# HSBC Holdings plc Annual Report and Accounts 2024

## HSBC Holdings plc
Annual Report and Accounts 2024

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## Opening up a world of opportunity
Our ambition is to be the preferred international financial partner for our clients.
Our purpose, ambition and values reflect our strategy and support our focus on execution.

Read more on our values and strategy on pages 5 and 11.

## Contents

**Strategic report**
1 Performance in 2024
2 Highlights
4 Who we are
6 Group Chairman’s shareholder letter
8 Group CEO’s shareholder letter
11 Our strategy
15 ESG overview
20 Board decision making and engagement with stakeholders (Section 172(1) statement)
24 Remuneration
25 Financial overview
30 Global businesses
37 Risk overview
40 Long-term viability and going concern statement

**Environmental, social and governance (‘ESG’) review**
42 Environmental
63 Social
73 Governance

**Financial review**
86 Financial summary
98 Global businesses and legal entities
120 Reconciliation of alternative performance measures

**Risk review**
127 Our approach to risk
131 Top and emerging risks
137 Our material banking risks

**Corporate governance report**
237 Biographies of Directors and senior management
259 Board committees
279 Directors’ remuneration report

**Financial statements**
330 Independent auditors’ report
341 Financial statements
341 – Consolidated income statement
342 – Consolidated statement of comprehensive income
343 – Consolidated balance sheet
344 – Consolidated statement of changes in equity
347 – Consolidated statement of cash flows
349 – HSBC Holdings financial statements
353 Notes on the financial statements

**Additional information**
439 Shareholder information
454 Abbreviations

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This Strategic Report was approved by the Board on 19 February 2025.

Sir Mark E Tucker
Group Chairman

**A reminder**
The currency we report in is US dollars.

**Our approach to ESG reporting**
We embed our ESG reporting and Task Force on Climate-related Financial Disclosures (‘TCFD’) within our Annual Report and Accounts. Our TCFD disclosures are highlighted with the following symbol: TCFD

**Use of alternative performance measures**
We supplement our IFRS Accounting Standards figures with non-IFRS Accounting Standards measures used by management internally that constitute alternative performance measures under European Securities and Markets Authority guidance and non-GAAP financial measures defined in and presented in accordance with US Securities and Exchange Commission rules and regulations. These measures are highlighted with the following symbol: Further explanation may be found on page 29.

**Targets and forward guidance**
We do not reconcile our forward guidance on RoTE excluding the impact of notable items, target basis operating expenses, dividend payout ratio target basis or banking net interest income (‘banking NII’) to their equivalent reported measures.

For our financial targets, medium-term is defined as between three to five years, and long term as five to six years, from 1 January 2025.

See page 2 for details on our forward guidance and outlook.

None of the websites referred to in this Annual Report and Accounts 2024 for the year ended 31 December 2024 (including where a link is provided), and none of the information contained on such websites, are incorporated by reference in this report.
linkedin.com/company/hsbc

**Cover image: Opening up a world of opportunity**
This year’s annual report marks 160 years since our founding and celebrates our rich history of shaping finance around the world. To mark this occasion, our special anniversary cover encapsulates the depth and the breadth of our services, and our commitment to connecting people and businesses through our global network – creating opportunities, driving progress and pioneering new ideas.

HSBC Holdings plc Annual Report and Accounts 2024

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# Performance in 2024

HSBC is one of the largest banking and financial services organisations in the world.
We have a clear strategy to deliver revenue and profit growth, enhance customer service and create long-term shareholder value.

**Financial performance indicators**
Our financial performance indicators demonstrate our continued focus on the delivery of sustainable returns for our shareholders. They also provide insight into the performance that has driven the outcomes of our financial targets.

Read more on our financial performance in 2024 on pages 2 and 27.
For an explanation of performance against our key Group financial targets, see page 25.
For a reconciliation of alternative performance measures to their reported equivalents, see page 124.

| Financial performance indicators | Result |
|---|---|
| Return on average tangible equity | 14.6% (2023: 14.6%) Return on average tangible equity excluding notable items of 16.0% (2023: 16.2%) |
| Profit before tax | \$32.3bn (2023: \$30.3bn) |
| Net interest income | \$32.7bn (2023: \$35.8bn) Banking net interest income of \$43.7bn (2023: \$44.1bn) |
| Operating expenses | \$33.0bn (2023: \$32.1bn) Target basis operating expenses up 5% to \$32.6bn |
| Common equity tier 1 capital ratio | 14.9% (2023: 14.8%) |
| Dividend per share in respect of 2024 | \$0.87 Inclusive of a special dividend of \$0.21 per share. (2023 dividend per share: \$0.61) |

**Strategic performance indicators**
Our strategy supports our ambition of being the preferred international financial partner for our clients.
We are committed to building a business for the long term, developing relationships that last.

Read more on our strategy on pages 11 to 13.
Read more on multi-jurisdictional client revenue on page 125.
Read more on how we set and define our ESG metrics on page 17.
Read more on our definition of sustainable finance and investment on page 45.

| Strategic performance indicators | Result |
|---|---|
| Grow our Wealth business | \$64bn Net new invested assets generated in 2024, of which \$47bn were in Asia. (2023: \$84bn generated, of which \$47bn were in Asia) |
| Serve our clients internationally | 62% Wholesale multi-jurisdictional client revenue is generated by clients banking with us across multiple markets. (2023: 61%) |
| Gender representation | 34.6% Senior leadership roles held by women. (2023: 34.1%) |
| Sustainable finance and investment | \$393.6bn Cumulative total provided and facilitated since 1 January 2020. (2023: \$294.4bn) |

HSBC Holdings plc Annual Report and Accounts 2024 1

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# Strategic Report

## Highlights

Financial performance reflected business growth, particularly in Wealth.
We continued to make progress in reshaping the Group and we have announced a simplification of our organisation structure to accelerate strategic delivery.

