- 29 January 2010
- HSBC has placed a big focus on the opportunity of climate change, serving as Chair of the Climate Principles steering committee, setting up the HSBC Climate Partnership - just to mention a few activities in this arena. Why is this?
HSBC believes that the world is now set on an irreversible path to a low carbon economy and that this shift will change the way we think about our business models, the way we conduct business, and the expectations consumers and shareholders have of business.
- How does HSBC ensure climate change considerations are factored into its core business strategy?
HSBC has always based its business strategy on achieving long term success. Climate change is an issue that has been embedded into our business thinking for some time from a footprint management, risk management, and of course commercial opportunity, perspective.
- What has HSBC done over the last 12 months to take action on climate change?
In 2009, HSBC:
- introduced targets to reduce our business travel by 10%. We did this by investing in new technologies such as tele-presence and video conferencing facilities and internal communications campaigns to inform and educate our employees.
- established a working group to look at the medium to long-term regulatory and physical threats to our business of a changing climate.
- produced a number of research reports analyzing climate policy, low carbon sectors and emerging economies.
- announced the HSBC Eco-Schools Climate Initiative, which aims to teach five to 18 year olds about protecting the environment.
- continued to work with customers developing renewable energy projects and low-carbon products and services such as solar and geo-thermal power.
- trained more than a thousand employees as climate champions as part of the HSBC Climate Partnership. They have conducted field research, contributing to the body of knowledge about climate change, bringing understanding and enthusiasm for the issues deep into our business.
- Where does HSBC see the main risks and opportunities for financial institutions in transitioning to the low carbon economy?
Voluntary initiatives like the Climate Principles are helping financial institutions understand and respond to the risks and opportunities that climate change presents.
HSBC's own research shows that the climate business sector - that is the goods, products and services linked to resolving the issues of climate change - now generates annual revenues of more than 500 billion dollars and it is expected to rise to two trillion dollars by 2020. I firmly believe that any company which does not anticipate and prepare for this change will ultimately fail commercially.
The low carbon industrial revolution is underway. At least 73 countries have renewable energy policy targets; according to a new survey of investors, investment in clean technologies is likely to increase over the next 12 months, prompted by continuing government subsidies and improving credit market conditions. The opportunities are emerging quickly.
The risks lie in how we manage the social and environmental impacts of the business that we do and we have a number of frameworks in place such as the Equator Principles and our sector policies, and indeed the Climate Principles, to help us do that.
We are also examining the medium to long-term regulatory and physical threats to our business of a changing climate and this will be a factor in our future planning and strategy for the Group.
Perhaps more imminently, firms face the prospect of higher costs from climate-related regulation - such as carbon pricing - if they do not take action and manage the shift to a low carbon operating environment. In response, banks will need increasingly sophisticated processes to identify firms at risk.
Stephen Green is a career banker having joined The Hongkong and Shanghai Banking Corporation Limited in 1982 with responsibility for corporate planning activities. He was Group Treasurer, with responsibility for the HSBC's treasury and capital markets businesses globallyfrom 1992 to 1998 and Executive Director, Corporate, Investment Banking and Markets from 1998 to 2003, when he was appointed Group Chief Executive.
He has worked in Hong Kong, New York, the Middle East and London and has extensive international experience and knowledge of the HSBC Group.
HSBC chairs the steering committee of the Climate Principles - the industry's landmark response to dealing with the risks and opportunities of climate change.