corporate social responsibility report 2003 · partnership. hsbc in society 3 continuing progress...

HSBC in SocietyCorporate Social Responsibility Report 2003

About HSBC

We are the world’s local bank.Headquartered in London, HSBC is one

of the largest banking and financialservices organisations in the world. HSBC’sinternational network comprises more than9,500 offices in 79 countries and territoriesin Europe, the Asia-Pacific region, theAmericas, the Middle East and Africa.

With listings on the London, Hong Kong,New York, Paris and Bermuda stockexchanges, shares in HSBC Holdings plcare held by around 200,000 shareholders insome 100 countries and territories. Theshares are traded on the New York StockExchange in the form of AmericanDepositary Receipts.

Through an international network linkedby advanced technology, including rapidlygrowing e-commerce channels, HSBCprovides a comprehensive range offinancial services: personal financialservices; consumer finance; commercialbanking; corporate, investment bankingand markets; and private banking.

In today’s world, companies like HSBC areexpected not just to behave well, but also tolisten to all their stakeholders — includingcustomers, shareholders, employees and thecommunities they serve — and to explain tothem their actions. This, our fourth annualreport on our corporate social responsibility,recognises and fulfils those obligations. Italso meets our commitment under the UNGlobal Compact to report a case studyannually on one of the Compact’s nineprinciples.

About this Report

Contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

HSBC in Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Listening to Views . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Acting Responsibly . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Managing our Impacts . . . . . . . . . . . . . . . . . . . . . . 13

Responsibility to Customers. . . . . . . . . . . . . . . . . . 20

Sharing our Success . . . . . . . . . . . . . . . . . . . . . . . . 23

Investing in Education . . . . . . . . . . . . . . . . . . . . . . . 26

Investing in Nature. . . . . . . . . . . . . . . . . . . . . . . . . . 37

Investing in the Community . . . . . . . . . . . . . . . . . . 42

Investing in our People . . . . . . . . . . . . . . . . . . . . . . 44

External Commentary . . . . . . . . . . . . . . . . . . . . . . . 48

Cover picture: HSBC engages with a diverse range ofstakeholders from communities across the world —shareholders, employees, non-governmentalorganisations, and over 110 million customers through anetwork of offices spanning six continents, as illustratedby this map.

Long before the phrase entered our commonvocabulary and, understandably, became a topicof widespread public debate, HSBC wasoperating with a strong sense of corporatesocial responsibility (CSR). Indeed theprinciples, if not the language, of CSR can betraced back to our earliest days. The reputationwe enjoy today owes much to the highstandards of behaviour set by our founders andgood behaviour is the essence of corporateresponsibility.

As the role of business and particularlymultinational enterprise, has come underincreasing scrutiny, so the need has grown forcompanies such as HSBC to set out theirviews on a wide range of social, ethical andenvironmental issues. Our Group strategicplan, ‘Managing for Growth’, which will guideus for the next five years, therefore calls for arenewed focus on CSR and on greaterdisclosure of our performance and policiesthan hitherto.

The world is wrestling with a number ofstubborn problems: the disparity between richand poor, the challenges as well as the benefitsof globalisation, the threats to the physicalenvironment. International companies areanswerable to a number of differentconstituencies. Balancing their differentdemands can be very challenging particularlywhere, as in the case of the environment, thereare as yet no clearly established supranationalagreements.

To help us strive to do the right thing, to findreal solutions to real problems and to give usthe best possible advice and guidance, we haveestablished a Corporate Social ResponsibilityCommittee of the HSBC Holdings plc Board.This is chaired by Lord Butler, a non-executiveDirector who, with great distinction, hasoverseen our philanthropic programme, ‘HSBCin the Community’, since 1999. I am delightedthat a number of other eminent people haveagreed to serve on the committee. WilliamFung, Sharon Hintze and Carole Taylor, alsonon-executive Directors, have been joined byBaroness Brigstocke, prominent in the field of

education and a Member of the House ofLords; Lord May, President of the RoyalSociety; and Gerry Davis, former teacher andlocal government leader.

Also joining HSBC during 2004 is FrancisSullivan as Adviser on the Environment.Francis was previously Director ofConservation at WWF-UK, one of ourpartners in ‘Investing in Nature’. Francis bringsa wealth of expertise to this new position andwill help us build on our long-standingcommitment to the environment, which wasalso marked in 2003 by our adoption of theEquator Principles which provide a frameworkfor banks involved in project finance. Francis’sexpertise complements Dame MaryRichardson’s in educational matters and Ibelieve that HSBC now has a formidable teamto take us forward in CSR.

This report is the fourth in a series to give anaccount of our social responsibility policies andactivities and we have renamed it HSBC inSociety to denote its more comprehensivecoverage. I hope you will find it interesting.HSBC welcomes dialogue with all those whofollow its progress. Do let us have suggestionson the further development of HSBC in Societyand please share with us your views on anyaspect of CSR. Details of how to contact uscan be found on the inside back cover.

Foreword

H S B C I N S O C I E T Y 1

Sir John Bond, Group Chairman HSBC Holdings plcMarch 2004

The way we approach our work with ourstakeholders reflects our core values, or what wecall our ‘corporate character’ (see page 9). It is afundamental part of the HSBC brand. Sinceeverything we do and the way we do it eitherexceeds, meets or falls short of the expectationspeople have of us, everyone who works forHSBC contributes to our corporate socialresponsibility.

Our first responsibility is to be a successfulcompany. Success is the only outcome thatsatisfies all of our stakeholders. Withoutsuccess, our shareholders would not invest inus, our customers would not bank with us, andgood people would not come to work for us.Our success also means that we can fulfil ourresponsibilities to the wider world, to thecommunities in which we operate.

We also believe that doing the right thing isjust as important. We recognise that remainingsuccessful in the long-term means that wemust manage our business in a sustainableway, taking care that our decisions andactions today do not compromise the successof our business or its stakeholders in thefuture.

We recognise that our success and that ofour stakeholders go hand in hand.Ultimately, we depend on — and contributeto — the health and vitality of society andthe environment at large.

The title of our report, HSBC in Society,reflects this reality.

The business case for CSR

There are a number of business reasons forinvesting in CSR.

The social reasons

For HSBC, good CSR is good business. We

always try to understand the needs of themarket and customers we serve. By followingsound CSR practices, we develop our businessin ways that will continue to appeal tocustomers, investors, employees and otherstakeholders.

Diversity is a good example. As the world’slocal bank, we believe the world is a rich anddiverse place, full of interesting cultures andideas. We value this diversity in our customersand in local communities. The better ourworkforce reflects this diversity, the better wecan anticipate and meet our customers’ needs.

Education is crucial to the development andprosperity of every country. It is the engine ofeconomic development and a route to personalachievement and success. HSBC’s own successhas always depended on the fruits ofeducation, both for the people we employ andthe societies in which we operate. By investingin education, we seek to build the confidenceand abilities of young people on whom, as

For HSBC, corporate social responsibility, or CSR, meansaddressing the expectations of our customers, shareholders,employees and other stakeholders in managing our businessresponsibly and sensitively for long-term success.

HSBC in Society

2 H S B C I N S O C I E T Y

Customers, shareholders, employees and other stakeholdersall gain from responsible business.

customers or employees, our future businesswill depend.

Supporting our communities through ouremployees’ time and through our charitabledonations has many benefits for our business:

• By working with schools and sharing theirknowledge with young people, ouremployees can also gain in understanding,confidence and self-esteem.

• Being recognised in the community as goodcorporate citizens and employers helps us toattract local people who can provide thebest service to customers.

• Community involvement leads to newcustomer relationships.

• We have an interest in healthy communitiesbecause our employees live in and belong tothose communities.

The environmental reasons

We recognise that, as a bank, we must lendand invest responsibly, avoiding projectswhere the potential for environmental damageoutweighs the economic benefits. We alsorecognise that businesses that damage theenvironment are likely to lose the support andcommitment of their stakeholders and,thereby, represent a greater credit risk to ourbusiness.

We believe companies like ours must shareresponsibility with governments and citizensfor minimising the damaging effects of humanactivity — pollution of land, water and airand the depletion of resources. Ourenvironmental management system, still in itsinfancy, continues to grow.

Although we already look for cost-savingsfrom more efficient use of resources, webelieve we need to go further. The depletionof the planet’s natural resources on which lifedepends can only lead to human conflict.Dependent as it is on political stability, thefinancial services industry has a vestedinterest in helping to provide solutions tothese major challenges. One HSBCcontribution is our Investing in Naturepartnership.


Continuing progress

Meeting our social responsibilities has beenpart of our approach since our earliest days. Forexample, in 1878 we donated HK$1,000 to theChina Crisis Fund and, in 1909, gave HK$50,000to help found the University of Hong Kong. Oursupport in the UK for Young Enterprise startedin 1971 while, to co-ordinate its extensivecommunity support programmes in the HongKong SAR and mainland China, The Hongkongand Shanghai Banking Corporation establishedits own fully registered charitable trust in 1981. We formalised our commitment tosustainability in 1992 by becoming a foundersignatory to the UN Environment ProgrammeStatement by Financial Institutions on theEnvironment and Sustainable Development. This is ongoing work. Progress over the lastseven years is summarised here.

1997 Publish our first Environmental Policy.

1998 First publish HSBC’s statement of BusinessPrinciples and Values. Adopt the vision of becoming the world’sleading financial services company.Adopt education and environment as twinfoci for philanthropic support worldwide.

1999 Develop dialogue with ethical investmentfund managers. Lord Butler is appointed to oversee HSBC inthe Community.

2000 Adopt UN Global Compact and GlobalSullivan Principles. A founder member of the Wolfsburg Group.

2001 Establish the HSBC Education Trust in the UK,headed by Dame Mary Richardson.Publish our first CSR report, HSBC in theCommunity: Sharing our Success 2000. Achieve inclusion in FTSE4Good ethical indexand Dow Jones Sustainability Index. Pilot environmental management system in the UK.

2002 Establish international diversity team. Launch Investing in Nature programme inpartnership with WWF, Earthwatch and BGCI. Environmental management systemoperating in 10 countries. First participate in Business in theEnvironment index.

2003 Adopt the Equator Principles covering project finance. Engagement with WWF on sustainabilityaspects of HSBC policies. Board of HSBC Holdings plc establishes CSR Committee.

A great deal of dialogue takes place at locallevel through our business around the world.This chapter describes some of the key waysHSBC communicates with stakeholders andaddresses the issues that are raised mostfrequently.

Stakeholder engagement

Investors

HSBC has around 200,000 registeredshareholders in some 100 countries andterritories worldwide. Since this numberincludes pension funds, insurance companiesand mutual funds, millions of people have anindirect interest in HSBC’s businessperformance and future prospects.

We engage with the investment communitythrough a range of investor relations activitiesand formal stakeholder reports, including:

• The Annual Report and Accounts, AnnualReview, the Interim Report and thisCorporate Social Responsibility Report.

