Advancing net zero through assessing and engaging customers on their transitions

Along with announcing its ambition to become a net-zero bank by 2050, HSBC recognizes the critical role of banks in engaging customers on their transitions. To steer corporate customer engagement, HSBC has designed and implemented a differentiated approach to the assessment of corporate customers’ transition plans. The type of assessment undertaken (deep dive or high level) depends on how material the customers are to HSBC’s portfolios and financed emissions targets. To assess its corporate customers’ transition risks and plans, HSBC has defined criteria across five categories: 1. Emissions trend: Requests the customer’s current and historic Scope 1, 2, and 3 GHG emissions, including the completeness of the company’s emissions reporting and whether it has been validated by a third party. 2. Ambition of plan: Indicates whether the customer has announced a commitment to net zero and set interim targets to reduce emissions over the short, medium, or long term and across relevant emission scopes. 3. Credibility of plan: Identifies details of the customer’s plans to achieve its ambition, including the specificity of these plans (e.g. the investment required) in the context of its business activities, current source of emissions, and operating context. 4. Credibility of action: Requests evidence of actions that the customer has taken to implement its plan and reduce emissions. 5. Climate risk: Considers physical and transition risks to which the customer may be exposed For customers that are the most material to HSBC’s portfolios and financed emissions targets, a deep-dive transition plan assessment is conducted. These assessments are performed by specialists from HSBC’s Sustainability Centre of Excellence that have deep expertise in sector transitions and emerging technologies, with input from relationship managers.