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    Our climate strategy

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    Our approach

    This strategy focuses on the resilience of our business when facing climate change, both in mitigating our emissions in daily operation and setting environmental targets in line with Hong Kong government’s goal to achieve carbon neutrality before 2050, and in adapting to the physical and transition risks and opportunities under climate change. We hope to leverage our position in the value chain to influence change and be a catalyst for our clients and partners in adopting climate actions.

    Highlights

    Emissions and targets

    Emissions and targets

    In October 2020, our parent group HSBC set out its plan to attain net zero by 2050. As its subsidiary, we are committed to supporting and aligning with HSBC’s decarbonisation process. In supporting the Group’s net zero ambitions, we have been measuring our carbon emissions and setting targets to reduce the carbon footprint in our operations.

    We aim to achieve this through a host of emission reduction initiatives and management incentives, and we can steer our investments to reduce carbon footprint in the wider community, fulfilling our pledge to address climate change. Together, we continue to monitor, manage and ultimately reduce the emissions generated from our daily operations, supply chain and financing portfolio.

    Examples of initiatives carried out in 2021 include:

    • In support of the government’s climate action, three office buildings and some large scale branches have enrolled in the Energy Saving Charter 2021 scheme and the 4T Charter scheme
    • Became a signatory to Carbon Neutrality Partnership, organised by the Environment Bureau of Hong Kong SAR Government
    • Joined the Climate Change Business Forum Advisory Group of Business Environment Council to promote and support climate action
    • Purchased 2,920MWh of renewable energy from local electricity providers, which is nearly nine times what we purchased in 2020
    • Installed solar panels at our Mong Kok office building with the capacity to generate over 60MWh of renewable energy each year
    • Invested around HKD7 million on several environmental initiatives which was estimated to help reduce 230 tonnes CO2e and HKD500,000 operation cost every year

    We have also set short, medium and long-term targets for water consumption, paper consumption, greenhouse gas emissions, and waste reduction and recycling.

    For details, please refer to the key metrics in our Environmental, Social and Governance Report 2021.

    Climate risk management

    Recent changes in climate are widespread and intensifying. The consequences of climate change can already be felt today.

    Hang Seng considers it a critical risk and pledges to incorporate climate risk into our bank-wide risk management framework. We believe that a comprehensive governance framework helps to reduce risk and enables us to make effective decisions.

    We are aligning our financing portfolio to support the Paris Agreement goals. In accordance with HSBC Group’s specific lending guidelines for climate sensitive sectors, we manage the Bank’s credit exposure to such industries to better promote climate change mitigation.

    • We established a climate risk management framework that is aligned with our parent company
    • We developed a Climate Change Management Roadmap in 2021 with four focus areas: governance, strategy, risk management, and metrics and targets
    • A Climate-related Risk Working Group, which is comprised of subject matter experts and function heads of the Risk function, was formed in 2021 and led by Chief Risk Officer to oversee the climate related risk
    • A qualitative risk appetite statement for climate risk was formulated in 2021, which is subject to review on semi-annual basis
    • We conduct a climate risk stress test and adopted representative concentration pathway (RCP) 8.5 scenario to assess how physical climate risks, including extreme weather events, increasing temperatures and rising sea levels, will affect our Hong Kong operation from 2051 to 2060
    • We assessed our business’ exposure to transition risks, and the associated impact, leveraging the orderly and disorderly scenarios developed by the Network of Central Banks and Supervisors for Greening the Financial System
    • We identified residential properties of individual borrowers at “higher physical risk” from climate perils
    • Became the first local bank in Hong Kong to sign up as a supporter of the Task Force on Climate-related Financial Disclosure (TCFD)

    Sustainable finance

    We aim to support our community in transition to a low-carbon economy and carbon neutrality with sustainable financial solutions. We believe sustainable finance will help ensure that investments support a sustainable economy. We are launching various initiatives to support economic growth while reducing pressures on the environment, taking social and governance aspects into consideration.

    Apart from setting internal targets on green loans and providing support to our corporate customers, we also offer green investment products to our retail and private banking customers. We observe the Equator Principles to adopt a responsible approach in making financing decisions.

    We provide sustainable financing services to help our customers’ transition to low-carbon economy. In addition, we manage the Bank’s credit risk exposure to climate-sensitive sectors.

    • We established a new team in 2021 that focuses exclusively on developing sustainable financing solutions for business customers in order to provide of a wider range of ESG-themed products and services
    • We signed a Memorandum of Understanding and announced a collaborative initiative to promote green finance and contribute to environmental protection and sustainable development with the Hong Kong Quality Assurance Agency in 2021
    • Hang Seng Indexes Company launched the HSI ESG Enhanced Index in 2021, which applies key ESG principles to its flagship blue-chip index, such as screening constituents for compliance with the United Nations Global Compact Principles
    • Hang Seng Indexes Company has created 11 more ESG-related indexes since 2019, demonstrating a strong commitment to formulating different index products for those who seek to capture investment opportunities arising from the transition to a lower-carbon and greener economy
    • Our sale of ESG investment products in 2021 recorded a growth of over 18 fold from 2020 figures to over HKD1.7 billion
    • We offered green loans and sustainability-linked loans to support their sustainability development for corporate customers
    • Our Green Financing Promotion Scheme encourages small and medium-sized enterprises to acquire environmentally friendly equipment that contributes to sustainable development
    • We approved over HKD7.2 billion of green loans to finance corporate customers’ green projects in 2021
    • We offered green and ESG investment funds, bonds and equity-linked structured products via branches and e-Banking for retail and private banking customers

    Climate risk capacity building

    We believe it is crucial for all employees to incorporate climate change-related risks and opportunities in their everyday work. It is of importance to raise awareness and provide training to employees to ensure they understand the broad issues relating to climate change and how our business can be impacted, while empowering them to make sure climate-related risks and opportunities are well-integrated into all our business units and functional departments. These trainings help foster corporate sustainable development.

    • We organised climate risk training sessions for management and colleagues from time-to-time
    • We trained a number of staff members as Green Ambassadors to support the implementation of our Environmental Policy
    • We organised ESG webinars and workshops for our staff. For example, we organised a three-month Branch Energy Saving Competition in 2021 to increase staff awareness on energy savings and inspire actions to reduce carbon emissions
    • we have built internal capacity through issuing regular internal communications, including ESG newsletters, comics and video clips to enhance the awareness and understanding of ESG matters among our staff

    Extreme weather and climate change also present risks to our buildings and business. To prepare for and minimise damage during the typhoon season, and to adapt to other extreme conditions, we launched a two-year overall façade enhancement programme at our headquarters building in 2019, which was completed in 2021. Uninterruptible Power Supply was installed in all our three core buildings to support the operations of critical departments and ensure service continuity in times of power suspension. Critical departments are split into at least two locations in daily operation so that the critical tasks can be maintained even if one of the offices is down.