• The Annual General Meeting and theinformal meeting of shareholders held inHong Kong.

• The recently enhanced Investment Centresection on our web site at www.hsbc.com.

• A number of investor events which arewebcast live, including results presentationsand the AGM. Recordings are also availableon our web site for a period to anyone notable to take part live.

• An extensive programme of institutionalinvestor meetings around the world:

• Our Investor Relations teams in London,Hong Kong and North America alsoaddress a wide range of investor queries

directly each year, including those sent in bye-mail. Contact details for each team areavailable in the Investment Centre section ofour web site.

This programme provides many opportunitiesfor HSBC to listen to and address investorissues and concerns. Recent examples ofactions that have resulted from the input ofour stakeholders include: the publishing on our web site of the Group-wide standard onenvironmental risk lending, and the introductionof quarterly dividend payments, benefitingshareholders who rely heavily on the incomethey receive from their shares.

Customers

In most of the countries and territories in whichwe operate, we conduct regular surveys tomonitor customer satisfaction. In our largerbusinesses, this information is typically one ofthe elements used for measuring branchperformance and determining individualrewards.

Syndicated research used by various Groupcompanies will generally include regularresearch on issues related to minorities andvarious customer segments.

Employees

As at 31 December 2003, we employed some223,000 people worldwide.

• Between 40 and 50 per cent of ouremployees are members of a union, whileother forums also exist for collectivediscussion.

• In Europe, an Employee Council with 29elected or nominated employeerepresentatives from 13 countries meetstwice a year with the Group GeneralManager, Human Resources.

• We welcome debate, feedback and discussion

We may not always agree with the views of all ourstakeholders, but we do try to understand their expectationsand concerns and to address them where we can.

Listening to Views


Number of meetings 122 256 319Number of countries 10 13 18

2001 2002 2003

with our employees, both on an individualbasis and in all of these forums.

• We have systems in place to deal withemployee grievances and complaints, andpromote an open culture of two-waycommunication.

• We track employee engagement andsatisfaction. During 2003, we conductedsurveys in North America, Brazil, Argentina,Asia-Pacific and the Middle East.

• We provide opportunities for employeelearning and communication.

For further information, see the ‘Investing inour People’ chapter, pages 44-47.

In 2004, we will undertake an audit toestablish a better understanding of unionmembership, employee representation andconsultation forums across the Group. We willalso standardise our methods of trackingrecruitment and employee satisfactionworldwide through a set of questions that canbe used in each country.

Suppliers

We have developed an Ethical Code of Conductfor Suppliers of Goods and Services and aSupplier Registration Form, both of which areposted on our web site. Suppliers are able tosign up to the code and provide us with detailsof how they are complying with it and whatsteps they are taking to meet environmental andsocially responsible standards. Initially, theregistration process will be used to vetprospective suppliers, but we have also started aprogramme to monitor and assess existingsuppliers against the undertakings they havemade to comply with the environmental andethical requirements set out in our code.

Non-governmental organisations

We are in regular contact with a number ofgroups representing wider society. Among themare the UN’s Global Compact body and otherleading non-governmental organisations(NGOs), including our Investing in Naturepartners (see pages 37-41).

In considering major financing decisions, wetake account of the expectations of legitimateinterests in society and any concerns expressedabout the wider impact of our business.

We are asked by NGOs to report even moredetail, for instance, to disclose information onmajor loans that we have declined for non-financial reasons. We are willing to give suchinformation, provided it does not undermineour competitive position, but we will not —indeed, by law we cannot — compromisecustomer confidentiality.

Governments and regulators

Public regulators, on behalf of society, issuebanking licences only to those organisations inwhich they have total confidence. Around theworld, we are answerable to more than 370regulators, most of whom we meet on a regular basis.

In addition, we participate in numerousgovernment-led and financial services industryworking parties.

Political donations

It is the Group’s long-standing policy not tomake contributions to political parties.Following its acquisition on 28 March 2003,and until 30 September 2003, HouseholdInternational, Inc. continued its previous policyof making donations to US political parties.During that period, donations totallingUS$455,270 were made. Since 1 October 2003,Household has adopted HSBC’s policy of not


March 2003:shareholders aregiven an opportunityto voice theiropinions about theacquisition ofHouseholdInternational, Inc. atan ExtraordinaryGeneral Meeting inLondon.

making contributions to any political party.Save for the donations made by Householdbefore 1 October 2003, no political donationswere made by HSBC during the year.

Key questions

These are some of the questions mostcommonly asked by our stakeholders in 2003.

Q. How do you justify the salaries paid tosenior executives?

A. We recognise that this is a sensitive issue andthat is why we are transparent about ourremuneration policy. Compared with manypeople, senior HSBC executives are wellpaid. However, they are responsible for amultinational organisation, some 223,000staff and over 110 million customers in 79countries and territories. High salaries arenecessary to compete for the best people inthis international market-place. HSBC’seight executive Directors have worked in 17different countries. Compared with seniorexecutives in other international companiesaround the world, HSBC’s top peopleremain relatively moderately paid, a factborne out by survey after survey.

Q. There do not seem to be many women insenior management or on your Board. Why?

A. HSBC believes in diversity based on merit,and we recruit employees solely on meritand suitability. It is true that we haverelatively few women in senior managerialpositions. This reflects the social andemployment practices of the past, becauseHSBC tends to recruit people for long-termcareers. However, we do have more womenon our Board than have most of the world’slargest companies. We are committed toproviding equality of opportunity to allstaff, regardless of gender, race, nationality,ethnic origin, age, disability, religion orstatus. Exactly the same principles apply tosenior management and Boardappointments. Individuals are promoted orinvited to become Directors not becausethey are men or women, but because theyare the best people for the job. (See the ‘Investing in our People’ chapter,pages 44-47.)

Q. What is HSBC doing to combat moneylaundering?

A. HSBC has comprehensive anti-moneylaundering standards and controls that weimplement across our business worldwide.We work closely with the appropriateauthorities in each of our markets where, insome cases, our controls exceed local


We compete for thebest people in an

international market-place.

requirements. Our global policies andprocedures form our money-launderingdeterrence programme. These include carefulidentification procedures for accountopening, close monitoring of transactionsand a worldwide network of control officersfor tracking and reporting.

In addition, HSBC conducts money-laundering awareness programmes for everynew member of staff and comprehensiverefresher training for all relevant employees.We are a founding signatory to theWolfsburg Principles on anti-moneylaundering for international private banksand a member of the UK group of sixbanks that have committed to a voluntaryexercise to improve their anti-moneylaundering procedures (see page 12).

Q. Why are you transferring work from thedeveloped countries to Asia?

A. HSBC is an international companyoperating in a global economy. We mustremain competitive to be successful. Weperform different tasks in various locationsaround the world according to where it ismost efficient for us to do so. This means,for example, that in the UK we do work forour offices in the Middle East, in Turkey, inMalta and elsewhere in Europe. Similarly,

we have staff in Canada, the UK, theUnited States and Hong Kong working onsystems used throughout the world.Equally, the UK, the United States,Canada and many other parts of ourworldwide operations do part of their workin our new Group Service Centres in India,Malaysia and mainland China. This allowsHSBC to remain competitive so we canprovide top quality service for ourcustomers, reasonable returns to ourshareholders, and job security for ouremployees. If we did not operate in thisway, our competitors would eventually takeaway our business.

From another perspective, HSBC also hasobligations to the communities we servearound the world. We believe creating jobsin emerging markets makes a positivecontribution. Our staff working around theworld enjoy attractive terms and conditionsand a working environment that is of thehighest international standard.

Q. Banks do not have a good reputation when itcomes to customer service. What are youdoing about that?

A. There is a tendency to see all banks as thesame in terms of performance and customerservice. Nevertheless, there is good evidence


HSBC’s new GroupService Centre inCyberjaya, Malaysia.The HSBC Group hasbeen operating inMalaysia for 120years.

from the product and service awards that wewin in many parts of the world, and fromcustomer surveys, that HSBC is trying to bedifferent and is succeeding. However, we arenot complacent and continue to focusstrongly on defining HSBC through thequality of service we give to our customers.We remain strongly committed to puttingour customers at the heart of everything wedo and, in so doing, create long-termmutual value.

Q. What are HSBC’s views on animal testing?A. This is a sensitive subject. Our

understanding is that many informedpeople support the use of animals inscientific research, where no alternativeexists, provided that such research isconducted under very strictly observedgovernment regulations, that it is ashumane as it can possibly be, and that itmanifestly serves the advancement ofhuman and animal welfare.

However, we also recognise that this viewis not universally held and that there are stilla number of difficult areas, including the useof primates. We also note that many of ourindividual customers are opposed to animaltesting and that some of our major businesscustomers place strict limitations on the saleof animal-tested products. We know that thelaw in the UK and elsewhere requires drugsto be tested on animals before they can bebrought to market, but we share the hope ofmany in the medical research field that wayscan be found of reducing the use of animalsin the future.

Q. Are you financing the export of armaments?A. We have always taken a cautious approach

to the financing of defence equipment salesby applying strict internal controls andensuring that all necessary governmentlicences and approvals relating to thetransaction were in place. However, wedecided some time ago to withdraw fromthis type of business progressively and in a

manner which recognises our properresponsibilities to our customers. As a result,we have made our customers and potentialcustomers aware that we have no appetite forlending for the manufacture and sale ofmilitary hardware.

Q. Does HSBC have a code of good ethicalconduct?

A. Yes. HSBC has long espoused high ethicalstandards in the conduct of its business.Honesty, integrity and a strong sense ofresponsibility have been our hallmarks indealings with our stakeholders. Our GroupStandards Manual, an internal document,sets out the company’s policies andprocedures in this vital area. So ingrainedare these standards that for much of ourhistory it was considered unnecessary toarticulate them. However, the Group’sinternational expansion and higher profilearound the world has coincided withincreasing public scrutiny of multinationalcompanies.

We have therefore decided to makeexplicit what was previously implicit.Although in 1998 we published ourstatement of Business Principles and Values,we consider it to be in the company’s bestinterests to provide additional evidence ofour adherence to internationally acceptedstandards of conduct. That is why we haveexpressed our support for the GlobalSullivan Principles and the United NationsGlobal Compact. In addition, we aremembers of the Institute of Business Ethicsand of the anti-corruption organisationTransparency International (UK).


Contact us

We want to hear your views about HSBC.Please see the inside back cover for details ofhow to contact us. We also welcomesuggestions of other audiences who might beinterested to receive this report in future.


Our corporate character

HSBC’s competitive advantage is built on ourcorporate character, which defines the valuesand principles that are inherent in all thecompany’s everyday dealings. We have identifiedfive core business principles and 12 values. Webelieve the values underlying our corporate

character are universal and expect them to beapplied throughout HSBC. At the same time,we respect national cultures wherever weoperate — for example, we are a Chinese bankin China and a Brazilian bank in Brazil.

Living our values

We establish these values among our staff in thefollowing ways:

• Setting an example, from the top down andthrough role models and mentors.