**Financial performance (vs 2023)**
* Profit before tax rose by \$2.0bn to \$32.3bn, including a \$1.0bn net favourable impact from notable items. In 2024, these included a gain of \$4.8bn on the disposal of our banking business in Canada, the impacts of the disposal of our business in Argentina, comprising a \$1.0bn loss on disposal, and the recycling of foreign currency reserve losses and other reserves of \$5.2bn. In 2023, notable items included an impairment of \$3.0bn on our associate, Bank of Communications Co., Limited (‘BoCom’), disposal losses of \$1.0bn on Treasury repositioning and risk management and a \$1.6bn gain recognised on the acquisition of Silicon Valley Bank UK Limited (‘SVB UK’). Profit after tax increased by \$0.4bn to \$25.0bn.
* Constant currency profit before tax excluding notable items increased by \$1.4bn to \$34.1bn, primarily reflecting revenue growth in Wealth and Personal Banking (‘WPB’) and Global Banking and Markets (‘GBM’), partly offset by a rise in operating expenses, in line with our cost growth targets.
* Revenue of \$65.9bn was stable. There was growth in revenue from higher customer activity in Wealth in WPB, and in Equities and Securities Financing in GBM. In addition, 2023 included disposal losses of \$1.0bn related to Treasury repositioning and risk management. This was offset by the net adverse impact of certain strategic transactions described above, as well as a \$0.2bn loss on the early redemption of legacy securities.
* Constant currency revenue excluding notable items rose by \$2.9bn to \$67.4bn.
* Net interest income (‘NII’) decreased by \$3.1bn, reflecting the impact of business disposals and higher funding costs associated with the redeployment of our commercial surplus to the trading book, where the related revenue is recognised in ‘net income from financial instruments held for trading or managed on a fair value basis‘, partly offset by higher NII in HSBC UK, reflecting the benefit of our structural hedge. Banking NII of \$43.7bn fell by \$0.4bn or 1% compared with 2023, as increased deployment of our commercial surplus to the trading book only partly mitigated the reductions in NII.
* Net interest margin (‘NIM’) of 1.56% decreased by 10 basis points (‘bps’), mainly due to increased deployment of our commercial surplus to the trading book.
* Expected credit losses and other credit impairment charges (‘ECL’) of \$3.4bn were stable. ECL were \$1.8bn in Commercial Banking (‘CMB’) and \$0.2bn in GBM. This included stage 3 charges relating to the commercial real estate sector in mainland China (\$0.4bn), the onshore Hong Kong real estate sector (\$0.1bn), and a charge related to a single CMB customer in the UK. ECL in WPB were \$1.3bn and primarily related to our legal entities in Mexico, Hong Kong and the UK. ECL were 36bps of average gross loans, including loans and advances classified as held for sale (2023: 32bps).
* Operating expenses grew by \$1.0bn or 3% to \$33.0bn, mainly due to higher spend and investment in technology and the impacts of inflation, partly offset by reductions related to our business disposals in Canada and France, and from lower levies in the UK and the US.
* Target basis operating expenses rose by 5%, in line with our cost growth target. This increase primarily reflected higher spend and investment in technology, and the impact of inflation. This is measured on a constant currency basis, excluding notable items, the impact of retranslating the prior year results of hyperinflationary economies at constant currency, and the direct costs from the sales of our French retail banking operations and our banking business in Canada.
* Customer lending balances fell by \$8bn on a reported basis but rose by \$14bn on a constant currency basis. Growth included lending balance growth in CMB and higher mortgage balances in WPB.
* Customer accounts rose by \$43bn on a reported basis, and \$75bn on a constant currency basis, with growth across all of our global businesses, primarily in Asia.
* Common equity tier 1 (‘CET1’) capital ratio of 14.9% rose by 0.1 of a percentage point, mainly due to capital generation and a reduction in RWAs through strategic transactions, offset by dividends, share buy backs and organic balance sheet growth.
* The Board has approved a fourth interim dividend of \$0.36 per share, resulting in a total of \$0.87 per share in respect of 2024, inclusive of a special dividend of \$0.21 per share. We also intend to initiate a share buy back of up to \$2bn, which we expect to complete by our first quarter 2025 results announcement.

**Outlook**
* We have announced measures to simplify the Group and we are focused on opportunities that build on our strong platform for growth.
* We are now targeting a mid-teens return on average tangible equity (‘RoTE’) in each of the three years from 2025 to 2027 excluding notable items, while acknowledging the outlook for interest rates remains volatile and uncertain, particularly in the medium term.
* We expect banking NII of around \$42bn in 2025. Our current expectation reflects modelling of a number of market-dependent factors. If changes in these factors impact the output of our modelling, we would update our expectation for 2025 Banking NII in future quarterly results announcements.
* We retain a Group-wide focus on cost discipline. We are targeting growth in target basis operating expenses of approximately 3% in 2025 compared with 2024.
* Our target basis operating expenses for 2025 excludes the direct cost impact of the business disposals in Canada and Argentina, notable items and the impact of retranslating the prior year results of hyperinflationary economies at constant currency.
* Our cost target includes the impact of simplification-related saves associated with our announced reorganisation, which aims to generate approximately \$0.3bn of cost reductions in 2025, with a commitment to an annualised reduction of \$1.5bn in our cost base expected by the end of 2026. To deliver these reductions, we plan to incur severance and other up-front costs of \$1.8bn over 2025 and 2026, which will be classified as notable items. We are focused on opportunities where we have a clear competitive advantage and accretive returns, and we aim to redeploy around \$1.5bn of additional costs from non-strategic activities into these areas, over the medium term.
* We expect ECL charges as a percentage of average gross loans to continue to be within our medium-term planning range of 30bps to 40bps in 2025 (including lending held for sale balances).
* Over the medium to long term, we continue to expect mid-single digit percentage growth for year-on-year customer lending balances.
* We expect double-digit percentage average annual growth in fee and other income in Wealth over the medium-term.
* We intend to continue to manage the CET1 capital ratio within our medium-term target range of 14% to 14.5%, with a dividend payout ratio target basis of 50% for 2025, excluding material notable items and related impacts.

Our targets and expectations reflect our current outlook for the global macroeconomic environment and market-dependent factors, such as market-implied interest rates (as of mid-January 2025) and rates of foreign exchange, as well as customer behaviour and activity levels.

We do not reconcile our forward guidance on RoTE excluding the impact of notable items, target basis operating expenses, dividend payout ratio target basis or banking NII to their equivalent reported measures.

**Reshaping the Group for growth**
* We continue to make progress on reshaping the Group. In 2024, we completed the sales of our retail banking operations in France, and exited our businesses in Canada and Argentina. We have also enhanced the efficiency of the Group through smaller inorganic actions.
* In 2024, we served our customers through three global businesses, Wealth and Personal Banking, Commercial Banking and Global Banking and Markets. In October 2024, we announced that we are simplifying our organisational structure to accelerate delivery against our strategic priorities. Effective 1 January 2025, the Group operates through four new businesses: Hong Kong, UK, Corporate and Institutional Banking, and International Wealth and Premier Banking.
* In January 2024, we completed the sale of our retail banking operations in France. In accordance with the terms of the sale, we retained a €7.1bn (\$7.4bn) portfolio of home and other loans. During the fourth quarter of 2024 we began to actively market this retained portfolio for sale. On 1 January 2025 we reclassified this portfolio as hold-to-collect-and sell and expect to recognise an estimated \$1bn fair value pre-tax loss in ‘other comprehensive income’ in equity on the remeasurement of the financial instruments in 1Q25.
* In March 2024, we completed the sale of HSBC Bank Canada. The completion of the transaction resulted in a \$4.8bn gain on sale, inclusive of the recycling of foreign currency translation and other reserves losses. Following completion of the sale, the Board approved a special dividend of \$0.21 per share, which was paid on 21 June 2024.
* In December 2024, we completed the sale of our business in Argentina. The completion of the transaction resulted in a pre-tax loss on sale of \$1.0bn during 2024 and a \$5.2bn recycling of foreign currency translation reserve losses and other reserves to the income statement in 4Q24.
* During 2024, we completed the sale of our business in Russia and recognised foreign currency translation reserve losses of approximately \$0.1bn. We also completed the sale of our operations in Armenia and exited our retail banking operations in Mauritius.
* We also announced divestments in our private banking business in Germany and our business in South Africa, and we signed a memorandum of understanding in relation to the planned sale of our France life insurance business. In addition, we have launched a strategic review of our business in Malta. The review is at an early stage and no decisions have been made.
* In January 2025, as part of our efforts to simplify HSBC and increase leadership in our areas of strength, we announced that we will begin to wind down our mergers and acquisitions (‘M\&A’) and equity capital markets activities in the UK, Europe, and the US, subject to local legal requirements. We will retain more focused M\&A and equity capital markets capabilities in Asia and the Middle East.
* In June 2024, we completed the acquisition of Citi’s retail wealth management portfolio in mainland China. This portfolio complements our growing set of wealth businesses and our ambition to be the leading international wealth manager for mass affluent and high net worth individuals in mainland China.
* In January 2024, we acquired SilkRoad Property Partners Group – expanding our real estate investment capabilities in Asia Pacific, aligning with our ambition of becoming a top direct real estate investment manager in the region.

Acquisitions and disposals that are classified as material notable items form part of ‘strategic transactions’ and their impacts are separately presented in our financial reporting. Read more on the financial impact of our strategic transactions on page 102.
Read more on our organisational update on page 5.

