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 (SDGs), 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.
In November 2017 we made five sustainable finance commitments. The table below summarises these pledges and the progress we have made in achieving them.
Sustainable finance commitments
1. 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 SDGs. This means playing a lead role in the development of financial products for customers advancing renewable energy and low-carbon business activities
• Facilitated more than USD25 billion of green, social and sustainability bonds by the third quarter of 2018
• Trained more than 2,500 customer-facing employees on sustainable finance
• Continued to innovate and develop new products, including new low-carbon investment funds in our Asset Management business and HSBC Holdings plc’s inaugural corporate SDG bond (see below)
2. Sourcing 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
• Renewables power purchase agreements signed to cover 27 per cent of our electricity consumption, a rise of four percentage points since 2016
• Decreased electricity consumption per full-time employee by 15 per cent since 2011
3. 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
• Embedding climate risk in risk policies and processes
• Completed a review of our energy policy
4. Adopting the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) report 2018. This will help us identify and disclose climate-related risks and opportunities across our businesses
• Published first TCFD disclosure on page 27 of our Annual Report and Accounts 2017 (274-page PDF 5MB)
• Our sustainability governance and executive accountability is outlined on page 37 of our April 2018 ESG Update (42-page PDF 1MB)
5. Lead and shape the debate around sustainable finance and investment
• Published five reports covering key themes including greening the Belt and Road Initiative, energy evolution and climate change risk assessment
• Participated in more than 100 sustainable finance-related events and conferences
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 panel systems.
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 and sustainability bonds page contains further detail.
In November 2017, HSBC broke new ground when it launched a USD1 billion bond based on the UN SDGs – the first time a private company had issued a bond of this type. The issue was three times over-subscribed. The bond’s proceeds will be used to support projects with broad social, economic and environmental benefits in line with selected SDG targets.
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 and were also awarded Best Underwriter in the Environmental Finance Green Bond Awards. In 2018 we were named Asia’s Best Bank for Sustainable Finance at the Euromoney Awards for Excellence.
Investors and investment managers are increasingly applying 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 visit our Global Asset Management website 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 our 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.
Centre of Sustainable Finance
HSBC’s Centre of Sustainable Finance leads and shapes the debate around sustainable finance and investment. The centre publishes research reports covering key themes such as greening the Belt and Road Initiative, energy evolution and climate change risk assessment.