• Implementing a ‘capability framework’ thatdetails the personal attitudes and behaviourwe seek to encourage in key areas of ouremployees’ performance, training anddevelopment, and other human resourcepractices.

• Providing financial incentives to encouragegood personal performance.

• Putting systems and procedures in place tohold people accountable for their actions.These include operating manuals on therunning of the business, annual and strategicplans, and computer systems that controlhow work is done.

• An active programme of internationalresourcing through movement anddevelopment of our employees around theworld, thereby transferring best practice andbuilding up networks.

• Encouraging teamwork rather than a ‘star’culture among our employees.

• Recruiting people who are comfortable withHSBC’s values.

Business integrity

HSBC has a series of systems and checks toprotect our reputation and financial integrity. Inaddition to adhering to the letter and the spiritof laws and regulations in force in the 79countries and territories in which we dobusiness, we have voluntarily agreed to meetmany codes and standards set by external

HSBC understands that social responsibility begins with theway we manage our business and ourselves.

Acting Responsibly

HSBC is committed to five core businessprinciples:

1. Long-term, ethical client relationships.

2. High productivity through teamwork.

3. Confident sense of excellence.

4. International character, prudent orientation.

5. Capable of creativity and strong marketing.

HSBC also operates according to certain key business values:

1. Setting the highest personal standards of integrity at all levels.

2. A commitment to truth and fair dealing.

3. Hands-on management at all levels.

4. Openly esteemed commitment to quality and competence.

5. A minimum of bureaucracy.

6. Fast decisions and implementation.

7. Putting the team’s interests ahead of the individual’s.

8. The appropriate delegation of authority with accountability.

9. To be a fair and objective employer.

10. A merit approach to recruitment, selection and promotion.

11. A commitment to complying with the spirit and letter of all laws andregulations wherever we conduct ourbusiness.

12. The promotion of good environmental practice and sustainable development,and commitment to the welfare anddevelopment of each local community.

HSBC’s reputation is founded on adherenceto these principles and values. All actionstaken by a staff member or Group companyshould conform to them.

Principles and values


organisations. We take great care to ensure ouremployees are fully aware of these as they areheld personally accountable.

Ensuring robust internal systems

HSBC’s own internal policies and proceduresunderpin the personal accountability of ouremployees. These are reinforced by stringentsystems, and auditing and reportingrequirements to ensure that they are properlyapplied. Managers at all levels are responsiblefor ensuring that effective internal controls aremaintained within their own areas of activity.Primary internal controls are laid down byestablished and well-documented procedures,and secondary controls by managerial andexecutive supervision. Our Internal Auditdepartment provides tertiary control throughindependent inspection, although this does notabsolve managers from their own responsibilities.

Corporate governance

HSBC Holdings’ Board has 14 non-executiveDirectors, of whom the Board has determined11 are independent, and eight executiveDirectors. In accordance with the Listing Rulesof the Financial Services Authority, HSBC willinclude in its Annual Report and Accounts eachyear a narrative statement of how the main andsupporting principles of the Combined Code onCorporate Governance are applied, and astatement either that the Company hascomplied throughout the accounting periodwith the Code provisions or, if it has not, anexplanation of any non-compliance. In 2003,HSBC Holdings complied with the best practiceprovisions of the Combined Code on CorporateGovernance, and with the provisions ofAppendix 14 to the Rules Governing the Listingof Securities on The Stock Exchange of Hong

Managing CSR

Management of HSBC’s corporate socialresponsibility policies is overseen by theCorporate Social Responsibility Committeechaired by Lord Butler. He is an independentnon-executive Director of HSBC Holdings plcwho, since 1999, has overseen ourphilanthropic activities via HSBC in theCommunity. Lord Butler also chairs the HSBCEducation Trust in the UK, which wasestablished in 2001.

Corporate Social Responsibility Committee

The Corporate Social ResponsibilityCommittee held its first meeting in February2004. The Committee is responsible foroverseeing HSBC’s CSR policies —principally environmental, social and ethicalmatters — and for advising the Board,committees of the Board and executivemanagement on such matters. The othermembers of the Committee are WilliamFung, Sharon Hintze and Carole Taylor, all ofwhom are independent non-executiveDirectors, Baroness Brigstocke, Gerry Davisand Lord May.

We obtain external advice onenvironmental reporting from theSustainability Advisory Service team ofKPMG, and on CSR reporting from TheCorporate Citizenship Company.

Benchmarking our performance

The Dow Jones Sustainability Index selectsfrom the world’s 2,500 largest companies thetop 10 per cent ‘sustainability leaders’ in eachindustry sector. As listed in the world index,HSBC’s sustainability performance isdescribed as ‘very high compared to itsindustry’.

HSBC has been a member of theFTSE4Good ethical index since its inception,and was again successful in gaining inclusionin 2003.

‘Morality is as important as earnings growth.’

From ‘Managing for Growth’ — the HSBC Group strategic plan 2004-2008

Kong. Implementation of the Board’s corporatestrategy is delegated to the Group ManagementBoard under the leadership of the Group ChiefExecutive.

The Board has appointed a number ofcommittees, including the Group ManagementBoard, the Group Audit Committee, theRemuneration Committee, the NominationCommittee and the Corporate SocialResponsibility Committee (see box opposite).The roles of these committees are described inour Annual Report and Accounts.

Group-wide approach

Our internal policies, standards and proceduresapply across our business worldwide. They areexplained in the Group Standards Manual, a160-page internal publication covering the rolesand functions of key departments, includingGroup Head Office. It also provides detailedinstructions for individual HSBC businesses,taking into account local circumstances andrelevant laws and regulations.

Our businesses are also required to adhere toGroup lending guidelines. These detail the typeof business we will accept and how decisionsare made and reviewed.

Some legislation has an impact beyondindividual countries, which effectively createsadditional global standards. Anti-bribery lawsin the UK and United States, for example,which prohibit the offer or receipt of gifts orinducements to or from public officials, apply toall UK and US persons regardless of theirlocation. Similarly, we are complying with theUS Sarbanes-Oxley Act by implementing globaldisclosure (‘whistle-blowing’) procedures thatwill allow all employees to report suspectedmalpractice on a confidential basis.

Local responsiveness

Despite our Group-wide approach in applyinguniform policies and standards, individual unitsare responsible for their own decisions andjudgement. This is consistent with ourdecentralised, local character. Ultimately, theselocal units are accountable for their actions to

senior management and the Board. Questionsover interpretation of Group standards aredealt with by the relevant Group function. Forinstance, questions about credit and riskstandards are referred to the Group Credit andRisk department, which also authorises largetransactions.

Adopting high external standards

HSBC Group members are required to followall relevant local, international and industrystandards in addition to our internal standards.We have also voluntarily agreed to abide by anumber of external codes of conduct, some ofwhich are detailed below.

We are a founder signatory to the UnitedNations Environment Programme Statement byFinancial Institutions on the Environment andSustainable Development.

Sir Mark Moody-Stuart, a non-executiveDirector on the Board of HSBC Holdings plc,is on the UN Secretary General’s AdvisoryCouncil for the Global Compact, of which webecame a corporate supporter in 2000. TheCompact challenges companies to demonstrateprogress in supporting and advancing keyprinciples in three fields: labour standards,human rights and environmental responsibility.The section ‘Diversity: a report on progress’ onpages 46-47 demonstrates HSBC’s support forPrinciple 6 of the Compact.

HSBC has expressed its support for theGlobal Sullivan Principles, which addresseconomic, social and political justice issues,such as human rights and equal opportunitiesin employment.

We follow the OECD Guidelines forMultinational Enterprises, which promotebusiness conduct in the area of sustainability.


Group Compliance policy

Members of the HSBC Group ‘should comply with both the letter and the spirit of all relevant laws, codes, rules, regulations andstandards of good market practice in each jurisdiction around theworld where they conduct business.’ — Group Compliance policy,adopted 12 March 1993.


In September 2003, we decided to further ourlong-standing environmental policy by adoptingthe Equator Principles, which cover projectfinancing. As a result, we will not provide loansdirectly to projects where the borrower will not,or is unable to, comply with either the EquatorPrinciples or our own internal environmental,reputational and social policies, whichevercarries the higher standard (see page 14 formore details).

HSBC has been at the forefront of thebanking industry’s efforts to discouragespeculators profiting from — and exacerbating— currency devaluations during financial crises.In 2001, we co-chaired a committee of 16leading international banks that drew upvoluntary foreign exchange guidelines todiscourage speculation, which are now endorsedby the foreign exchange trading committees inthe world’s principal trading centres. Theseguidelines consider speculative practices by

banks to be unacceptable trading behaviour,prohibit the use of electronic dealing systems togenerate artificial price movements, and requiremarket makers to refuse client transactions thatmight be disruptive.

Through initiatives such as the WolfsburgPrinciples, banks are increasingly expected bygovernments to play a front-line role inidentifying and reporting monies suspected ofbeing proceeds from criminal activity and tohelp combat the funding of terrorism.

We have our own internal procedures tocombat the threats to the financial system posedby credit card fraud and money laundering,which criminals use to disguise the true source oftheir funds. We also work with other banks andgovernment agencies to ensure effective measuresare applied throughout the banking system.

Key to deterring money laundering isknowing the true identity of all customers andinvestigating major or unexpected transactions.We have stringent internal procedures tomonitor transactions and report suspiciousactivities. We are, however, careful to respect the privacy of legitimate customers. The skillsand awareness of our staff are thereforeessential, which is why we place a high emphasison training at all levels. Employees receiveregular updates on developments, changes inlaw and risk alerts in addition to annualtraining on anti-money laundering procedures.We work with outside experts to improve theeffectiveness of this considerable investment intime and resources.

Terrorism presents a new challenge as itsfinancing is not necessarily derived fromcriminal activity. In addition to our ‘know yourcustomer’ policies, effective action depends onliaising with law enforcement and governmentagencies about suspicious individuals andorganisations. As an added precaution, we alsorestrict our business dealings with high-risksectors, such as alternative remittance systemsand money transfer agents.

We are members of TransparencyInternational (UK), the anti-corruption pressure group.

Combating crime

We work within internationally agreed standards, notably:

• The UN Convention against Illicit Traffic inNarcotic Drugs and PsychotropicSubstances (Vienna Convention 1988).

• The Council of Europe Convention onLaundering, Search, Seizure andConfiscation of the Proceeds of Crime(Strasbourg Convention 1990).

• The Basle Committee on BankingRegulations and Supervisory Practices(Statement of Principles on Prevention ofCriminal Use of the Banking System for thePurpose of Money Laundering 1988).

• The Financial Action Task Force and specialrecommendations on terrorist financing.

In addition, HSBC is a founder member of theWolfsburg Group and subscribes to thefollowing guidelines:

• Wolfsburg Anti-Money LaunderingPrinciples for Private Banking.

• Wolfsburg Anti-Money LaunderingPrinciples for Correspondent Banking.

