Project Details
Project
HSBC Green Financing Framework Second-Party Opinion (2024)
Client
HSBC
Project Type
Green Bond/Loan
Industry Group
Banks
Use of Proceeds
Renewable energy; Energy efficiency; Clean transport; Green buildings;
Location
U.K.
Evaluation Date
Oct 2024
Evaluation Summary
Sustainalytics is of the opinion that the HSBC Green Financing Framework is credible and impactful and aligns with the four core components of the ICMA Green Bond Principles 2021. This assessment is based on the following:
USE OF PROCEEDS
The eligible categories for the use of proceeds –Renewable Energy, Energy Efficiency, Clean Transportation, Green Buildings – are aligned with those recognized by the ICMA Green Bond Principles. Sustainalytics considers that investments in the eligible categories are expected to lead to positive environmental impacts and advance the UN Sustainable Development Goals, specifically SDGs 7, 9 and 11.
PROJECT EVALUATION AND SELECTION
HSBC’s Sustainable Finance Forum is responsible for endorsing or approving transactions in accordance with the Group’s internal framework and the relevant principles issued by the Loan Market Associations (LMA, APLMA and LSTA) for classifying financing and investment as sustainable. HSBC’s Working Group is responsible for identifying and recommending for approving a shortlist of eligible assets that are in line with the Framework’s eligibility criteria, the evaluation and selection of eligible projects and for including them in the eligible asset register. HSBC’s Global Committee provides the final approval on the selected assets in the eligible asset register for the regional committees to determine allocation. HSBC’s regional committees determine the allocation of eligible assets for each green financing transaction issued in each of the respective regions. HSBC has in place specific sustainability risk policies covering various sectors to help mitigate the potential negative environmental or social impact of the projects. Sustainalytics considers the project selection process in line with market practice.
MANAGEMENT OF PROCEEDS
HSBC’s global and regional committees will be responsible for the management and allocation of proceeds against eligible assets. This is in line with market practice. HSBC intends to allocate proceeds within 24 months of issuance. For green financing transactions with a tenor shorter than 24 months, allocation will be performed within the maturity of the relevant transaction. Pending allocation, HSBC will temporarily integrate the proceeds into the entity’s treasury liquidity reserve without segregation and invest the proceeds according to normal liquidity practices. This is in line with market practice.
REPORTING
HSBC commits to report on the allocation of proceeds and corresponding impact in its allocation report and non-financial impact report, which will be published on the Bank’s website, on an annual basis for green financing transactions until the transaction is no longer outstanding after full allocation. For short-term green financing transactions, allocation of proceeds will be reported on a quarterly basis. In addition, HSBC intends to report on relevant impact metrics. Sustainalytics views HSBC’s allocation and impact reporting as aligned with market practice.