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12 December 2004

HSBC became the first major bank in the world to commit to going carbon neutral. The bank made the announcement on the opening day (6th December 2004) of the 10th Conference of the Parties of the UN Framework Convention on Climate Change.

Francis Sullivan is HSBC's Advisor on the Environment. Here he talks to the climate group about HSBC's commitment:

Why did HSBC decide to go carbon neutral?

HSBC believes that climate change represents the largest single environmental challenge this century. Earlier this year, HSBC was involved with the launch of The Climate Group and the Carbon Disclosure Project. At that time, we made our views on climate change public. We have now announced the next phase of our response to climate change, the HSBC Carbon Management Plan, on the opening day of the 10th Conference of the Parties of the UN Framework Convention on Climate Change.

How will HSBC achieve this?

The Carbon Management Plan lays out HSBC's plans to reduce the Group's contribution to climate change through three different approaches: energy efficiency to reduce our energy use; buying 'green' electricity where possible; and offsetting our remaining carbon dioxide emissions.

How will HSBC ensure that offset projects are truly beneficial?

HSBC is establishing a Carbon Management Task Force to oversee the process of finding suitable credible, genuinely incremental and cost-effective offsets. The Task Force is sponsored by the Group Chief Executive and will include 5 HSBC employees and two external partners: The Climate Group and ICF Consulting. When we are confident we can make good decisions on how best to offset our {CO2} emissions we will make an announcement.

What is the timeframe for going carbon neutral?

We expect this will be during 2005.

How important are partnerships with external organisations in taking things forward?

Partnerships are critical for us to decide how best to reduce our energy use and make good carbon offset decisions. We believe that The Climate Group, ICF Consulting, The University of Newcastle and UEA, all of whom we have strong partnerships with, can really help us there. Although they are all based in the UK, they have diverse international partners, which is important to the world's local bank.

HSBC has recently established a three-year, £650,000 collaboration with Newcastle University and the University of East Anglia (UEA). Called the 'HSBC Partnership in Environmental Innovation', it is a global programme to research climate change and other major forms of environmental damage, society's awareness of the issues, and to develop technologies to overcome some of the problems identified.

How does HSBC plan to address climate change in financing and investment decisions?

Our Carbon Management Plan will deepen our first-hand experience and understanding of energy efficiency, emissions trading, and related policies and technologies. We will be better placed to understand the challenges and opportunities faced by our customers and to provide them with the right advice as appropriate. Helping to ensure that companies are well-placed to manage in a carbon constrained world will be the over-riding approach we take. We are getting our own house in order first.

Is the issue rising up the agenda for the banking sector?

Yes. The EU Emissions Trading Scheme starts on 1 January 2005 and the Kyoto Protocol comes into force on 16 February 2005. From next year carbon will start to have a real cost to business; financial institutions need to understand the impacts this may have on their customers.

What are the key things banks can do to minimise their carbon footprints?

Energy efficiency in property management is a good place to start. Reducing business travel can yield real benefits, but is difficult to achieve in a rapidly growing business. We believe that credible carbon offsets are the way forward, once energy efficiency gains have been maximised.

How does it benefit HSBC to be taking the lead within the sector - what are the business benefits of taking action to reduce emissions?

Sir John Bond, HSBC group chairman, sums up the business benefits when he said: "HSBC has a deep and longstanding commitment to the environment, and it is our judgement that climate change represents the largest single environmental challenge this century. It will have an impact on all aspects of modern life. It is therefore a major issue for our customers and our staff, as well for every organisation on the planet, no matter how large or how small."

Should businesses be pushing forward emission reduction, or is this a job for government?

A large-scale collective effort is going to needed to address climate change. Governments must play their part, and help the public to make informed decisions. Banks should also do their bit. We recognise that many of our customers have already set targets for reducing their emissions and we support them for doing so, as this will reduce their costs and help maintain their reputations for being responsible.

What next for HSBC?

In the short term we must assess the options for offsetting our carbon dioxide emissions and devise a process for making offset decisions which are credible, genuinely incremental and cost effective. Watch this space!

The views presented in the Viewpoint Series are not necessarily representative of the views of The Climate Group.

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