• Wolfsburg Statement on the Suppressionof the Funding of Terrorism.


A group of the size and scope of HSBC makesa significant impact on the world. Most of theseimpacts are positive, such as the economic andsocial benefits that flow from our business.However, as an organisation with thousands ofoffices and tens of thousands of employees, wealso create other impacts, for exampleenvironmental, that we need to managecarefully. We believe that in order to be a forcefor good in the world, we must conduct ourfinancial services business in a highlyresponsible manner ensuring, as far as possible,that the businesses and projects we support arethemselves managed responsibly.

Sharing economic benefits

HSBC’s operations around the world createwealth that helps to sustain the jobs andlivelihoods of millions of people. Shareholders’earnings, employers’ wages, taxes paid togovernments and purchases made fromsuppliers all help communities around the worldto prosper and grow.

We have adapted the widely used ‘value added’methodology to demonstrate this distribution ofwealth. As the table and chart on the right show,we spent more than US$7 billion with manythousands of suppliers. Of the value added tothe business in 2003, employees earned a thirdwhile governments received US$3.9 billionthrough business taxation and social securitycontributions. They also benefited considerablymore by taxing our employees, investors,suppliers and, ultimately, customers.

Responsible finance

Our approach to lending and investment isbased on a combination of our own businessprinciples and values, society’s expectations and,fundamentally, an assessment of risk. We avoidundertaking certain types of business, such asthe financing of weapons manufacture and

sales, dealing with countries subject tointernationally agreed sanctions, andtransactions that might be used to evade tax or launder earnings from crime.

In industry sectors with the potential formajor, adverse social, ethical or environmentalimpact, we will only advance credit underexceptional circumstances, and then only afteran additional and detailed assessment of theindividual borrower. This approach means thatwe are unlikely to be involved in projectfinancing for a number of schemes — for

HSBC is committed to playing its part in making sustainabledevelopment a reality — meeting the needs of the presentwithout compromising those of the future.

Managing our Impacts

Retained forinvestment 34%

Employees 33%

Shareholders 22%

Government 11%

How HSBC’s cashvalue added wasdistributed in 2003

HSBC’s cash value added in 2003

US$billion

The value our operations add in monetary terms to the goods and services we buy in, calculated as the differencebetween net income and payments out to suppliers:

Received by HSBC for supply of products and services 57.4Returns on investments 0.9Servicing of finance (16.5)Payments to suppliers (premises and other) (7.5)

34.2

This cash value added is available for sharing among stakeholders in the business and is also shown in the pie chart above:

Employees (remuneration for their services) 11.3Government (taxes and social security) 3.9Shareholders (cash dividends and minority interests) 7.5Retained for investment 11.5

34.2


example, power plants, mineral extraction anddams — without first conducting detailedenvironmental impact assessments.

In some cases, we have disengaged fromprevious business commitments in response tothe development of our lending policies. Theeffect of our internal standards and externalcommitments is that, in some countries andterritories, we set a higher standard than thatrequired by local regulations. For example, ourlending policy is more stringent than thatapplied by some export credit agencies.

Implementing the Equator Principles

In 2003, HSBC reinforced its long-establishedenvironmental and social risk evaluationprocess and position as one of the leadingcompanies in environmental impactmanagement by adopting the EquatorPrinciples. These voluntary guidelines providea common framework to address theenvironmental and social issues that arise infinancing projects, and ensure that the projectsare assessed according to sound environmentalmanagement practices. Developed by majorinternational banks, the Principles apply to allprojects costing more than US$50 million.Projects fall into one of three categories, A, Bor C, with category A indicating the highestdegree of environmental or social impact.

The Equator Principles help us to categorisethe degree of environmental and social impactof commercial proposals. In adopting them,HSBC has undertaken to ensure that allapplicable project finance proposals fall withinthe requirements of the Principles. We will notprovide loans directly to projects where theborrower will not, or is not able to, complywith either the Equator Principles or our owninternal environmental, reputational and socialpolicies, whichever carries the higher standard.

Our focus for 2004 will be to ensure that theEquator Principles are fully implementedacross the HSBC Group. To this end, we areupdating our Group Standards Manual andGroup Lending Guidelines on environmentalrisk. In conjunction with the International

Finance Corporation*, we are also starting toroll out awareness and implementation trainingprogrammes for our senior executives in projectand export finance and related areas. Webelieve training our staff in how to implementthe Principles is key to ensuring compliance.

We will also demonstrate that we areadhering to the Equator Principles. From 2004onwards, we will report summary numbers forthe total value and volume of project financedeals booked, split by category (A, B and C).These figures will be included in the nextedition of this report, to be published in 2005.

During 2004, we will consider adopting ourown sector-based lending policies for certainindustries that are potentially damaging to theenvironment, for example, to freshwater andforest land.

Managing suppliers and contractors

Environmental performance is already a key partof our assessment process for suppliers in theUK, France, the United States and Hong Kong.In these areas, we expect as a minimum oursuppliers to have an environmental policy, toshow evidence of compliance with environmentalregulations, and to employ an individual withresponsibility for the environment. We alsoenquire about such issues as discrimination, useof child labour, health and safety, and workingconditions. Over time, we shall apply similarrequirements to our suppliers worldwide.

Managing our impacts on the

environment

In order to fulfill our commitments tosustainable development, we have to understandthe effects of our working practices. Since 2001,increasingly we have been gathering data on ourenvironmental impacts from our operationsaround the world. Progress and results for 2003(plus comparison with 2002) are shownopposite and in the data tables on pages 16-17.

* The International Finance Corporation is the private sector armof the World Bank Group. Its mission is to promote privatesector investment in developing countries, which will reducepoverty and improve people’s lives.

Our environmental performance

Energy use

Overall, energy consumption has increasedmarginally.2003 initiatives

• Outsourcing of energy management in Asia-Pacific, North America and the UK.

• Lighting upgrades and thermostatreplacements in the United States and theUK will see an estimated annual saving ofover 320 tonnes of carbon dioxide.

• Use of energy surveys in Brazil and India toidentify potential savings, combined withemployee awareness programmes on energyreduction.

Business travel

Business travel has increased. This is partiallydue to increased data capture in Asia-Pacificbut also reflects more travel in connection with the integration of new members of theGroup, Household and HSBC Mexico.2003 initiatives

• Extended use of video-conferencing andtele-conferencing systems, and tightercontrol of costs has decreased travel by staffin Brazil.

• The introduction of an environmental travelpolicy in Hong Kong aimed at cuttingcarbon dioxide emissions by 1 per cent.

Greenhouse gas emissions

While energy consumption has risen onlymarginally, our greenhouse gas emissions haverisen substantially, despite our efforts to reducethem. This is due to the inclusion of additionalsites in Asia-Pacific, which have higher carbondioxide conversion rates than in other regions.2003 initiatives

• We expect our emissions to reduce further asa result of our switch to using ‘green’electricity in the majority of our UKoperations, with an estimated annualreduction of 50,000 tonnes of carbon dioxide.

• Our Australian operations are seeking toobtain 10 per cent of their energy fromrenewable sources.

Water consumption

We attribute the decrease in our waterconsumption to improvements in our reportingsystems in the UK and more accurate estimatesof consumption in Brazil, the United States andFrance, offset by the increased scope ofreporting in Asia-Pacific.2003 initiatives

• Installing a new water distribution system inthe HSBC operations centre in Malta.

• Replacing water cooling towers with drycooling systems in some of our operationsin France.

• Installing water meters at all company-owned premises in India.

Waste

Significant improvements in the waste reportingsystems in some regions make it impossible tomake realistic comparisons between 2002 and2003 data.2003 initiatives

• We are moving to online and double-sidedprinters at our Brazilian, Chinese, Australianand UK operations.

• In Brazil, confidential waste is being recycled.

• In the UK, an initiative with the charityFuture Forests to recycle mobile phones has resulted in 500 saplings being plantedin the HSBC forest in Balblair, Scotland.


Achievements at a glance 2003

Expanded coverage

China, Panama and new Group ServiceCentres in Asia-Pacific are now included inthe environmental reporting system.

Improved data quality

Such methods as the direct metering of siteshave improved the quality of data we collect inBrazil, the United States and Asia-Pacific.

Reducing impacts

Initiatives include a pilot scheme for eco-branches in the UK, lighting upgrades andthermostat replacements in the United Statesand the UK, and switching to ‘green’electricity in the UK.


a The increase in electricity consumption is largely due to the dual runningof the new Group Head Office in London and the premises being vacated.

b The decrease in water consumption is attributed to improvements in datacollection as a result of utilities management outsourcing.

c Waste reporting is more complete than in other regions.

d Business travel has increased as a result of the development of the newGroup Service Centres.

e In 2003, we sourced 17% of our electricity from renewable sources,enabling our greenhouse gas emissions to decrease while energyconsumption increased.

UK

Resource efficiency 2002 2003 Notes

Energy consumption GWh 392 422 a

Energy consumed per m2 KWh/m2 387 431 a

Water consumption 000 m3 896 784 bWater consumption per person m3/FTE 17 15 b

Waste not recycled tonnes 14,705 14,487 cPercentage of waste recycled % 29 27 c

Business travel million km 150 158 dAmount travelled per person 000 km/FTE 2.8 3.0 d


From energy consumption kilotonnes CO2 136 130 e

From business travel kilotonnes CO2 22 22

Total kilotonnes CO2 158 152 e

Environmental performance reviewof HSBC's operations in 12countries and territories in 2003.

0 200 400 600 800 1000 1200

2003

Energy consumption

Business travel


1,134 GWh

1,115 GWh

Electricity

Gas

Oil2002

0 50 100 150 200 250 300 350 400

2003

2002

370 million km

349 million km

Air

Road

Rail

0 100 200 300 400 500 600

2003

2002

558 kilotonnes CO2

457 kilotonnes CO2

Energy

Travel

a Addition of Panama in 2003 reporting.

b We attribute the decrease in water consumption and increase in wasteproduction to improvements in the reporting system as a result ofoutsourcing the management of waste and water, which has greatlyimproved data accuracy.

United States, Canada and Panama




Water consumption 000 m3 590 522 a,bWater consumption per person m3/FTE 34 30 a

Waste not recycled tonnes 2,425 3,383 a,bPercentage of waste recycled % 63 58 a

Business travel million km 80 82 aAmount travelled per person 000 km/FTE 4.6 4.7 a


From energy consumption kilotonnes CO2 97 93 a

From business travel kilotonnes CO2 12 13 a

Total kilotonnes CO2 109 106 a

a Data exclude operations acquired from Lloyds TSB in November 2003.

b The downward trends in water and energy consumption are as a result ofimprovements in the reporting systems.

c General waste data are not available due to local constraints within Brazil.All confidential paper waste is recycled.

d Increased accuracy in reporting, combined with a drive to reduce travelcosts, has resulted in a decrease in the impacts of travel.

e The 2002 figure for greenhouse gas emissions from energy use has beenrestated from 36,278 tonnes carbon dioxide to 4,229 tonnes. This changehas been made to reflect the lower emissions profile of energy in Brazil(UN Environment Programme sourced emissions factor).

