Awards for Excellence 2019
|View full 2019 results|
When HSBC sends a 30-page pitch for world’s best bank in sustainable finance, it’s understandable. The scope of the work at the bank covers every country in which it operates and every business line from retail banking to supply-chain finance.
If there is one bank that realizes the urgency of getting capital working for the planet, it is HSBC.
The bank dominates in green bonds and green loans; and as the trusted bank in the sector, HSBC nearly always appears with firsts. Among its deal highlights last year it had the inaugural Hong Kong sovereign $1 billion green bond, Ireland’s first green bond, the first green bond for protected agriculture in Mexico, the first green bond for a telecoms company (Telefonica) and the first green sukuk in the Middle East. The bank was also the sole lead manager on the World Bank’s €200 million blue bond.
“In order to mainstream the green bond market and grow it from billions to trillions, we need to diversify to new sectors and industries,” says Farnam Bidgoli, head of sustainable bonds, DCM EMEA.
Supporting the development of the green loans market, the bank was mandated lead arranger for DP World’s green rotating credit facility that links to sustainability improvements at the company. It was the sole lender and green loan coordinator on Ballymore and Oxley’s green loan – the first in Ireland using the principles.
There is no doubt that the development of the green bond and loan market has been crucial in connecting finance with sustainability. But it is the bank’s work outside green bonds and loans that is more important. It is finding ways to educate on and improve sustainability, and bring finance to projects that are not already green.
The bank’s work with Walmart and Puma exemplifies its commitment to innovation and the importance of that work in transforming industries.
For companies such as Walmart, where their supply chains have five times more social and environmental impact than their own operations, bringing sustainability to supply-chain finance can lead to big changes. HSBC introduced in its pricing of the supply-chain financing programme for Walmart and Puma a link to environmental, social and governance (ESG) goals and standards set by the companies themselves.
“Suppliers that meet these goals may receive payments faster and preferential rates of funding,” says Sanjay Tandon, regional head of product and propositions in global trade and receivables finance in Asia Pacific.
Daniel Klier, global head of sustainable finance, says: “It’s a great way to take the concept of sustainability that many large firms are now embracing down to middle market and small and medium-sized enterprises that tend to be based in emerging markets and to cover many industries.”
That is one of many ways that HSBC is enabling a shift to sustainability in every sector.
We are still at the start of an exciting journey to a sustainable, low-carbon economy- Daniel Klier
The bank is also shaping industry engagement. Its global research on climate and ESG-related topics is well recognized (it put out 75 such reports in 2018 alone) with more than 300 client visits, as well as 42 reports and articles published through its public Centre of Sustainable Finance.
In Asia, it created a sustainable palm oil alliance, is one of the founders of the sustainable steel coalition and is working to create better practices in the fashion sector by partnering with the Apparel Impact Institute.
This year, it launched the Plastic, Ocean and Business Innovation forum in Hong Kong to support businesses targeting plastic clean-up and reduction. And this is in addition to being a member or signatory on 50 sustainable finance-related initiatives from the Task Force on Climate-related Financial Disclosures to the Montreal carbon pledge.
Klier himself chairs the climate risk working group at the Bank of England.
“Engagement and collaboration is crucial and, as an industry and indeed a planet, we cannot run the risk of not getting this right,” he says.
He points to an independent expert group that consults on all of its sustainable business to ensure standards are maintained.
Outside large-scale financings, the bank has integrated green into all of its businesses. Some 4,000 of its employees have undergone sustainable finance training in conjunction with Cambridge University.
In retail banking, HSBC in Malta provides preferential interest rates for borrowers buying green cars and mortgages and is expanding its sustainable investment offerings to retail customers across markets.
In asset management, HSBC integrates ESG criteria into all investment decisions, across all products, and even more importantly, is heavily engaged as a shareholder to push for enhanced company disclosure regarding climate risks and low-carbon transition plans. In this area it works collaboratively with groups such as Climate Action 100+ and the CDP’s non-disclosure initiative.
“HSBC Asset Management recently issued its own green impact framework,” point outs Melissa McDonald, global head of product – equities and responsible investment.
Says Klier: ‘‘We believe that we are still at the start of an exciting journey to a sustainable, low-carbon economy.”