**ESG update**

**Transition to net zero**
* Supporting the transition to net zero is a key priority for HSBC. In our net zero transition plan published in January 2024, we committed to continually calibrate our approach to take into consideration the latest scientific methodologies, climate-related policy measures and developments in the real world.
* As we near the mid-point towards our 2030 targets, we have begun a review of our interim 2030 financed emission targets and associated policies. This forms part of our annual net zero transition plan review as referenced in our 3Q24 earnings release in October.
* In 2020, we set an ambition to achieve net zero in our own operations and supply chain by 2030. We have made good progress in reducing our scope 1 and 2 emissions and are currently on track to deliver reductions of more than 90% by 2030 compared to our 2019 baseline. However, progress in reducing emissions in the scope 3 supply chain component is proving slower than we anticipated. We currently expect a 40% emissions reduction across our operations, travel and supply chain by 2030 which would mean that we would need to rely heavily on carbon offsets to achieve net zero in our supply chain by 2030. As such, we have revisited our ambition, taking into account latest best practice on carbon offsets. We are now focused on achieving net zero in our operations, travel and supply chain by 2050.
* Since 2020, we have provided and facilitated \$393.6bn of sustainable finance and investment, which was an increase of \$99.2bn in the past year. This consisted of green and social financing, alongside other forms of sustainable financing and investment.
* We have continued to focus on financing our clients’ transition needs. In 2024, we launched HSBC Infrastructure Finance to help realise the financing and advisory opportunities in creating the infrastructure for a low carbon economy. We have also continued to focus on emerging climate technologies and supply chain decarbonisation.
* We have continued to participate in cross sector efforts to support customers’ transitions.

**Build inclusion and resilience**
* In 2024, 34.6% of senior leadership roles were held by women, and we are on track to achieve our ambition of 35% by 2025. We also continued to work towards meeting our ethnicity ambitions.
* Digital accessibility is important to us. We are using the power of technology to help provide a great digital experience for our customers and employees, including people with disabilities and those who are neurodivergent. We also expanded our efforts to support customers with disabilities in our branch spaces.

**Act responsibly**
* We have strengthened our AI governance processes to help ensure the responsible development and use of AI and launched www.hsbc.com/ai to increase the transparency of our AI strategy with clients and investors.
* We continued to develop our understanding of our salient human rights issues. In 2024, we focused on our approach to human rights risk management relating to the goods and services we buy from third parties and in respect of our business customers.

**Engaging with our stakeholders and our material ESG topics**
We know that engaging with our stakeholders is core to being a responsible business. To determine material topics that our stakeholders are interested in, we conduct a number of activities throughout the year, including engagements outlined in the table below. Disclosure standards such as the TCFD, World Economic Forum (‘WEF’) Stakeholder Capitalism Metrics and Sustainability Accounting Standards Board (‘SASB’), as well as the ESG Guide under the Hong Kong Stock Exchange Listing Rules and other applicable rules and regulations, are considered as part of the identification of material issues and disclosures.

| Our stakeholders | How we engage | Material topics highlighted through our engagement1 |
|---|---|---|
| Customers | Our customers’ voices are heard through our everyday interactions with them, customer surveys, listening to their complaints, and online feedback through social media and third-party financial websites and forums. | – Customer advocacy – Cybersecurity – Employee training – Inclusion – Employee engagement – Supporting our customers – financed emissions – Embedding net zero into the way we operate – Sustainability risk policies, including thermal coal phase-out policy and energy policy – Net zero transition plan – Financial inclusion and community investment – Climate risk – Anti-bribery and corruption – Conduct and product responsibility – Supply chain management – Human rights |
| Employees | Our colleagues’ voices are heard through our annual Snapshot survey, exchange sessions, town hall meetings, leadership summits, and our ‘speak-up’ channels, including our global whistleblowing platform, HSBC Confidential. | |
| Investors | We engage with our investors through our AGMs, virtual and in person meetings, investor roadshows, conferences and investor surveys, seeking to respond to questions they raise and to convey their views to senior management. | |
| Communities | We regularly engage with non-governmental organisations (‘NGOs’), charities and civil society groups both directly and through cross-industry forums, as well as through partnerships. Our Climate Advisory Panel, comprising representatives from NGOs and industry experts, provides independent advice and challenge. | |
| Regulators and governments | We proactively engage with regulators, governments and international leaders to build strong relationships, responding to consultations via industry bodies to help shape our approach to financed emissions methodologies, scenario analysis and portfolio alignment to support the transition to net zero in the global economy. | |
| Suppliers | Our code of conduct sets out our expectations and the minimum standards we expect from our suppliers on the environment, diversity, and human rights. We have begun direct engagement with our highest-emitting suppliers to understand their carbon reduction targets and disclosure plans. | |

1 These form part of our ESG disclosures suite together with other requirements, and are not exhaustive or exclusive to one stakeholder group. For further details of our disclosures, see our ESG review and ESG Data Pack, as well as our ESG reporting centre at www.hsbc.com/who-we-are/esg-and-responsible-business/esg-reporting-centre.

# Our ESG ambitions, metrics and targets TCFD

We have established ambitions and targets that guide how we do business, including how we operate and how we serve our customers. These include targets designed to help track our progress against our environmental and social sustainability goals. They also help us to improve employee advocacy and the representation of senior leadership, as well as strengthen our market conduct. The targets for these measures are linked to the pillars of our ESG strategy: transition to net zero, building inclusion and resilience, and acting responsibly.

To help us achieve our ESG ambitions, a number of measures are included in the annual incentive and long-term incentive scorecards of the Group CEO, Group CFO and Group Executives that underpin the ESG metrics in the table below.

For a summary of how all financial and non-financial metrics link to executive remuneration, see pages 296 to 308 of the Directors’ remuneration report.

In our previous disclosures and in our net zero transition plan we have highlighted the risks, dependencies and uncertainties associated with our approach and progress towards our ESG ambitions. For further details on our climate reporting, see the ESG review page 43.

The table below sets out some of the key ESG metrics we use to measure progress against our ambitions. For further details of how we are doing, see the ESG review on page 41.

| Environmental: Transition to net zero | Metric |
|---|---|
| Sustainable finance and investment2 | \$393.6bn Cumulative total provided and facilitated since 1 January 2020. (2023: \$294.4bn) Ambition: Provide and facilitate \$750bn to \$1tn of sustainable finance and investment by 2030. |
| Net zero in our own operations3 | 66.1% Reduction in absolute operational greenhouse gas emissions from 2019 baseline. (2023: 57.3%) Updated ambition: Become a net zero bank by 2050. |
| Financed emissions4 | 7 sectors Number of sectors where we have set interim financed emissions targets, comprising five on-balance sheet and two combined financed emissions targets. Ambition: Align our financed emissions to achieve net zero by 2050. |

| Social: Build inclusion and resilience | Metric |
|---|---|
| Gender representation5 | 34.6% Senior leadership roles held by women. (2023: 34.1%) Ambition: Achieve 35% senior leadership roles held by women by 20256. |
| Black heritage5 | 3.0% Senior leadership roles held by Black heritage colleagues in the UK and US combined. (2023: 3.0%) Ambition: 3.4% of senior leadership roles held by Black heritage colleagues in the UK and US combined by 20256. |
| Inclusion Index7 | 78% Inclusion index score. (2023: 78%) Ambition: Maintain 75% in the Snapshot Inclusion index. |

| Governance: Acting responsibly | Metric |
|---|---|
| Conduct training8 | 99% Employees who completed conduct training in 2024. (2023: 98%) Target: At least 98% of employees complete conduct and financial crime training each year. |
| Customer satisfaction9 | 4 out of 6 WPB markets that sustained top three rank and/or improved in customer satisfaction. (2023: 3 out of 6) Target: To be ranked top three and/or improve customer satisfaction rank. |
| | 3 out of 6 CMB markets that sustained top three rank and/or improved in customer satisfaction. (2023: 5 out of 6) Target: To be ranked top three and/or improve customer satisfaction rank. |