Brazil


Energy consumption GWh 132 98 a,b


Water consumption 000 m3 747 361 a,bWater consumption per person m3/FTE 36 16 a,b

Waste not recycled tonnes – – a,cPercentage of waste recycled % – – a

Business travel million km 49 33 a,dAmount travelled per person 000 km/FTE 2.4 1.5 a


From energy consumption kilotonnes CO2 4 4 a,e


Total kilotonnes CO2 12 10 a,e

FTE full-time equivalents (a measure of the number of employees)

KWh kilowatt hoursGWh gigawatt hours

Data ranking key

The colours in the tables on pages 16-17 indicatethe estimated ranking of the data, with 1 indicating greater reliability and 4 lesser reliability.

1 2 3 4


Basis of reporting

We report our environmental data in accordance with ourinternal Environmental Reporting Guidance, which usescalculation methods set out by the UK Government’sDepartment of Environment, Food and Rural Affairs and theUN Environment Programme. Some markets haveoutsourced facilities management who provideconsumption data upon which we rely for reporting.

We currently report data for our five main markets: theUK, Brazil (excluding assets purchased from Lloyds TSB inBrazil during 2003), North America, France and Asia-Pacific.We do not yet report data for our new businessacquisitions, Household in the United States and HSBCMexico. However, our teams in North America are workingclosely with staff in these two businesses to help themdevelop the processes they need to gather and analyseenvironmental data. We expect to report on theirperformance for 2004.

Improvements in 2003

In 2003, we have focused on improving our environmentalreporting system and putting in place the foundations we need to develop an effective global environmentalmanagement system. We have made further progress,improving the accuracy of our reporting systems in

Asia-Pacific, Canada and Brazil, and including data fromChina, our new Group Service Centres and Panama for thefirst time.

Comparability

Comparison of year-on-year environmental data issometimes difficult because of the continued developmentof our reporting system and improvements in accuracy ofthe data collection. It can also be affected by changes in thescale of our operations and local climatic and economicconditions. Where these effects are significant, we willhighlight them. Nor can there be total consistency in thequality of the data we collect because of variations in theavailability of information within the different markets. Wereport our estimation of the ranking of data providedbetween 1 (greater reliability) and 4 (lesser reliability).

Assurance

HSBC’s Group Audit function is developing internalassurance procedures over our environmental performancereporting. In addition, we have engaged KPMG to provideexternal assurance over our UK environmental performancedata and associated statements and the effectiveness of ouraggregation process for Group data. Their assurance reportis on page 19.

a Data for 2002 include the following operations: India, Malaysia,Singapore, Australia and Hong Kong. In 2003, reporting was extended toinclude mainland China and the four new Group Service Centres inChina, Malaysia and India.

b Energy data for 2002 were restated to reflect an error made in convertinggas from m3 to KWh, and incorrect electricity measurements inSingapore.

Asia-Pacific


Energy consumption GWh 217 241 a,b


Water consumption 000 m3 588 810 aWater consumption per person m3/FTE 17 18 a

Waste not recycled tonnes 2,574 3,766 aPercentage of waste recycled % 54 48

Business travel million km 57 74 aAmount travelled per person 000 km/FTE 1.6 1.7 a





a There have been some improvements in data quality. However, due tothe nature of our operations in France and the large number ofsubsidiaries of CCF, improvements have not been distributed evenly.Some areas are able to provide quality data, but others have shown littleimprovement.

b Some CCF subsidiaries have reported only for 2002 or only for 2003.

France




Water consumption 000 m3 278 226 aWater consumption per person m3/FTE 21 21 a

Waste not recycled tonnes 1,566 802 aPercentage of waste recycled % 34 48

Business travel million km 13 23 a,bAmount travelled per person 000 km/FTE 1 2.1 a,b





Setting targets

We implemented environmental reporting in the UK in 2000 and, in 2001, set performancetargets for our UK operations only. Ourprogress is given in the table below.

Other regions are also starting to set targets astheir reporting systems mature. Asia-Pacific isthe next to do so, making a commitment toreduce greenhouse gas emissions by 5 per centover a five-year period. We intend to developfurther targets when we are satisfied with thequality of our baseline information. In themeantime, we will focus on developing ourenvironmental management systems.

Looking to the future

There are a number of challenges ahead that wewish to meet.

• Implement an international environmentalmanagement system, setting targets forreducing our environmental impacts.

• Expand our reporting on environmentalperformance to incorporate products andservices.

• Expand the scope of our environmentalreporting by 2004 to include Household,HSBC Mexico and the Lloyds TSBacquisition in Brazil.

• Continue to improve our baseline data forcountries that are already reporting.

• Roll out our internal assurance processesover this data for all major markets by 2005.

• Take part in developments in environmentalreporting through our membership of theUN Environment Programme FinanceInitiative, which is working with the GlobalReporting Initiative to developenvironmental performance indicators forthe sector.


Target

To reduce greenhouse gas emissions by 5% overfive years.

To improve water data capture for meteredbuildings from 70% by end 2003.

To improve data on general waste, consolidatecontracts and increase proportion of wasterecycled.

Progress

Improved data capture meant that we detected anincrease of 5% in 2001. With the sourcing of‘green’ electricity, however, we expect to meet our target.

Data capture now over 90% for meteredbuildings.

Data quality reliability has improved from a rankingof 3 to 2 by reducing our waste contract to onewaste contractor from over 500 contractors in 2001.

Managing our performance

Building for sustainability

When designing and building a new branch, wehave the chance to incorporate environmentallysustainable practices. There is a clearopportunity to design for energy conservation— to reduce carbon dioxide emissions and usematerials that have a low impact on theenvironment. We are currently running a pilotscheme in the UK with four ‘eco-branches’,which will be operational early in 2004 andwhich we will assess during the rest of the year.

Engaging our employees

We will only succeed in managing ourperformance if we are able and willing tochange our working practices and becomemore efficient in the use of resources. Staffawareness and involvement is essential andwe are addressing this in different waysaround the Group. For example, in Hong Kongwe have created environmental managementcommittees, with members drawn from acrossthe business, and Hang Seng Bank haslaunched a ‘Green Ambassador’ scheme toencourage employees to take individualresponsibility for environmental performance.In order to raise employees’ awareness of theirenvironmental impacts, some of ourbusinesses in Asia-Pacific and North Americause their intranet sites while, in the UK, HSBCBank uses road shows and poster campaigns.

Progress against targets in the UK


Assurance statementIndependent assurance report to HSBC Holdings plc on its

Environmental Performance Report 2003

Introduction

HSBC Holdings plc (HSBC) engaged us to review its selectedenvironmental performance data and associated statements forthe year ended 31 December 2003, as reported in its CorporateSocial Responsibility Report 2003 (the report) on pages 14 to 18.This is the first year we have provided an independentassurance report of this information. Accordingly, we have notreviewed the environmental performance data for 2002.

This report is made solely to HSBC in accordance with theterms of our engagement. Our work has been undertaken sothat we might state to the company those matters we have beenengaged to state in this report and for no other purpose. To thefullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company for our work,for this report, or for the conclusions we have reached.

Respective responsibilities of directors and reviewers

HSBC’s directors are responsible for the preparation of thereport and the information and assessments contained within it,for determining HSBC’s objectives in respect of environmentalperformance and for establishing and maintaining appropriateperformance management and internal control systems fromwhich the reported information is derived.

Our responsibility is to express our conclusions on theselected 2003 environmental performance data, and theassociated statements for the year ended 31 December 2003.We also report if, in our opinion:

• any disclosures in the report relating to the selected 2003environmental performance data and associated statementsare misrepresented or inconsistent with our findings;

• if we have not received all the information and explanationswe required for our review; or

• if we became aware of additional information, the omission ofwhich may result in the selected environmental performancedata together with the associated statements for the year ended31 December 2003 being materially misstated or misleading.

Basis of our work

There are no generally accepted standards for the reporting orreview of environmental performance data. HSBC applies its owninternal Environmental Reporting Guidance, based on emergingbest practice for reporting environmental performance.

We conducted our examination having regard to emergingbest practice and principles within international assuranceengagements and, in particular, our approach draws from theInternational Standard on Assurance Engagements 3000:Assurance Engagements other than Audits or Reviews ofHistorical Information issued by the International Auditing andAssurance Standards Board.

Our work was carried out by a multi-disciplinary team ofcorporate social responsibility, greenhouse gas and assurancespecialists. Our approach is risk-based, drawing on anunderstanding of risks associated with reporting

environmental performance and systems and processes inplace to mitigate these risks.

Scope of review

The selected 2003 environmental performance data subject toour review were: water consumption, waste production, energyconsumption, business travel and related greenhouse gasemissions from energy consumption and business travel(collectively referred to as the ‘selected 2003 environmentalperformance data’) for the UK on page 16. We also reviewed theeffectiveness of the aggregation process for the Group selected2003 environmental performance data.

Work performed

We planned and performed our work to obtain all theinformation and explanations that we considered necessary toprovide sufficient evidence for us to give limited assurance thatthe UK selected 2003 environmental performance data are fairlystated and the aggregation process for Group selectedenvironmental performance data is effective.Our work performed consisted of:

• understanding the systems used to generate, aggregate andreport the selected 2003 environmental performance data forthe UK;

• reviewing consistency of the reported selected 2003environmental performance data with HSBC’s EnvironmentalReporting Guidelines (dated 18 February 2003) for the UK;

• conducting interviews with management to obtain anunderstanding of the consistency of UK reporting processescompared with the prior year and to obtain explanations forenvironmental performance trends for the UK;

• understanding and confirmation of the process in place toaggregate the selected 2003 environmental performance datafor the Group data;

• testing the accuracy of the aggregation process for the 2003selected Group environmental performance data, includingreviewing explanations for unusual trends in the data alreadyobtained by HSBC;

• reviewing all carbon dioxide emissions factors used for theGroup against current best practice; and

• reviewing the presentation of the selected 2003environmental performance data and associated statementsin the report in light of the findings from our work and ourknowledge of the industry and HSBC’s operations.

Conclusions

Based on the above, nothing has come to our attention thatcauses us to believe that:

• the information reported about the HSBC UK selected 2003environmental performance data is not fairly stated;

• the aggregation process for the HSBC Group selected 2003environmental performance data is not effective; or

• that statements made in the report relating to this process arenot fairly stated.

KPMG Audit plcChartered Accountants9 March 2004

This chapter details a few examples of how werespond to challenges and opportunities inorder to meet our customers’ expectations.

Standards of personal conduct

Our employee codes of conduct emphasise ouroverriding commitment to truth, fair dealingand customer privacy, and prohibit insiderdealing and the soliciting of gifts. All ourcompanies must comply with Group standardsof behaviour. These include avoiding conflictsof interest with customers and the use ofunpublished, price-sensitive information. Theinformation we do collect is restricted to thatwhich is relevant to the conduct of a customer’sbusiness with us. We do not disclose thiswithout consent, unless required to do so by lawor to regulators under proper authority.

