AmazonScience/document-haystack

1Our sustainability risk policies help to set 2out our appetite for financing and advisory 3activities in certain sectors. Our policies are 4important mechanisms for delivering our 5net zero ambitions, as well as for managing 6sustainability risks.7Our policies8Our sustainability risk policies comprise 9our core net zero-aligned policies – thermal 10coal phase-out and energy – and our 11broader sustainability risk policies covering: 12agricultural commodities, chemicals, forestry, 13mining and metals, and World Heritage Sites 14and Ramsar-designated wetlands. We also 15apply the Equator Principles when financing 16relevant projects. 17Our sustainability risk policies focus on 18mitigating the negative impacts of specific 19sectors on people and the environment. 20Our net zero policies, including energy and 21thermal coal phase-out, also support our 22ambition to transition to net zero. Engaging 23with customers on their transition plans is a 24key aspect of our net zero policy approach. 25These policies aim to provide clear signals 26to our customers on how our appetite and 27expectations for different activities are 28changing, as well as how we will consider 29their plans for the future.30We continue to review policy implementation 31as we apply our policies in practice, and our 32operationalisation of such policies continues 33to be enhanced. We take a risk-based 34approach when identifying transactions and 35clients to which our energy and thermal coal 36phase-out policies apply, and when reporting 37on relevant exposures, adopting approaches 38proportionate to risk and materiality. This 39helps to focus our efforts on areas where we 40believe we can help drive meaningful change, 41while taking into account experience from 42policy implementation over time. 43We regularly review our policies, incorporating 44feedback and building on experience from 45policy implementation over time. 46Where we identify activities that could 47cause material negative impacts, we expect 48customers to demonstrate that they are 49identifying and mitigating risks responsibly, 50and we will look to take required actions as 51outlined in our policies, which may include 52applying financing restrictions or enhanced 53due diligence. 54 For further details of how we manage 55sustainability risk, as well as our full policies,  56see www.hsbc.com/our-approach/risk-and-57res58ponsibility/sustainability-risk.59Governance and implementation60Our Group Risk and Compliance function 61has specialists who review and support 62implementation of our sustainability risk 63policies. Our relationship managers are the 64primary point of contact for many of our 65business customers and are responsible 66for managing customers’ adherence to 67the sustainability risk policies. They are 68supported by sustainability risk managers 69across the Group who have local or regional 70responsibility for advising on, and overseeing, 71the management of risks as outlined in the 72policies. Where considered appropriate, policy 73matters are escalated to relevant internal 74governance committees.75Oversight of the development and 76implementation of policies is the responsibility 77of relevant governance committees comprising 78senior members of the Group Risk and 79Compliance function and global businesses.80Biodiversity and natural  81capital-related policies82Our sustainability risk policies impose 83restrictions on certain financing activities 84that may have material negative impacts on 85nature. While a number of our sustainability 86risk policies have such restrictions, our 87forestry and agricultural commodities policies 88focus specifically on a key nature-related 89impact: deforestation. These policies require 90customers involved with major deforestation-91risk commodities to operate in accordance 92with sustainable business principles. We 93also require palm oil customers to obtain 94certification under the Roundtable on 95Sustainable Palm Oil, and commit to ‘No 96Deforestation, No Peat and No Exploitation’ 97(see ‘Our respect for human rights’ on  98page 89). 99Our energy policy100Our energy policy covers the broader energy 101system, including upstream oil and gas, fossil 102fuel power generation, hydrogen, renewables 103and hydropower, nuclear, biomass and waste-104to-energy sectors. 105The policy seeks to balance three objectives: 106driving down global greenhouse gas 107emissions; enabling an orderly transition 108that builds resilience in the long term; and 109supporting a just and affordable transition, 110recognising the local realities in all the 111communities we serve.112The energy policy was first published in 113December 2022 and updated in January 2024. 114We review the policy annually to help ensure 115that it remains aligned with our net zero by 1162050 ambition and strategic objectives. 117 For further details of our oil and gas, and power 118and utilities financed emissions targets, see the 119‘Targets and progress’ section in ‘Financed 120emissions on page 57.121 For further details of our energy policy, see 122www.hsbc.com/our-approach/risk-and-123responsibility/sustainability-risk.124Sustainability risk policies  TCFD12566 HSBC Holdings plc Annual Report and Accounts 2023126ESG review | Environmental