relating to climate change.
Please see our Global Asset Management page for more information on our approach to responsible investing.
Meeting international standards
We continue to work in partnership with governments, investors and other financial institutions to improve transparency and create the right conditions to support long-term investment in environmentally sustainable projects. We have played an active role in industry forums for many years and built long-term relationships with key non-governmental organisations.
Read more about approach to working in partnership in our HSBC sustainable finance highlights timeline (1-page PDF, 34KB).
HSBC seeks to ensure that the financial services we provide to our customers to support economic development do not result in an unacceptable impact on people or the environment. HSBC is a signatory to the Equator Principles and we work with business customers to help them recognise sustainability risk and improve their sustainability practices. Read more about our approach to sustainability risk.