Responding to our customers’ diversity

We have built our business with financialexperts who live and work in the countlesscommunities that HSBC serves across theworld. We believe this expertise andunderstanding is invaluable to an international

company such as ours, and of great benefit toour customers, wherever they are.

We aim to reflect the diversity of ourcustomers in the diversity of our workforce. Webelieve this makes us a more customer-drivencompany and, ultimately, a more successfulbusiness. With this in mind, we support anumber of organisations that promoteenterprise among particular communitysegments, such as the European Federation ofBlack Women Business Owners.

We cater for the particular needs of ourdisabled customers in a variety of ways. Brailleand large letter print statements, inductionhearing loops and sign language interpreters areavailable in many branches. Our telephone andinternet banking services are especially usefulfor customers who find it difficult to visit abranch.

Islamic financial products

There is a growing demand from Muslimcustomers for products and services that accordwith their beliefs as set out in shariah (Islamiclaw). HSBC Amanah Finance offers shariah-compliant community banking products andservices for personal customers, and a range ofservices for corporate and institutional clients,including cross-border trade finance, structuredtrade finance and project finance.

The Amanah proposition is based oninclusiveness — serving both Muslim and non-Muslim customers — and HSBC’s internationalnetwork is helping the Islamic finance industryto grow in both reach and customer diversity.As the world’s local bank, we aim to share theknowledge gained in one part of the world forthe benefit of our customers in other marketsand communities. We therefore offer HSBC

HSBC expects all its employees at all levels to display thehighest standards of personal integrity. This is particularlyimportant when serving customers, who have a right toexpect transparency, openness and value for money in their dealings with us.

Responsibility to Customers


Noaman Hasan(centre), Head of

HSBC AmanahFinance UK, Personal

and CommercialBanking, advises

potential customers.

Amanah products and services in a number ofmarkets around the world: Indonesia, Malaysia,Saudi Arabia, the United Arab Emirates, theUK and the United States.

HSBC Amanah Finance was recognised asthe ‘best international provider of Islamicfinancial services’ and ‘best international suluk(Islamic bond) house’ in Euromoney magazine’s2003 Islamic Finance Awards. For more detailsof Islamic financial products and services, visitwww.amanahfinance.hsbc.com.

Responsible lending

In 2003, consumer advocacy groups, stateattorneys general and state regulators in theUnited States continued to scrutinise non-prime lending. They focused on rates, fees,disclosures, and general business practices inthe industry. Household worked collaborativelywith representatives from many of these groupsto address areas of concern. As a result,Household’s consumer lending unit agreed toestablish new consumer protections in severalareas: customer disclosure and communications,product and policy changes, and certain feelimitations. In introducing these changes,Household has taken extra steps to ensure that:

• Mortgage loans are sold only if they providea true financial benefit to our customers.

• Our customers truly understand key loanterms and conditions at all points in theloan process.

• Our billing statements provide clear andcomplete information.

• Our ‘foreclosure avoidance programme’assists our employees in working withcustomers to find solutions that keepcustomers in their homes.

In our view, these practices not only provideappropriate protection for the consumer, butalso lead the consumer finance industry by, insome cases, going beyond the steps proposed byregulators.

Complementing our continued commitmentto responsible lending practices, Householdinvests heavily in financial literacy and

community outreach programmes that are alsoa form of consumer protection. For example,over the last two years, Household hascontributed more than US$2 million to localorganisations that have provided nearly 3,000people with credit education, moneymanagement training and help with homeownership. In addition, since October 2003, ithas awarded almost 300 scholarships tocustomers, with a further 900 being considered,as part of a four-year, US$8 million consumereducation programme under the HFC andBeneficial brand names.

Responsible mortgages

Poor stock-market performance, low interestrates and low inflation mean that mostmortgage endowment policies in the UK arenow thought unlikely to meet the targetmaturity value. Although we have a relativelysmall share in this market, we took steps tocontain the problem when, in August 1999, webecame the first UK bank to stop sellingendowment mortgages. Our repaymentmortgage product in the UK continues to behighly regarded. HSBC won the What Mortgagemagazine ‘Best value national bank’ award overtwo, five and 10 years, winning the two-yearaward for five years running.

Sustainable investment

Our investment banking business complies with Group-wide policies on environmentalprotection, which take into accountenvironmental legislation and requireenvironmental impact assessments whereapplicable.

To help our institutional clients with theirinvestment decision-making, HSBC can nowprovide environmental and social, as well asfinancial, analysis. In 2003, we also created anumber of opportunities for institutionalinvestors to meet and question companies ontheir progress and plans in respect ofsustainable development. HSBC AssetManagement provides a comprehensive serviceto manage institutional pensions, charity and


foundation assets with client-specific sociallyresponsible investment (SRI) or ethical criteria.

Through CCF in France, HSBC offers an SRIfund called HSBC Sélection ValeursResponsables. Rather than screening out wholesectors, the fund selects stocks using ratingsfrom a social and environmental rating agency,further refined by an in-house SRI analyst. Toensure the investment approach continues tomeet society’s changing expectations, it is

overseen by a committee with representativesfrom a wide cross-section of society.

Responding to terrorism

Two terrorist bombs exploded in Istanbul in lateNovember 2003. One bomb destroyed HSBC’sTurkish headquarters, killing three employeesand injuring 43 others (see page 45). The otherdevastated the British Consulate and damagedan HSBC branch.

More than 3,000 faxes were sent on the day ofthe blast to all corporate customers, advisingthem of contingency plans and confirming thatHSBC remained open for business. Allcustomer payments made by HSBC were free ofcharge for a 48-hour period, and we establisheda scheme to provide financial relief tobusinesses affected in the surrounding area.

Helping customers invest in communities

In 2003, we gave our ATM users in Mexico theopportunity to make a donation to severalnational and regionally recognised charitiesafter withdrawing cash. This innovative facilityhelped customers to donate over 24 millionpesos to help children with healthcare,education and nutrition.


We have built ourbusiness with

financial experts wholive and work in the

communities thatHSBC serves across

the world.

Managing the impact of SARS

The economic consequences of SARS putparticular strain on airlines, hotels, touroperators and restaurants, among which wehave many customers. Our efforts to supportthem as much as we could included aHK$100 million ‘HSBC Supports Hong Kong’campaign to provide financial assistance tothose affected by atypical pneumonia. Ourspecial offers and promotions also aidedrecovery in economic activity.

After the World Health Organisationdeclared the SARS virus contained in July2003, we launched the ‘Shop Asia, Dine Asia’programme to stimulate retail business inAsia-Pacific. More than 2,500 outlets fromacross the region supported the programme.

We believe we can make a real differencethrough support for education andenvironmental projects, so focus most of ourcharitable donations worldwide to contribute tothese two areas. However, as the world’s localbank, we recognise the importance ofsupporting a range of other communityprojects. In the case of companies joining theGroup who already had philanthropicprogrammes under way, these ‘other’ areas areoften substantial. The growth in ourcontributions and how they were distributed in2003 can be seen from the charts on the right.

Much of the growth in donations in 2003 wasdue to the acquisition of Household, whichcontributed US$11.5 million since joining HSBC(Household donated US$18.8 million for the full year).

Vital as our financial contributions are — andthey have risen considerably over recent years —the time and experience thousands of ouremployees around the world devote toworthwhile projects is just as important. It isclear, therefore, that financial donations alone arenot a good measure of our overall contribution,and so we are working to develop better ways ofmeasuring the impact of our work.

Engaging our employees

HSBC people show a remarkable desire to beactive members of their local communities. Wetherefore encourage them to play their part —by volunteering for community programmes, forinstance — so that together we can achievemore. The pages that follow contain manyexamples of our involvement, led from the topby our Group Chairman, Sir John Bond, who isPresident of Heads, Teachers and Industry,which arranges secondments in industry forsenior educationalists in the UK. The ChiefExecutive of HSBC Bank plc, MichaelGeoghegan, also chairs Young Enterprise in the

UK, in whose activities around 1,000 HSBCemployees take part.

Employee fundraising

We supplement our employees’ charitablefundraising efforts in a number of countrieswith corporate donations. We also encourageour employees to give to charity through thepayroll. Household’s ‘United for Hope’programme, for instance, makes it possible foremployees to contribute through their paypackets to local agencies that improve thequality of life in communities where they workand live. More than eight out of every 10Household employees participated in 2003,pledging more than US$4.6 million. TheAmerican Cancer Society named Household asthe top US company for contributions througha workplace giving campaign, and the UnitedNegro College Fund ranked Household amongthe top 10 contributors.

As one of the largest banking and financial servicesorganisations in the world, we have the opportunity to touchmany people’s lives.

Sharing our Success


2003 total donations

US$000

Education 17,114

Environment 8,940

Other 21,320

TOTAL 47,374

1999

2000

2001

2002

2003

US$m

0 10 20 30 40 50

HSBC’s donations 1999-2003

Investing in Education, the Environment and the Community


Our work with WWF is helping toensure fresh water for futuregenerations by cleaning up the RioGrande along the US-Mexican border.

We are helping BGCI savethreatened plants by establishing anetwork of botanic garden educatorsin Canada.

Read more on pages 37-41.

Investing in Nature

In 30 US states, our employees areworking with young people throughJunior Achievement.

We are also providing direct supportto schools in Las Vegas and Buffalo,providing grants to many otherschools and colleges, andscholarships to talented individuals.


Investing in Education

HSBC Bank USA and HouseholdInternational are actively committedto community development, boththrough community grants andthrough the involvement of ouremployees.


Investing in Communities

Our work with WWF is helping toensure fresh water for futuregenerations by cleaning up theAmazon River.

We are helping BGCI in Brazil withimportant native plant conservationprojects.


Investing in Nature

The HSBC Education Trust providesfinancial support to schools and othereducational institutions in the UK.

Hundreds of HSBC employees arealso actively involved in supportinglocal schools as volunteers.



HSBC is funding pioneering work byWWF in the UK on sustainable rivermanagement.

HSBC employees from the UK,France and other countries acrossEurope have taken part inenvironmental field projects throughEarthwatch.


Investing in Nature

In Brazil, HSBC is reaching out todisadvantaged children to providebasic healthcare, food and shelter aswell as educational support.

At a school in Argentina, we arehelping children from poorer familiesmeet the costs of examinations.



North America donations 2003

US$000

Education 6,386Environment 685Other 13,509

TOTAL 20,580

South America donations 2003

US$000

Education 843Environment 688Other 21

TOTAL 1,552


at the World’s Local Bank

HSBC is funding a range ofeducational projects in India, Pakistanand Bangladesh.



HSBC funding is helping youngpeople in mainland China and HongKong not only in the classroom butalso in music and sport.



Our work with WWF is helping toensure fresh water for futuregenerations by cleaning up theYangtze River in China.