1 For further details of our approach to transition to net zero, methodology and third-party limited assurance reports on financed emissions, sustainable finance and investment progress, and our own operations’ scope 1, 2 and 3 (business travel and supply chain) greenhouse gas emissions data, see www.hsbc.com/who-we-are/esg-and-responsible-business/esg-reporting-centre.
2 In October 2020, we announced our ambition to provide and facilitate between \$750bn to \$1tn of sustainable finance and investment by 2030. For further details and breakdown, see the ESG review on page 45. For details of how this ambition links with the scorecards, see page 297.
3 This absolute greenhouse gas emission figure covers scope 1, scope 2 and scope 3 (business travel) emissions. For further details of how this ambition links with the scorecards, see page 297.
4 See page 48 for further details of our interim targets, which include combined on-balance sheet financed emissions and facilitated emission targets for two emissions intensive sectors: oil and gas, and power and utilities. The remaining five sectors for which we have set on-balance sheet financed emissions targets are: cement; iron, steel and aluminium; aviation; automotive; and thermal coal mining.
5 Senior leadership is classified as those at band 3 and above in our global career band structure. For further details, see the ESG review on page 65. For further details of how this ambition links with the scorecards, see page 297.
6 These numerical ambitions do not form part of any US-based senior leader performance or other objectives, or in other jurisdictions where application of such should not apply under local law.
7 For further details, see the ESG review on page 67. For details of how this ambition links with the scorecards, see page 297.
8 The completion rate shown relates to the ‘Conduct Matters’ training module that was launched in December 2023 and concluded in 2024, and covers permanent and non-permanent employees (where legally permissible to assign training). For completion rates related to financial crime training, see the ESG review on page 80.
9 The markets where we report rank positions for WPB and CMB – the UK, Hong Kong, mainland China, India, Mexico and Singapore – are in line with the annual executive scorecards. For further details of customer satisfaction, see the ESG review on page 77. For further details of how this target links with the scorecards, see page 297.

# Task Force on Climate-related Financial Disclosures (‘TCFD’) TCFD

The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (‘TCFD’) recommendations set an important framework for understanding and analysing climate-related risks, and we are committed to regular and transparent reporting to help communicate and track our progress. We also seek to advocate for the same from our customers, suppliers and the industry.

We have set out our key climate-related financial disclosures throughout the Annual Report and Accounts 2024 and related disclosures. We recognise that further work lies ahead as we continue to develop our management and reporting capabilities. In 2024, we enhanced our disclosures, such as the portfolio breakdown for Energy Performance Certificate (‘EPC’) ratings into owner-occupied and buy-to-let properties.

We have considered our ‘comply or explain’ obligation under both the UK Financial Conduct Authority’s Listing Rules and Sections 414CA and 414CB of the UK Companies Act 2006, and confirm that we have made disclosures consistent with the TCFD Recommendations and Recommended Disclosures, including its annexes and supplemental guidance, save for certain items, which we summarise below.

* We set interim 2030 financed emissions targets. However, we use different time horizons for climate risk management. For climate risk, we define short term as time periods up to 2026; medium term between 2027 and 2035; and long term between 2036 and 2050. For financed emissions we do not plan to set 2026 targets. In 2024, we disclosed interim 2030 targets for financed emissions for seven sectors as outlined on page 52. Following this, we have set combined on-balance sheet financed emissions and facilitated emissions targets for two emissions intensive sectors: oil and gas, and power and utilities. We have also set targets for on-balance sheet financed emissions for the following five sectors: cement; iron, steel and aluminium; aviation; automotive; and thermal coal mining.
* The methodology and data used for financed emissions is evolving. We expect industry guidance, market practice, data availability, scenarios and regulatory disclosure requirements to continue to change, along with the shape of our own business. We have begun a review of our 2030 financed emissions targets and associated policies, as part of the annual review of our NZTP that we referenced in our 3Q24 earnings release in October.
* We do not fully disclose impacts from climate-related opportunities on financial planning and performance, including on revenue, costs and the balance sheet, quantitative scenario analysis, detailed climate risk exposures for all sectors and geographies or physical risk metrics. This is due to transitional challenges in relation to data limitations, although nascent work is ongoing in these areas. We expect these data limitations to be addressed in the medium term as more reliable data becomes available and technology solutions are implemented.
* We currently focus on disclosing only four out of 15 categories of scope 3 greenhouse gas emissions including business travel, supply chain and financed emissions, following our internal materiality assessment. In relation to financed emissions, we publish on-balance sheet financed emissions for a number of sectors, covering 2.7% of our loans and advances to customers at 31 December 2023, as detailed on page 56. We also publish facilitated emissions for the oil and gas, and power and utilities sectors. Data quality of future disclosures on financed emissions and related risks are reliant on our customers publicly disclosing their greenhouse gas emissions, targets and plans, and related risks. We recognise the need to provide early transparency on climate disclosures but balance this with the recognition that existing data and reporting processes continue to require significant enhancements.

For a full summary of our TCFD disclosures, including detailed disclosure locations for additional information, see pages 444 to 450.

## ESG disclosure map and directory

The table below sets out the key non-financial information, including risks and policies on environmental, social and governance matters, and where it can be found:

| Transition to net zero | At a glance | Read more on our approach to the transition and understanding our climate reporting | Page 42 |
|---|---|---|---|
| | Supporting our customers | Read more on our progress made against our \$750bn to \$1tn sustainable finance and investment ambition | Page 45 |
| | Partnering for systemic change | Read more on how we partner externally in support of systemic change, including an update on our Climate Solutions Partnership | Page 47 |
| | Embedding net zero | Read more on our progress made against our ambition to achieve net zero in our financed emissions by 2050 | Page 48 |
| | | Read more on our progress in decarbonising our own operations and supply chain | Page 58 |
| | | Read more on our sustainability risk policies and our thermal coal exposures | Page 61 |
| | Detailed Task Force on Climate-related Financial Disclosures (‘TCFD’) | We make disclosures consistent with Task Force on Climate-related Financial Disclosures (‘TCFD’) recommendations, highlighted with the following symbol: TCFD | Page 444 |
| Build inclusion and resilience | Inclusion disclosures | Read more on how we are building an inclusive environment that reflects our customers and communities, and our latest pay gap statistics | Page 63 |
| | Pay gap disclosures | | Page 65 |
| Act responsibly | How we govern ESG | Read more on our approach to ESG governance and human rights | Page 74 |
| | Human rights disclosures | | Page 75 |
| | How our ESG ambitions link to executive remuneration | Read more on our ESG ambitions embedded in executive remuneration | Page 17 | Pages 284 to 300 |
| ESG Data Pack | Detailed ESG information | Our ESG Data Pack provides more granular ESG information, including the breakdown of our sustainable finance and investment progress, and complaints volumes | www.hsbc.com/esg |

Strategic Report
16 HSBC Holdings plc Annual Report and Accounts 2024

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# Environmental

## Transition to net zero TCFD

We aim to support the transition to net zero and a sustainable future in partnership with our customers and other stakeholders

**At a glance**
* Supporting the transition to net zero is a key priority for HSBC. In 2020, we set an ambition to become a net zero bank by 2050. We continue to develop our capabilities, products and services to support our customers’ transition, reduce emissions in our own operations and partner for systemic change.
* We believe supporting our customers’ transition both benefits their business and helps generate long-term financial returns for our shareholders. Since we set our net zero ambition, we have seen promising progress in some vital areas of the decarbonisation challenge. Yet while the transition has progressed, the global pace of change remains insufficient. We are limited by, and cannot on our own overcome, the present lag in policy measures and the overall slower pace of the transition.
* In our net zero transition plan published in January 2024 we committed to continually calibrate our approach to take into consideration the latest scientific methodologies, climate related policies, and developments in the real world given that our sector portfolios reflect progress in the regional economies where we operate. As we near the mid-point towards our own 2030 targets, it is important to take stock of our own progress so far. We have made good progress in reducing the emissions from our own operations but more uneven progress towards our ambitions for our financed emissions footprint.

