Key sustainability issues

By working with stakeholders, especially investors and NGOs, and through industry working groups, we have identified a number of key sustainable issues, which are broken down by customer group below.

Personal Financial Services (including consumer finance)

1. Financial inclusion and consumer debt.

Banks provide people the services they need to manage their finances in the best way for them. We need to respond to the requirements of all customers and potential customers, including those who fall outside the traditional banking models, such as those on low incomes and those with disabilities.

Providing finance for customers to make improvements in their lives or livelihoods is one of the fundamental reasons for a bank’s existence, and a primary source of our income. Lending involves risks on both sides: for the customer there is the risk of being unable to repay the loan, incurring further charges, and for the bank there is the risk of default. We therefore take our responsibilities to prudent lending very seriously, for the sake of our customers, and for the long-term sustainability of our business. Credit approval and interest rates are based on the borrower’s ability to repay, the loan product and the customer’s credit profile.

HSBC is committed to treating customers fairly. We strive to ensure we conduct ethical lending practices and have clear communications with our customers. This means complying with the letter and spirit of regulations in all countries and territories in which we operate and training our employees to offer products that are truly suitable for and affordable to the customer.

2. Secure and convenient delivery channels.

We do our best to protect our customers from becoming victims of financial crime through the security features, checks and advice in place for all channels through which we communicate with customers, including Internet and Telephone Banking.

All our customers’ information is held securely in compliance with the Data Protection Act. All employees who have access to customer information for telephone call handling or administrative purposes, irrespective of geographical location, are trained to the same high standards and subject to the same stringent obligations over confidentiality, data protection and security.

3. Customer satisfaction.

HSBC exists for its customers, because without them we could not be in business. Customer satisfaction is therefore a high priority for us.

There is a tendency to see all banks as being the same in terms of performance and customer service.  Nevertheless, surveys of customer satisfaction, and other evidence, show that HSBC is trying to be different and is succeeding.  We have continued to focus strongly on defining HSBC Bank through the quality of service provided to our customers. We remain strongly committed to putting our customers at the heart of everything we do and creating long-term mutual value. Our continued successes have resulted in HSBC Bank being recognised in a number of awards over the last 12 months.
 
We encourage and value feedback from our customers.  This allows us to improve the products and services we offer.  If, for any reason, a customer is not entirely satisfied with any aspect of our service, we aim to put matters right as soon as we can.  We work hard to resolve customer complaints without recourse to the independent arbitration of the Financial Ombudsman Service.

Commercial Banking

1. Environmental credit risk needs to be managed carefully to minimise ecological damage caused indirectly through financing.

Environmental risks are part of the normal checklist of risk assessment and management.  Our Environmental Risk Standard sets out our position on the mitigation of environmental risk.

We have stringent procedures in place to ensure that our assessment of a finance proposal results in a clear and full understanding of the use of funds and the environmental risks involved. To help mitigate environmental credit risk and adverse impacts on our reputation, we have developed sector guidelines and have adopted internationally recognised codes of conduct, such as the Equator Principles, to help us in our decision-making.

2. Emerging markets pose certain regulatory and ethical risks.

HSBC operates in 83 countries and territories which means we are subject to a range of laws and regulations across the board. The diverse geographical spread of our business also means that we must be careful to manage risks that may threaten the ethical culture of our business. Emerging markets, such as China and India, present opportunities for us to develop our business but we will only do business where we believe it is right to do so.

We believe international trade and foreign investment play an important role in economic development, and that personal freedom is best nurtured in an environment of economic growth and economic freedom. Economic development has improved the lives of millions of people around the world. Restricting trade, or other economic ties, can slow a country's progress to the detriment of its people.

Our observation is that oppressive regimes are more susceptible to change through interaction with the rest of the world – trade, finance, politics and the media – than from within. As a peaceful means of influence, interdependence will often exert more pressure for change than isolation.

We have, on occasion, withdrawn from countries where conditions were no longer conducive to business but, where we are able to manage the risk, we do so whilst remaining conscious of our responsibilities to customers who rely on us for their financial needs.

Global Banking and Markets

1. Social, environmental and financial risks and opportunities of major projects.

We developed, in 2004, a strategy for managing sustainability risks, ‘From Risk to Opportunity’.  We have since put in place a new head office function, Group Sustainable Development, to implement the strategy by working closely with customer groups, particularly within Global Banking and Markets.

Our relationship managers manage large-scale investments and advance credit to global clients involved in almost every business sector. Business opportunities will come with some social, environmental or financial risk.

Employees in Global Banking and Markets (as well as in Commercial Banking) receive training on sector guidelines relevant to their business area when each guideline is issued. We continue to implement the Equator Principles across the bank, ensuring that employees working with high-risk sectors are clear of our commitments and conscious of our reputation.  By providing this training we seek to minimise these risks.

Private Banking

1. Money laundering and financial crime.

The nature of private banking means that the risk of money laundering and financial crime is particularly high in this customer group.

Our procedures and policies require Private Banking, as well as all other customer groups, to know its customers. We thoroughly check the identity of a client and seek to understand his or her financial situation and background prior to opening an account.

We train our Private Banking client contact employees, traders, operations personnel and management annually in how to prevent money laundering. We provide additional training whenever there are changes to local laws and regulations or to our own practices.

2. Determining the legitimacy of the source of an individual’s wealth.

Private Banking employees are trained to ensure they find out as much information as possible about the customer prior to account opening. This process includes consulting a commercial database to check if the client has a criminal background. Comprehensive policies and procedures are in place to prevent the use of our banks as vehicles for money laundering, terrorist financing or other criminal activities.

Certain categories of customer – for example, public officials who open accounts outside of their home countries – potentially pose a greater risk of laundering the proceeds of illegal activity, such as corruption. The approval process for such clients is much more stringent.