The HSBC Fellows EnvironmentalClub in Hong Kong is helping toengage employees in environmentalprojects.

We are helping botanic gardens inIndia to conserve native plant species.

HSBC is funding the training ofbotanic garden staff as well as botanicgarden schools clubs in Indonesia.


Investing in Nature

HSBC supports educationprogrammes in Jordan, the PalestinianAutonomous Area and the UnitedArab Emirates.



HSBCkids is an innovative partnershipwith children’s charity Barnardo’s toprovide mentors to underprivilegedchildren in Australia, to help theireducation and social development.



In many countries across Asia-Pacific,HSBC employees provide voluntaryhelp for a variety of communityneeds. This report gives examplesfrom Australia, Brunei, Hong Kong,India, Indonesia and Singapore.

In Singapore, HSBC was namedOutstanding Corporate Volunteer ofthe Year in 2003.


Investing in Communities

Europe donations 2003

US$000

Education 5,891Environment 4,934Other 4,814

TOTAL 15,639

Asia-Pacific donations 2003

US$000

Education 3,771Environment 2,127Other 2,774

TOTAL 8,672

Middle East donations 2003

US$000

Education 223Environment 506Other 202

TOTAL 931

For more examples of HSBC’ssupport for education, theenvironment and the community around the world, see our web site at www.hsbc.com/society.

We fund education projects across the world tohelp give young people hope, a positive attitude,opportunities for success and, above all, a betterfuture. Acquiring knowledge, understandingand skills during the formative years helpsyoung people become confident, ambitious andresponsible adults, and the benefits can be far-reaching. They may, after all, eventually becomeemployees of ours, or they may be the ones totake a community, a city or even a country to abetter, more prosperous future.

Of course, there is only so much that onecompany can do, so to maximise our impact weconcentrate our support on five main areas:nurturing talent; direct funding; involving ouremployees; positive attitudes; and localsolutions for local needs.

Nurturing talent

Many talented young people never get thechance to fulfil their potential, which meansthey, their families and the wider community,

all lose out. HSBC tries to make a difference tothe lives of at least some of them by providingpractical, financial support to give youngpeople across the world access to the educationthey need.

• In Canada, we work with the University ofToronto and the University of BritishColumbia to put university within reach ofthose who thought it not possible. HSBChas committed more than US$1 million to provide scholarships and encouragedisadvantaged high school students toconsider university.

• In Hong Kong, HSBC supports severalscholarship projects to enable young peopleto study both at home and abroad. Since itslaunch in 1995, 321 students have benefitedfrom the Hang Seng Scholars project, whichawards 53 scholarships annually toundergraduate students at 10 localinstitutions.

• In the United States, Household is investingUS$1 million over four years with theUnited Negro College Fund to providescholarships and paid summer internships atHousehold facilities. Included in theprogramme were 370 scholarships to thisand other leading organisations, such as theHispanic Scholarship Fund and theUniversity of Maryland.

• HSBC promotes intellectual and culturaldiversity through the Chevening Scholarsscheme, with annual awards of more thanUS$390,000. The scheme enablesexceptional students from all over the worldto pursue postgraduate courses or universityresearch in the UK.

Education is the key to prosperity. Providing access toeducation, particularly for children from disadvantagedbackgrounds who might not otherwise get the opportunity, is the central aim of HSBC’s education initiatives.



Dame Mary Richardson joined HSBC in 2000after a distinguished career in education. For 14years, she was the principal of a school in adeprived area of London and transformed it intoa shining example of its kind. She also sits on anumber of authoritative education committees,including the Ministerial Advisory Group onBusiness and Education. Dame Mary’s primaryrole with HSBC is as Chief Executive of theHSBC Education Trust in the UK.

• More than 450 young people in the UK willhave the opportunity to study at 26independent schools through the HSBCScholars scheme. The US$3 million projectis being funded equally by HSBC and theschools themselves.

• Trinity College of Music students in Londonplay at the HSBC Group Head Office forstaff and visitors. This helps students gainthe performance experience essential fortheir degree qualification.

• HSBC in Pakistan and The Citizens’Foundation are raising funds amongcorporate partners and customers to buildschools for the underprivileged. Our staffalso support the project by volunteering tospend time with children in need.

• The English Language Programme in theUnited Arab Emirates helps 20 secondaryschool students every year to improve theirEnglish language skills and understanding ofBritish culture. They attend English coursesin the UK and stay with British families.

• The British Council’s China programmeenables 24 qualified teachers from China tovisit the UK and teach Mandarin andChinese culture in UK schools for one year.

• HSBC-supported Teach First encouragestop graduates in the UK to teach for twoyears and achieve qualified teacher status.Fourteen of the Teach First graduates havedegrees in mathematics, in which there is ateacher shortage in London and globally. Allwill be trained in the use of the onlineGCSE mathematics course, funded byHSBC and produced by leading specialistschool Thomas Telford City TechnologyTrust.

• The Escuela de Educación Media No 6 JuanPablo Duarte y Diez in Buenos Aires is oneof only two public schools in Argentina that

enters students for the InternationalBaccalaureate examination. HSBC inArgentina pays examination fees for childrenwhose families do not have the financialresources to pay for the final examination. Agood result brings the chance to apply forfurther scholarships.

Direct funding

We often find the best solution to a problem isto provide direct funding, concentratedresources and HSBC volunteers to achievespecific and measurable outcomes.

• For the past eight years, HSBC in the United States has partnered Buffalo’sRiverside Institute of Technology in ProjectJumpStart. The project provides studentswith technology training, scholarships, anadvanced studies programme in whichcollege courses can been taken during highschool, work experience and workplacetraining, leadership, team-building andconfidence-building camps, mentorprogrammes and community service projects.

• HSBC Educação in Brazil contributesUS$160,000 each year to help more than850 children with health and dental care,educational support classes and courses.Activities such as reading, art and music,and professional training for youngstersaged over 14 help boost their confidence.


HSBC promotes theteaching ofmathematics throughsupport for TeachFirst in the UK.

• Slum-dwelling children in India get newschools, health care, non-formal educationand meals funded by HSBC, which alsoprovides orphans with homes and educationthrough the Future Hope School and SOSChildren’s Villages of India.

• HSBC paid for the building of a library atthe Rashid Paediatric Centre in the UnitedArab Emirates, giving disabled youngstersaccess to study aids.

• HSBC funding through the SpecialistSchools Trust in the UK is helpingsecondary schools gain specialist schoolstatus and extra government funding forsuch areas as languages, sports or businessand enterprise. Sharing their expertise withother schools helps raise standards acrossthe whole community.

• Household employees in the United Stateshave taught Junior Achievementprogrammes, hosted holiday parties andsponsored ‘Read a Book’ programmes at theTom Williams elementary school in northLas Vegas. In addition to 750 hours ofemployees’ time, during which 170volunteers painted classrooms and improvedthe playground, Household donatedUS$20,000 for supplies and much neededimprovements.

• The under-performing Esteban AbadaElementary School in the Philippinesbenefited from HSBC-funded initiatives,which include a weekly ‘chalk-free’ day whenalternative teaching techniques are used. Newfacilities, such as a library and creative kids’centre, and a parent volunteer programmehelped take the school ranking from 69th to42nd out of 96 schools in just two years.

• HSBC in Brazil helps young men previouslyliving on the streets of Curitiba by donatingUS$40,000 a year to Perpétuo Socorro(Perpetual Help), a project started sevenyears ago by Irish priest Father PatrickMcGillicuddy to give young men over theage of 18 a home, an education and a future.HSBC’s direct funding is enabling FatherPatrick to build another home.

• Household has supported colleges anduniversities in the United States for almost50 years through its programmes for schools,offering tuition to minorities in fieldsrelevant to the financial services industry.Grants were awarded to 65 colleges in 2003.


Children enjoying theswing at the Gijubhai

Bal Academy inGujarat, India.

Children in Braziltaking computer

classes with helpfrom HSBCEducação.

HSBC funding andthe Future Hope

School haveprovided new

schools for thesechildren in

Kolkata, India.

• Following the devastating earthquake thathit the state of Gujarat, India, in January2001, HSBC staff from around the worldcontributed to provide assistance to theaffected residents. One project that wasfunded from this effort and a matchingcontribution of US$125,000 from HSBC inIndia was the Gijubhai Bal Academy, run byGanatar, a Gujarat-based organisation thatworks for children’s rights. It will train localvolunteers to provide the children of poorsalt-pan workers with non-formal education.

Involving our employees

Often the most effective way of supportingeducation is by engaging our most powerfulasset — our own employees.

Achievement in the United States

By teaching young people about finances at anearly age, we can equip them to make soundfinancial decisions later in life. Junior

Achievement (JA) is the world’s largest andfastest-growing organisation dedicated toeducating young people to value free enterprise,business and economics. It reaches some sixmillion students in more than 100 countries. Inthe United Sates, both Household and HSBCBank USA support JA.

Household, whose involvement with JAstarted in 1942, has had a national JA volunteerprogramme for the past seven years. Over 900Household employees volunteered in 30 statesin 2003, presenting business, financial andeconomic education to 25,000 children in localelementary, middle and high schools.Household’s is the only corporate-sponsored JAprogramme in the United States that combinesvolunteering with significant financial support— over US$526,000 in 2003. A record-breakingUS$711,032 was also raised for 17 JA officesthrough Household’s unique ‘nationalbowlathon’, which attracted almost 4,000employees, family and friends.


Household employeevolunteers help in allsorts of ways at theTom Williamselementary school inLas Vegas, Nevada.

HSBC Bank USA employees also make adifference. Jill Carbone, Senior DirectorEducation, Junior Achievement, New York,said: ‘Volunteers are essential to the success ofJunior Achievement. For the children to have areal-life role model in front of them, tellingthem that what they are learning will help themonce they leave the security of school, is reallyinspirational. Students also find visiting thevolunteer’s work-place extremely valuable, as itoften opens their eyes to careers or jobs theyhad not previously considered.’

UK enterprises

HSBC staff in the UK also use their experienceto make a difference in their communities.Around 1,000 HSBC volunteers work withYoung Enterprise, a UK educational charitythat encourages young people to set up andmanage their own business while in full-timeeducation. With advice from our volunteers,students learn about business and enterprise,and develop their teamwork, communication,innovation and negotiation skills.

Volunteers are helping children to developtheir numeracy skills in the Number Partnersproject by each working with two children oncea week. More than 78 per cent of childrentaking part have shown significant improvementin their confidence with numbers, with 87 percent measurably improving their numeracy.

We encourage local members of staff tobecome governors of the schools we supportfinancially. Fifty-five UK employees aregovernors of schools supported by HSBC. Weprovide training on the role of a governor and a24-hour support and advice service. Mentoringheadteachers is another way of sharingmanagers’ experience.