**Financed emissions**
Our strategy is to support emissions reductions in the wider economy by working with our portfolio of customers to facilitate the emissions reductions they are making. We continue to focus on engaging with our customers on their transition plans, managing the products and services that we offer, and adapting the financing choices we make to help move the world towards a resilient, net zero economy.

We have set 2030 targets that combine financed and facilitated emissions for the oil and gas sector on an absolute emissions reduction basis, and for the power and utilities sector using an emissions intensity metric. We have also set a target for on-balance sheet financed emissions for thermal coal mining.

For demand-side sectors, we have set 2030 emissions intensity targets to reflect the need to scale up low-emissions technologies while transitioning away from existing high-emitting technologies in transport and industry. As part of our financial reporting, we present the progress for these sectors against our published financed emissions baselines and targets.

As we have set out in our net zero transition plan, we must acknowledge that there are fundamental prerequisites, outside of our control, which impact our ability to meet our 2030 interim financed emissions targets. These include technological advancements, diversification of the energy mix, market demand for climate solutions, evolving customer preferences, and government leadership and effective policy.

At the current pace of decarbonisation, a combination of the above factors has led to the transition being slower than envisaged by recent Paris-aligned net zero scenarios. Against this background, we have begun a review of our interim 2030 financed emission targets and associated policies as part of the annual net zero transition plan review referenced in our 3Q24 earnings release in October.

As we calibrate our approach for the latest context, we will seek to balance being ambitious on net zero while recognising the present near term global challenges and the associated impact of the transition playing out differently across the regions and sectors we serve. In doing so we plan to draw on the latest scientific evidence and credible industry-specific pathways, while, at the same time, maintaining our commitment under our 2021 Climate Resolution.

**Own operations and supply chain**
In 2020, we set an ambition to reach net zero in our operations and supply chain by 2030. Our approach is to reduce emissions from consumption, replace consumption with low emissions alternatives, and remove remaining emissions with high-quality carbon credits, in line with external guidance.

We continue to make good progress in driving down our direct emissions. However, progress in reducing scope 3 emissions in our supply chain is proving slower than we anticipated, driven mainly by the slower pace of the transition across the real economy.

While we remain committed to our approach, it has become clear that we would need to rely heavily on carbon offsets to achieve net zero in our supply chain by 2030. As such, we have revisited our ambition to take into account latest best practice guidance on carbon offsets. We are now focused on achieving net zero across our operations, travel and supply chain by 2050.

**Interim financed emissions targets**
Our strategy is to support emission reductions in the wider economy by working with our portfolio of customers to facilitate the emission reductions they are seeking to make. That is what we consider when setting financed emissions targets. To the extent our customers are facing challenges, especially in light of the slower pace of the transition, there is no real benefit to society in simply sending those customers to another organisation that may be less committed to supporting their transition.

As such, we are supporting both new and existing customers that are making positive steps to transition to a net zero economy. We continue to focus on engaging with our customers on their transition plans, considering our strategic business lines and markets, managing the products and services we offer, and adapting the financing choices we make to help move the world towards a resilient, net zero economy.

However, as we have set out in our net zero transition plan, we must acknowledge that our influence on the decarbonisation of individual companies and the industries and economies in which our customers operate has limits. There are fundamental prerequisites, outside of our control, which impact our ability to meet our 2030 interim financed emissions targets and ultimately reach our net zero ambition. These include technological advancements, diversification of the energy mix, market demand for climate solutions, evolving customer preferences, and government leadership and effective policy.

At the current pace of decarbonisation, a combination of the above factors has led to the transition being slower than envisaged by recent Paris-aligned net zero scenarios. Moreover, certain high emitting sectors are not yet currently on a 1.5°C pathway. Until the real economy makes significant progress in decarbonising, our own progress towards our 2030 targets and 2050 net zero ambition will be constrained.

Against this background, we have begun a review of our interim financed emissions targets and associated policies as part of the annual review of our net zero transition plan that we referenced in our 3Q24 earnings release in October. This analysis is complex: it presents considerable data and methodology challenges and it is going to take time to complete.

As we calibrate our approach for the latest context, we will seek to balance being ambitious on net zero while recognising present near-term global challenges, and the associated impact of the transition playing out differently across the regions and sectors we serve. In doing so we plan to draw on the latest scientific evidence and credible industry-specific pathways while, at the same time, maintaining our commitment under our 2021 Climate Resolution.

**In this section**
| Understanding our climate reporting | We continue to evolve our disclosures taking into consideration data limitations and other challenges, and provide an overview of key changes for 2024. | Page 43 |
|---|---|---|
| Supporting our customers | Sustainable finance and investment | We seek to support our customers’ transition to net zero, including through the provision and facilitation of sustainable finance and investment solutions. | Page 45 |
| Partnering for systemic change | Supporting systemic change to help deliver net zero | We focus on building partnerships that help support an enabling environment for scaling net zero solutions in the geographies most impacted by climate change. | Page 47 |
| Embedding net zero | Financed emissions | We aim to align our financed emissions to achieve net zero by 2050. | Page 48 |
| | Net zero in our own operations | We aim to achieve net zero in our own operations, travel and supply chain by 2050, in line with our overarching net zero ambition. | Page 58 |
| | Managing climate risk | We manage climate risk across our businesses in line with our Group-wide risk management framework and continue to enhance our stress testing and scenario analysis capability to identify and understand climate-related risks. | Page 60 |
| | Sustainability risk policies | Our sustainability risk policies help to set out our appetite for financing and advisory activities in certain sectors. | Page 61 |

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## Understanding our climate reporting TCFD

**Continuing to evolve our climate disclosures**
We engage with standard setters to support the development of transparent and consistent climate-related industry standards in areas such as product labelling, sustainability disclosures, sustainable finance taxonomy and emissions accounting. In 2025, we will continue to review and enhance our approach to disclosures.

**Internal and external data challenges**
The effective measurement, governance and reporting of progress against our climate ambitions relies heavily on the availability and quality of both internal and external data. Newer data sources and topics may be difficult to assure using traditional verification techniques. This, coupled with diverse external data sources and complex structures, further complicates data consolidation. Our internal data on customer groups that was used to source financial exposure and emissions data, is based on credit and relationship management factors and is not always aligned with the need to analyse emissions across sector value chains. This can result in inconsistencies in our financed emissions calculations.

We continue to invest in the development of data and analytics capabilities to support our transition. This includes sourcing more reliable data from external providers. We are also developing our processes, systems, controls and governance to meet the demands of future ESG reporting.

Given our dependency on collecting emissions data from our clients and the manual nature of the process, enhanced verification and assurance procedures are performed on a sample basis over this data, including the first and second lines of defence. Our climate models undergo independent review by an internal model review group, and we obtain limited assurance on our financed emissions and sustainable finance disclosures from external parties, including our external auditors.

**Policies and implementation**
We continue to review and enhance implementation of sustainability risk policies as we apply them in practice. They are reviewed and, where appropriate, updated based on factors including risk materiality, implementation experience, evolving scientific guidance, updated climate scenarios, policy and regulatory requirements and evolving industry practices.

