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Review of HSBC Holdings plc Sustainability Report 2008 from HSBC Holdings plc.
HSBC Banking on a Serious, Focused Approach
By Michelle Bernhart (True Blue Communications) on June 04, 2009 at 10:41am.
HSBC’s current ad campaign is by turns edgy, warm, quirky and provocative. Anchored by the phrase, “The more you look at the world, the more you recognise that people value the same things but in different ways”, it features intriguing people living out their dreams and values in sometimes competing ways, along with colorful, playful objects interpreted from myriad viewpoints. The global bank’s 2008 sustainability report, however, is downright serious, focused, and straightforward, bearing none of the personality HSBC is injecting into its brand. This is fine, of course, as sustainability reporting is not a marketing exercise. Still, the contrast is dramatic and meaningful. Fun with branding is one thing, the bank seems to say, but our sustainability performance is deadly serious business.
Indeed, this latest report (which can be downloaded or requested in hard copy) provides an excellent, no-frills accounting of HSBC’s goals and progress in three material issues: climate change, forestry (including biodiversity) and sustainable finance (including lending policies). The report also describes HSBC’s strong stakeholder engagement activities, support for customers during the economic downturn, steps to promote future social opportunity and community investment, and approach to managing the risks and opportunities associated with climate change, among other issues.
The report begins with this earnest statement by Stephen Green, HSBC Holdings Group Chairman, “The global economic and financial crisis we face has brought the wider challenges of what it means to be a sustainable business into sharp focus. We have previously stated that our goal is to be a leading brand in sustainability and this remains fundamental to our strategic aims.” Heartened by the bank’s resistance to retreating from sustainability objectives, readers are then walked through 30 pages of concise text, tables and graphs on HSBC’s sustainability management approach, objectives, activities and performance against previous commitments.
Just two elements appear weak in this otherwise strong report: a discussion of how certain improvements were achieved, and an understanding of the context for specific outcomes. To the first point, the report mentions that feedback from stakeholders in Latin America indicated treatment of employees as the issue of greatest importance. The text then jumps to detail about rising employee engagement scores (presumably across the entire Group, although this is unclear), but no explanation is provided as to why employees might feel more engaged, nor how - or whether - the concerns of Latin American stakeholders have been addressed. This is a fairly isolated example, however; most outcomes in the report provide a better picture of cause and effect.
Context, on the other hand, is sometimes absent where it is needed most, such as in the presentation of energy use, which at first glance is about as confusing as a credit card user agreement. At several points, the report mentions a 4.6-percent reduction in energy use during 2008. Another section reveals that this only applies to those “parts of the Group where targets have been set (excluding data centres)”. This is confusing at best and misleading at worst. To further confound readers, the table at the back of the document shows energy consumption increasing over time per full-time-equivalent employee, despite text elsewhere that says energy use was reduced when normalised by the number of full-time-equivalent employees. Waste generation and water use have also increased, but these results are easier to see thanks to clear graphs and a lack of text to the contrary.
In addition, several statements like this one beg for percentages to help readers determine whether the numbers are hugely positive or simply routine: “Around 23 million of our personal finance customers and one million of our commercial customers are actively using internet banking”. So? Are those figures significant? Do they exceed a banking industry benchmark or an internal HSBC target? But helpful context is provided in the discussion of home foreclosures: “HSBC’s subprime business in the USA foreclosed on one in 15 mortgages in 2008. However, this compares to the 2008 sub-prime industry foreclosure average in the USA of one in six”. The news is tragic, but at least it is presented in a way that makes it immediately comparable.
The bank’s website includes convenient side-by-side descriptions of the assurance focus for 2005 through 2008 as well as access to the current and previous assurance statements, and the report itself includes discussion of the assurance process. At the same time, HSBC’s focus on stakeholder engagement and responses to feedback enhance the report’s credibility. The report clearly outlines the issues on which stakeholders have asked for greater transparency, including business transactions, implementation of sector policies, the process used to make decisions about challenges, a focus on material issues and global governance arrangements. Indeed, the report strives to address these areas, while attempting “to provide more balance between our consideration of economic, social and environmental issues”.
What’s more, the report makes clear that HSBC’s “most fundamental contribution…to the economy, the environment and society is through delivering a robust business and sustainable revenues”, not necessarily through its own environmental or social impacts. To this end, HSBC’s clearly reported lending policies for various sectors and the pressure the bank exerts on its customers to improve performance and reduce risks demonstrate it is willing to practice tough love toward customers until their operations reach acceptable sustainability standards. “We will continue to support customers as they make progress but, in accordance with our original commitment, we will exit relationships with those who are ‘non-compliant’ in 2009” the report says. As noted, this is one enterprise that takes sustainability seriously.
1. Continue robust stakeholder engagement practices, with additional emphasis on how stakeholder and Group interests are being addressed.
Michelle Bernhart is the founder of True Blue Communications LLC, which helps organizations strengthen sustainability performance, achieve strategic objectives, enhance brand, and manage risk through credible and engaging communications. www.truebluecomm.com