Carbon Disclosure Project 2011 – Global 500 Report
Commentary for the Carbon Disclosure Project: Douglas Flint, Group Chairman, HSBC Holdings plc
For HSBC, climate change is a cornerstone of our ongoing business strategy, and so it gives me great pleasure to introduce the 2011 Carbon Disclosure Report. The reporting framework that the CDP has pioneered over the past decade has helped us both as respondent and signatory to improve our understanding of the strategic risks and opportunities in this area.
In the past year, we have sought to support financially as well as through advocacy the huge business potential of low carbon growth. Our own research suggests that the low carbon energy market alone will triple in size by 2020 to US$2.2 trillion. We expect the fastest growth will take place in emerging economies. To take one example: China plans to expand the share of seven strategic industries – all with a low carbon dimension – from 3 to 15% of GDP by 2020. This is perhaps the clearest statement yet of the economic growth that could flow from a determined focus on resource efficiency, technological innovation and long-term investment.
For us, “climate business” starts with our clients, and financing lies at the heart of the solution. The technologies and business models needed to deliver clean energy, cut emissions and drive down inefficient resource use can often involve higher upfront capital costs, which are then more than repaid through much lower operating costs. Project finance and equity markets have long been involved in supplying capital to the climate economy. But the full range of capital market instruments will need to be deployed, including fixed income and bonds. To enable HSBC to address this opportunity at a strategic level, a Climate Business Council has been established, which is chaired by Stuart Gulliver, Group Chief Executive, and includes the heads of all our business lines. The Council has already uncovered new ways of enabling our clients to pursue profitable growth in this arena.
But climate change is also serving to intensify the commodity constraints facing the global economy. Food yields have already been hit by warming global temperatures. And the scale and intensity of extreme weather events over the past 12 months have reminded us of the vulnerability of economies and societies to natural hazards. The scientific evidence has
also become ever clearer that climate change is increasing the probabilities of these extremes. As the world’s leading emerging markets bank, we are particularly alert to the vulnerability of Asia and Latin America to climate impacts, and our Group Risk, Operations and Sustainability teams are routinely investigating this as yet another stress that the bank needs to weather.
In an uncertain period with pressing concerns about the fate of the global economy, it would be easy - but foolish - to regard climate change as a luxury issue only to be addressed in the good times. Around the world, we are seeing encouraging signs that climate responsive business could drive an investment-led recovery. Governments are responding with new instruments to leverage private capital, such as the UK’s Green Investment Bank, which will start operations in 2012. It is at moments such as these that businesses with a long- term perspective can help shape the contours of the coming revival and thereby accelerate clean and profitable growth.
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