**Lack of consistency across sustainable finance taxonomies**
Sustainable finance metrics, taxonomies and practices currently lack global consistency. As standards develop and regulatory guidance evolves across jurisdictions, our targets, methodologies and disclosures may also need to adapt. Recognising these challenges, we have developed and disclosed our Sustainable Finance and Investment Data Dictionary to accompany reporting against our sustainable financing and investment ambition. For further details, see page 45. The evolution of the dictionary could lead to differences in year-on-year reporting. We continue to engage with standard setters in different regions to support the development of transparent and consistent taxonomies to encourage science-based decarbonisation, particularly in high transition risk sectors.

**Impact on our reporting and financial statements**
We have assessed the impact of climate risk on our balance sheet and have concluded that no incremental adjustments were needed to capture climate impacts in our financial statements for the year ended 31 December 2024. The effects of climate change are a source of uncertainty. We capture known and observable potential impacts of climate related risks in our asset valuations and balance sheet calculations. These are considered in relevant areas of our balance sheet, including expected credit losses, classification and measurement of financial instruments, goodwill and other intangible assets; and in making the long-term viability and going concern assessment. As part of assessing the impact on our financial statements we conducted scenario analysis to understand the impact of climate risk on our business (see pages 60 and 223). For further details of how management considered the impact of climate-related risks on its financial position and performance, see ‘Critical estimates and judgements’ on page 354.

**Progress on our net zero transition plan**
We continue to take actions across our organisation to support the implementation of our net zero transition plan. This report provides key updates on our progress in 2024 and our annual TCFD reporting.

For further details of our climate risk exposures, see page 219.

**Key changes to our 2024 disclosures**
We are committed to timely and transparent reporting. However, we recognise that challenges may result in us having to change certain disclosures. In 2024, there was an impact on certain climate disclosures, including:
* Financed emissions for the automotive, thermal coal mining and aviation sectors: In 2024, we made a methodological change to the way we calculate financed emissions for our automotive clients. In addition, we identified errors in both the thermal coal mining and aviation sectors, including errors in lending product codes. These changes have resulted in a 25% decrease in emissions reported for automotive and a 30% increase in emissions reported for aviation in 2022 figures, and a 18% increase in emissions reported for thermal coal mining in the 2020 baseline figure on an absolute financed emissions basis. For further details, see page 51.
* Thermal coal exposure: we continue to refine our basis of preparation and have made further enhancements in 2024. For further details, see page 62.
* Supply chain emissions: we have restated our supply chain emissions due to revisions in our methodology and an error in the mapping of industry averages. This has resulted in a 25% increase to our 2019 baseline emissions and a 2% increase to our 2023 reported emissions. For further details, see page 59.
* Asset management financed emissions 2019 baseline: we have re-baselined our 2019 intensity figure due to an error in the issuer mapping and is now 124 tCO2e/M\$ invested versus 131 tCO2e/M\$ invested reported in the Annual Report and Accounts 2022. For further details, see page 57.
* Energy consumption: We have restated our 2019 metric for total energy consumption due to an error. For further details, see page 59.

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## Explaining scope 1, 2 and 3 emissions

To measure and manage our greenhouse gas emissions, we follow the Greenhouse Gas Protocol global framework, which identifies three scopes of emissions. Scope 1 represents the direct emissions we create. Scope 2 represents the indirect emissions resulting from the use of electricity and energy to run a business. Scope 3 represents indirect emissions attributed to upstream and downstream activities. Our upstream activities include business travel and emissions from our supply chain including transport, distribution and waste. Our downstream activities include those related to investments and including financed emissions.

Under the protocol, scope 3 emissions are also broken down into 15 categories, of which we provide reporting emissions data for three related to upstream activities. These are: purchased goods and services (category 1); capital goods (category 2); and business travel (category 6). We also report data on downstream activities for financed emissions (category 15).

For further breakdown of our scope 1, 2 and 3 emissions, see our ESG Data Pack at www.hsbc.com/esg.
1 Our analysis of financed emissions comprises ‘on-balance sheet financed emissions’ and ‘facilitated emissions’.

```mermaid
graph TD
    A[Upstream activities] --> B(Scope 3 Indirect)
    B --> B1(Purchased goods and services (Category 1))
    B --> B2(Capital goods (Category 2))
    B --> B3(Business travel (Category 6))
    C[HSBC Holdings] --> D(Scope 1 Direct)
    D --> D1(Company facilities)
    D --> D2(Company vehicles)
    C --> E(Scope 2 Indirect)
    E --> E1(Electricity, steam heating and cooling)
    C --> F(Downstream activities)
    F --> F1(Scope 3 Indirect)
    F1 --> F2(Investments and financed emissions (category 15))
    subgraph HSBC Holdings
        D
        E
    end
```

**Assurance relating to ESG metrics TCFD**
HSBC Holdings plc is responsible for preparation of the ESG information and all supporting records, including selecting appropriate measurement and reporting criteria, in this Annual Report and Accounts 2024, ESG Data Pack and the additional reports published on our website.

We recognise the importance of ESG disclosures and the quality of data underpinning them. We also acknowledge that our internal processes to support ESG disclosures continue to be developed and that currently they partly rely on manual sourcing and categorisation of data. Certain aspects of our ESG disclosures are subject to enhanced verification and assurance procedures including the first, second and third lines of defence. Assurance assists with reducing the risk of misstatement, although it cannot be fully eliminated given the challenges in data, evolving methodologies and emerging standards. We aim to continue to enhance our approach in line with external regulations and expectations.

For 2024, ESG metrics are subject to stand-alone independent limited third-party assurance in accordance with the International Standard on Assurance Engagements 3000 (Revised) ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’ and, in respect of the greenhouse gas emissions, in accordance with the International Standard on Assurance Engagements 3410 ‘Assurance Engagements on Greenhouse Gas Statements’, issued by the International Auditing and Assurance Standards Board, on the following specific ESG metrics:
* our use of proceeds from Green Bond issuances 2024 (published in December 2024);
* our cumulative sustainable finance and investment provided and facilitated from 1 January 2020 to 31 December 2024 (see page 45);
* our on-balance sheet financed emissions for 2023 for six sectors, our on-balance sheet financed emissions for 2021 and 2022 for thermal coal mining, and our facilitated emissions for two sectors for 2023 (see page 56);
* our thermal coal financing drawn balance exposures for 2021 and 2022 (see page 62);
* our own operations’ scope 1, 2 and 3 (business travel) greenhouse gas emissions data (see page 59), as well as supply chain emissions (purchased good and services, and capital goods) data; and
* our re-baselined 2019 intensity metric and the scope 1 and 2 financed emission intensity achieved by 31 December 2023 for our HSBC asset management business (see page 57).

The work performed for independent limited assurance is substantially less than the work performed for a reasonable assurance opinion, such as that provided for financial statements. Our data dictionaries and methodologies for preparing the above ESG-related metrics and independent third-party limited assurance reports can be found at www.hsbc.com/who-we-are/esg-and-responsible-business/esg-reporting-centre.

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## Supporting our customers TCFD

**Sustainable finance and investment**
We aim to help our customers transition to net zero and a sustainable future by providing and facilitating between \$750bn and \$1tn of sustainable finance and investment by 2030. Our sustainable finance and investment ambition aims to help promote green, sustainable and socially-focused business and sustainable investment products and solutions.

Since 1 January 2020, we have provided and facilitated a cumulative \$352.5bn of sustainable finance and \$41.1bn of ESG and sustainable investing, as defined in our Sustainable Finance and Investment Data Dictionary 2024. This included 39% where the use of proceeds was dedicated to green financing, 12% to social financing, and 15% to other sustainable financing. It also included 24% of sustainability-linked financing and 10% of net new investment flows managed and distributed on behalf of investors.

In 2024, our underwriting of green, social, sustainability and sustainability-linked bonds for clients increased over the year, measured on a proportional share basis, in line with the wider bond market environment, although it remained at 15% of our total bond underwriting.

On-balance sheet sustainable lending transactions increased by 11% compared with 2023. In 2024, transactions totalling \$0.5bn were identified as no longer fulfilling our eligibility criteria. These were declassified and removed from the cumulative progress total, and reported as a negative entry in 2024. Since 1 January 2020, the cumulative amount declassified from the total is \$1.2bn.

Continued progress towards achieving our sustainable finance and investment ambition is dependent on market demand for the products and services set out in our Sustainable Finance and Investment Data Dictionary 2024.

**Sustainable finance and investment summary1**

| Metric | 2024 (\$bn) | 2023 (\$bn) | 2022 (\$bn) | 2021 (\$bn) | 2020 (\$bn) | Cumulative progress since 2020 (\$bn) |
|---|---|---|---|---|---|---|
| Balance sheet-related transactions provided2 | 47.4 | 42.7 | 42.2 | 26.0 | 10.4 | 168.7 |
| Capital markets/advisory (facilitated) | 37.3 | 33.3 | 34.5 | 48.7 | 30.0 | 183.8 |
| ESG and sustainable investing (net new flows) | 14.5 | 7.7 | 7.5 | 7.7 | 3.7 | 41.1 |
| Total contribution6 | 99.2 | 83.7 | 84.2 | 82.4 | 44.1 | 393.6 |

**Sustainable finance and investment classification by theme1**

| Theme | 2024 (\$bn) | 2023 (\$bn) | 2022 (\$bn) | 2021 (\$bn) | 2020 (\$bn) | Total contribution6 (\$bn) |
|---|---|---|---|---|---|---|
| Green use of proceeds5 | 42.2 | 37.1 | 29.0 | 27.1 | 18.9 | 154.3 |
| Social use of proceeds | 9.6 | 8.4 | 6.7 | 11.3 | 9.7 | 45.7 |
| Other sustainable use of proceeds3 | 13.9 | 10.7 | 12.6 | 11.7 | 8.3 | 57.2 |
| Sustainability-linked4 | 19.0 | 19.8 | 28.4 | 24.6 | 3.5 | 95.3 |
| ESG and sustainable investing | 14.5 | 7.7 | 7.5 | 7.7 | 3.7 | 41.1 |
| Total contribution6 | 99.2 | 83.7 | 84.2 | 82.4 | 44.1 | 393.6 |

1 The 2024 data in this table has been prepared in accordance with our Sustainable Finance and Investment Data Dictionary 2024, which includes green, social and sustainability activities. The amounts provided and facilitated include: the limits agreed for balance sheet-related transactions provided (including drawn and undrawn amounts), the proportional share of facilitated capital markets/advisory activities and ESG and sustainable investing net new flows of both HSBC-owned (Asset Management) sustainable investment funds and Wealth and Global Private Banking investments.
2 In 2024 only 9 months of WPB green/energy efficient mortgages were included for the first time within Other Qualified Green Lending, future years’ reporting will include 12 months of transactions.
3 Sustainable use of proceeds can be used for green, social or a combination of green and social purposes, assessed by HSBC against internal standards and relevant industry guidelines.
4 Sustainability-linked products, where the coupon or interest rate is dependent on whether the borrower achieves certain pre-defined sustainability performance target(s), are assessed by HSBC against internal standards and relevant industry guidelines and can be used for general purposes, which may be sustainable or non-sustainable.
5 Included within the total cumulative contribution towards our ambition are transactions to customers within the six high transition risk sectors (i.e. automotive, chemicals, construction and building materials, metal and mining, oil and gas, and power and utilities) as described on page 221, of which approximately \$56bn is defined as green use of proceeds in line with the Sustainable Finance and Investment Data Dictionary 2024.
6 The \$393.6bn cumulative progress since 1 January 2020 is subject to independent third-party limited assurance in accordance with International Standard on Assurance Engagements 3000 (Revised) ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’. Our Sustainable Finance and Investment Data Dictionary 2024 and independent third-party limited assurance report is available at: www.hsbc.com/who-we-are/esg-and-responsible-business/esg-reporting-centre.

**Our sustainable finance and investment data dictionary**
We define sustainable finance and investment as any form of financial service that integrates ESG criteria into business or investment decisions. This includes financing, investing and related activities that support the achievement of the UN SDGs, including but not limited to the aims of the Paris Agreement on climate change.

Our Sustainable Finance and Investment Data Dictionary sets out our approach for classifying financing and investment as sustainable for the purpose of tracking and disclosing our performance against our sustainable finance and investment ambition.

We update our data dictionary annually, including reviewing our product definitions, adding new qualifying products and removing products that no longer qualify, making enhancements to our internal standards, and developing our reporting and governance. This year, we also indicate for the first time the types of eligible environmental and social activities we intend to consider going forward when qualifying certain use of proceeds financing for inclusion towards our sustainable finance and investment ambition including: climate solutions; nature; adaptation and social related activities.

We engage in industry initiatives to develop our understanding and approach to ‘transition finance’. However, we do not currently plan to include transition finance as a product label or stand-alone category in our data dictionary and reporting. We will continue to monitor industry guidance as it develops.

For our 2024 ESG Data Pack and Sustainable Finance and Investment Data Dictionary, see www.hsbc.com/who-we-are/esg-and-responsible-business/esg-reporting-centre.

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## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

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## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

ESG review | Environment
46 HSBC Holdings plc Annual Report and Accounts 2024

---

## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives. In 2024, we launched HSBC Infrastructure Finance (‘HIF’), which brings together our infrastructure finance, export finance, and debt/project finance capabilities to increase our capacity to realise opportunities in the transition to a low carbon economy.

Pentagreen Capital, our joint venture with Singapore investment firm Temasek targets marginally bankable clean energy and adaptation projects in Southeast Asia to support them to commercial scale, with the aim of accelerating the transition to a low carbon economy. Pentagreen Capital completed its second deal in 2024: a green loan for BE C&I Solutions to catalyse the construction of distributed sustainable bioenergy projects across Southeast Asia and India.

To support our WPB customers, HSBC UK launched Energy Efficient Home Cashback Mortgages, to offer cashback incentives to customers taking out our mortgage loans to finance their purchases of residential properties with an A or B EPC rating.

**Catalysing the new economy**
We aim to support clean industrial development and the scaling of entrepreneurial new economy companies at all stages of financing across the markets we operate in. We do this through direct financing and investment as well as through catalytic partnerships.

We continue to work closely with Breakthrough Energy in developing and deploying critical climate solutions. We are an anchor partner in the Breakthrough Energy Catalyst platform, which provides expertise, resources and capital into first-of-a-kind or first commercial scale projects. Additionally, in 2024 we directly supported a number of Breakthrough Energy Ventures portfolio companies with venture debt and other banking services. We acted as a lead arranger in a \$100m credit facility for US-based Electric Hydrogen to support the manufacturing and deployment of the company’s electrolyser plants in producing green hydrogen.

In 2024, we launched a partnership with Google Cloud to offer banking support for climate tech companies in the Google Cloud Ready Sustainability programme, and support them to scale up. These companies can now access HSBC products and services that are tailored to their specific growth ambitions, including venture debt financing options and support from our specialist climate tech finance team.

**Decarbonising trade and supply chains**
We continue to focus on helping to decarbonise trade flows and supply chains through our green trade finance and sustainable trade instruments, sustainable supply chain financing and sustainability-linked lending for trade.

We supported PDS Limited, a global fashion infrastructure platform, on a trade facility to enable deployment of working capital linked to the successful delivery of environmental and social targets across their operations, aligned to their ESG approach.

Mid-market and smaller businesses make up a large proportion of global supply chains. In 2024, we expanded our sustainable finance capabilities with the launch of a sustainability improvement loan (‘SIL’) for businesses of this size in Hong Kong and Singapore, broadening the sustainable finance options available in the region. We recently completed our first SIL transaction in Asia-Pacific with Opal Cosmetics, a manufacturer and seller of personal care and beauty products headquartered in Hong Kong and with a global supply chain. The proceeds from the facility will support the company’s general working capital needs and ongoing research and development activities. We now offer sustainability improvement loans to clients in 11 markets.

For more examples of how we are supporting our customers, see additional case studies on pages 19, 48, 49, 50, 51, and 57.

**ESG and sustainable investing**
We offer a broad suite of ESG and sustainable investing solutions across asset management, wealth, private banking, and insurance, to help institutional and individual investors generate financial returns, manage risk and pursue ESG related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset Management managed \$179.8bn in ESG and sustainable investing portfolios for internal and external investors. This includes those that are distributed by HSBC Wealth and Private Banking and those HSBC Asset Management manages on behalf of HSBC Life.

HSBC Asset Management recognises that its clients’ investment objectives are evolving, and sustainability preferences vary, and offers a broad range of sustainable investing solutions, in both traditional and alternative areas of investment. Our ESG and sustainable investing approach includes impact funds with a clear ESG or sustainable objective, thematic funds that seek to invest in ESG or sustainable trends, and strategies that seek to mitigate ESG risks by investing assets with higher ESG performance and exclusions of those that are lower ESG performing. Considerations across our approach can include, but are not limited to, climate or net-zero transition plans and controversies identified related to UN SDGs.

For the avoidance of doubt, products or assets invested pursuant to our ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosure Regulation and/or other relevant regulations, and may not qualify as ‘sustainable’ products for the purposes of the UK Sustainability Disclosure Requirements and European Securities and Markets Authority fund naming guidance and/or any other regulatory standards. The HSBC ESG and sustainable investing approach is an internal classification used to establish our own ESG and sustainable investing standards and to promote consistency across asset classes and HSBC business lines where relevant. Our ESG and sustainable investing approach should not be relied on externally to assess the sustainability characteristics of any given product.

For our private banking and wealth customers, we offer a range of ESG and sustainable investing products across different asset classes, including mutual funds, ETFs, equities, fixed income, discretionary and alternatives. In 2024, we continued to expand our investment offering with the launch of eight ESG and sustainable investing mutual funds and ETFs. We regularly publish insights to help our clients better understand the ESG implications of their investments.

In 2024, we made updates to integrate ESG into our client wealth advisory journey in both Switzerland and Luxembourg, including building capabilities to understand private banking clients’ sustainability preferences, rebalance their investment portfolios and monitor portfolios in line with their preferences. We also integrated client sustainability preferences into the investment product filtering process for retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and sustainable investing assets across its insurance manufacturing entities in Asia, Europe, and Latin America. The majority of these newly-deployed assets were green and sustainability-linked bonds, followed by placements into sustainable private credit funds.

For further details of our asset management policies, see page 62.

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## Partnering for systemic change

**Supporting systemic change to help deliver net zero**
We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and support development and scaling-up of solutions for the net zero transition. For example, in 2024 we made a strategic investment in sustainable aviation fuel (‘SAF’) through a one-time purchase agreement for approximately 1.2m US gallons of SAF produced by EcoCeres, which will be used to refuel Cathay Pacific aircraft at Hong Kong International Airport.

We continue to participate in several sustainability-related cross-industry alliances and initiatives to help stimulate industry engagement on climate and nature-related issues, encourage the flow of finance for the net zero transition, and improve global financial standards, guidance, and frameworks to mobilise finance and accelerate action.

Through our philanthropy, we partner with a range of non-governmental organisations to develop thought leadership, spur innovation, build capacity and test and scale climate solutions.

**Highlights from our net zero and sustainability-aligned partnerships**
In 2024 we donated approximately \$9m in grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.

Our collaboration with the Mission Possible Partnership seeks to support decarbonisation of some of the world’s hard-to-abate heavy industry and transport sectors. We are funding a joint initiative focused on demand creation for green building materials in the Middle East, fostering collaboration among industry leaders, policymakers, and innovators to unlock projects.

We launched a new partnership with Third Derivative and Founders Factory to support climate tech innovation focused on hard-to-abate sectors, particularly in Asia where there is a significant need and growing market for such technologies. The partnership seeks to provide capacity building and facilitate connections with the investment community to support the development and scaling of key climate technologies.

Our partnership with the Venture Climate Alliance (‘VCA’) supports venture capital firms to shape and share best practices that help to prepare them for the climate transition at the earliest stages of business creation. Work is underway on developing a climate solutions framework to support portfolio-level climate impact disclosure and expand VCA membership across emerging markets.

We are supporting Apparel Impact Institute’s (‘Aii’) Fashion Climate Fund, which aims to mobilise \$2bn in blended finance to halve carbon emissions from the sector by 2030. We have leveraged our trade finance expertise to provide insights and help inform Aii’s ‘Brand Playbook for Financing Decarbonisation’ and the ‘Landscape and Opportunities to Finance the Decarbonisation of India’s Apparel Manufacturing Sector’.

**Climate Solutions Partnership**
Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners, continues to support nature-based solutions and energy transition in Asia.

Since 2020, \$105m in funding has been deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to reach investment readiness.

Through this partnership, we also launched an open-access Environmental Crimes Financial Toolkit to help financial institutions detect and monitor activities related to environmental and financial crimes. The first set of tools focuses on commodity-driven deforestation and land conversion.

**Our approach to nature**
Around one third of the emissions reductions required to limit global warming in line with the Paris Agreement are linked to the land use system and nature.

We have been further developing our approach to nature, which builds on the outline that was set out in our net zero transition plan. This includes considering how to: understand our exposure to nature; manage nature-related risks and impacts; support our customers, including financing and investing in nature-related solutions; and build nature-related skills, data capacities and partnerships.

We are taking steps to embed our approach to nature alongside delivery of our net zero implementation plans. We continue to test and scale approaches to financing and investing in biodiversity and nature, which has included acting as sole bookrunner and structuring bank for an Amazon reforestation linked outcome bond, the World Bank’s largest outcome bond issued to date (see page 19). In 2024, starting with our European clients, we began including nature-related questions in our client transition engagement questionnaire.

**Our just transition approach**
The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions.

HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities.

We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people centred approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals sector.

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## Sustainable finance and investment continued TCFD

**Leveraging our strengths**
We are focused on three key areas that play to our strengths as an organisation and can help deliver an impact on decarbonisation in the global economy, particularly in Asia-Pacific and the Middle East where the need for financing at scale is most critical. In 2024, we were named the world’s best bank for sustainable finance in the Euromoney Awards for Excellence.

**Transitioning industry**
We support our clients in emissions-intensive industries with their transition goals by engaging with them on their transition plans and by providing financing solutions.

In 2024, we refreshed transition plan assessments for major clients in the oil and gas, power and utilities and coal mining sectors, and we began assessing major clients in the automotive, aviation, cement, steel and aluminium sectors, to better understand their objectives and identify opportunities to enable their decarbonisation strategies.

Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy efficiency, by acting as joint lead manager and bookrunner in raising \$1bn through its second green bond issuance.

Scaling infrastructure finance plays an important role in meeting global decarbonisation objectives.