Around the world

There are many other examples of HSBCemployees contributing to the lives of youngpeople around the world. One such is the DoorStep School in Colaba in Mumbai, India, whichencourages disillusioned students to return tolearning and literally takes schools and libraries

to people’s homes. Some HSBC volunteersteach basic English skills in the classroom whileothers assist by making teaching aids or puttingthe finishing touches to arts and craftsdesigned, produced and sold by students to helpfinance the project. Volunteers also organise thecollection of toys, clothes, books and otheritems from their colleagues. Branch visits arearranged during which students can see thetechnology and bank equipment and talk toemployees about their jobs.

HSBCkids is a tutoring and mentoringprogramme run in conjunction with the charityBarnardo’s in Australia. It aims to helpdisadvantaged children to develop literacy andnumeracy skills, so that they might continue inmainstream education. HSBC employees alsohost children from the programme oneducational excursions, such as museum visits.

Positive attitudes

A positive attitude, fostered through thedevelopment of skills such as teamwork, isessential if a child is to make a worthwhilecontribution to the community in which he orshe lives and will ultimately work. It is a qualitythat comes from a child’s attitude to others, theapproach to problems, growth of character, self-confidence, self-esteem and achievement outsidethe classroom.

HSBC puts considerable effort into projectsthat help children to develop these skills,boosting their self-confidence and making themaware of others who may share their outlook onlife or possess the same physical abilities.

Emma Richards, the record-breaking round-the-world yachtswoman, is helping us championand develop our work in this area. Emma, whohas become an ambassador to the HSBCEducation Trust, embodies the positive attitudeswe seek to develop. She made sailing history bybecoming the youngest competitor and firstBritish woman ever to complete Around Alone,the world’s longest solo yacht race.

HSBC supports a whole raft of projects thatnurture a positive attitude, some of which aredetailed in this chapter.


Left, top: Tom Detelich,

President of Consumer

Lending and board

member of Junior

Achievement of

Chicago, joins students

at Household’s annual

Junior Achievement

‘bowlathon’.

Loretta Abrams,National Director,Consumer Affairs at HouseholdInternational, teachesa Junior Achievementeconomic educationprogramme tosecond graders.


Left, bottom: HSBCemployees in the UKhelp children developtheir numeracy skillsthrough NumberPartners.

Far left: EmmaRichards, solo round-the-world sailor andHSBC EducationTrust ambassador,embodies thepositive attitudes thatHSBC seeks toencourage.

• Attitudinal skills are a key element of aproject launched at the April 2003 officialopening of HSBC’s new Group Head Officein Canary Wharf, London, in the UK.Funding of US$800,000 over five years isenabling 150 students a year from five localschools to attend a seven-day OutwardBound course at one of three residentialcentres in Wales, Scotland and the LakeDistrict. HSBC staff are also involved asmentors throughout the year and help onthe expeditions. We increasingly aim todemonstrate the real benefits of ourcommunity projects. We have thereforecommissioned Loughborough University tocarry out research over the life of thisproject on the impacts it has on the youngpeople involved, on their peers and on theHSBC employee mentors. We will makethese findings widely available.

• The Tall Ships Youth Trust in the UK takesyoung people to their limits. Each year,youngsters from 24 of the HSBC ‘family ofschools’ become the crew of the Stavros SNiarchos on a 10-day voyage. They learnhow to sail the ship, scrub the decks andclimb the rigging. They also learn self-discipline, teamwork, a sense ofresponsibility and an appreciation of thosefrom different cultures and backgrounds.

• The Kielder Challenge, funded by HSBC inthe UK, gives children with and withoutdisabilities the chance to compete on equalterms in a series of problem-solving tasksthat are imaginative and challenging. This


Volunteers in action

Angela Clarke, a management trainee at theHSBC branch in Sheffield’s Church Street inthe UK, is a community volunteer. Therewards, she says, come from a sense ofachievement and the enjoyment she gets.HSBC branches in the Sheffield area worktogether to assist charities, localorganisations and the wider community. Oneof their projects involves the Notre DameHigh School, where a number of initiativeshave been launched, including funding for aconference facility that will benefit the entirearea, local manager David Corker becominga school governor, and HSBC volunteersworking on an environmental project.

The school had an overgrown woodlandarea with a pond. HSBC volunteers workedfor three days to clear the area for theschoolchildren to use. They returned a monthlater to make it wheelchair-accessible. Angelasaid of the task: ‘Although it was hard workand the weather wasn’t kind, it was afantastic experience. The feeling you getfrom really making a difference to a localproject is great, and the opportunity to get toknow colleagues better was wonderful.’

The work has led to a long-term project,which includes plans to build an ecologicallyfriendly outdoor classroom that can be usedby schools all over Sheffield forenvironmental and biological studies.

Able-bodied anddisabled children

competing on equalterms in the Kielder

Challenge.

‘I have really enjoyed thiswonderful experience...allthe teams have bondedtogether like a family.’Chrissy Growney, 16, Chestnut Lodge School,

London — Kielder Challenge participant

helps promote teamwork, leadership skills,self-esteem and a change in attitude.

• Environment Watch for a FutureGeneration, a camp funded by HSBC inKorea, teaches children how habitatsbecome polluted, what the impact of suchpollution is, and the importance ofminimising environmental impact. Theyalso gain extensive ecological knowledgeabout the islands in which they live andtheir importance on both a local and global scale.

• A pool of talent is being nurtured in HongKong through the Hang Seng Bank TableTennis Academy. Children develop a senseof team spirit and fair competition, and

boost their own self-confidence throughfocused training programmes. Table tennisenthusiasts of all ages and skill levelsparticipate, helping to improve the overallstandard of the sport in Hong Kong.

• Teachers are the ones being taught in Jordanand the Palestinian Autonomous Area.HSBC provides US$24,000 of funding for aseries of seminars to help them withteaching aids, to provide advice on how toteach young children, and to give themmotivation to carry on in a very difficultsocio-political climate.

• The Hang Seng Bank ‘Blossom with MusicProgramme’, in partnership with the HongKong Philharmonic Orchestra, helps youngpeople step into the world of music bystaging concerts in schools, universities and


‘Skills and attributes such as leadershipand teamwork are critical if young people are to be equipped for the

challenges they face at school, and asthey enter the world of work.’

Outward Bound founder Kurt Hahn

Skills and self-confidence are boosted through the HangSeng Bank Table Tennis Academy.

A young musician inthe Junior HongKong ChineseOrchestra, supportedby HSBC.

even shopping centres in Hong Kong. Morethan 234,000 young people have enjoyedclassical music through the scheme since1998. HSBC is also helping young people inHong Kong to learn Chinese music. TheHongkong Bank Foundation donatedHK$277,000 to meet the one-time start-up

costs of the Junior Hong Kong ChineseOrchestra, which has 100 members agedseven to 16.

• HSBC is sponsoring educational materialsand activities associated with the CanadaNational Arts Centre Orchestra’s tour ofthe United States and Mexico, helpingteachers to introduce children to classicalmusic and to encourage them to becomemore involved in the music world.

• ‘Supersunday’, a programme for childrenand their families at the Vancouver ArtGallery, Canada, fosters creativity andimagination among children with a widerange of activities to cater for all levels oflearning and art knowledge.

• The HSBC Children’s Choir in Brazil,formed from the Christmas choir whichperforms every year at the bank’sheadquarters in Curitiba, provides a focusfor music in the children’s lives. The 2003Christmas concert was broadcast by a majorTV network across Brazil.

• The English-Speaking Union’s internationalpublic speaking competition enables youngpeople from nearly 50 countries to travel tothe UK for the final supported by HSBC.Competitors give five-minute speeches on acommon theme and are then questioned bythe audience.

• We promote financial acumen in the UK inseveral ways. The HSBC-sponsoredProShare Student Investor Programmehelps secondary school students learn more about savings, shares andinvestments, with more than 16,500 takingpart in 2003. Over 100,000 young peoplehave benefitted from our support for thePersonal Finance Education Group, whichhelps teachers become skilled in teachingpersonal finance. In about 900 UK schools, young people can manage theirown money through an HSBCSchoolbranch, in which the pupils manageand staff the branch themselves. Inaddition, a second CD-ROM entitled ‘The UK Economy Explained’, has beenproduced by HSBC’s Business EconomicsDepartment in conjunction with teachers,and is available free to support theteaching of ‘A’ level economics andbusiness studies.

• Some 100 children in Malaysia who arefighting cancer have the opportunity toenjoy their childhood at a special camp


Above: Enthusiasticmembers of theHSBC Children’s

Choir in Brazil, whichperforms every yearat our headquarters

in Curitiba.

Above right: HSBCfunds support

computer classes atthe Associação Maria

Helen Drexel socialwelfare home in

Brazil.

funded by HSBC in partnership with theCancerlink Foundation.

Local solutions for local needs

In addition to supporting projects that addressissues common the world over, HSBC tries totackle many specific local needs.

• A technology programme at a computercentre in Selayang Prima, near KualaLumpur, provides computer lessons forchildren from poor families in Malaysia.

• HSBC’s US$12,000 annual contribution tothe Associação Maria Helen Drexel inBrazil, a group of eight social welfare homesfor disadvantaged children, providesteachers for school reinforcement lessons, acomputer centre, art classes, a library, a toy-lending facility and video library, and akitchen for cookery classes. Music, singing,art, dance and handicraft classes are alsoplanned.

• e-skills4industry, which prepares youngpeople in the UK for jobs in IT, has enabled15- to 17-year-olds from Tower Hamlets, adeprived London area with highunemployment, to get jobs with major blue-chip companies.

• HSBC’s funding of books, classrooms,equipment, examination fees, specialistteaching aids, clothing, shoes and other

resources is giving underprivileged anddisabled children in Malaysia, Bangladeshand India the chance to go to school. Onesuch project, in Bangalore, India, is detailedin the box overleaf.

• In the United States, our gift of US$35,000

has enabled an outdoor reading room to beopened, giving people in New York Cityaccess to periodicals at the Bryant ParkLibrary. Our support for the Institute forStudent Achievement in New York istackling the problem of young people at riskof not completing their education.

• In mainland China, some 3,500 long-termunemployed are being retrained.Redundancies are becoming more commonas Chinese businesses become more efficient.Training centres in Shanghai, Qingdao,Tianjin and Guangzhou are helping peopleto acquire new skills, with about half ofthose taking part finding new jobs indifferent industries.

• The Great Canadian Geography Challenge,sponsored by HSBC for the past four years,fosters interest in Canada’s wide variety ofnatural habitats. The challenge promoteslearning of geography in elementary andsecondary schools through a nationwidecompetition, and offers scholarships for thetop three finalists. More than 150,000


Above: Hopefulcontestants at theGreat CanadianGeographyChallenge,sponsored by HSBCBank Canada.

Above left: Theoutdoor readingroom at Bryant Parkin New York City.

students from 967 schools took part in thelast competition.

• Trinity College of Music’s Isle of DogsMusic Project, in London, UK, harnessesthe talent and cultural heritage of localresidents through music and language tocombat segregation, increase thecommunity’s sense of well-being and raiseeducation and employment aspirations.

• The Hongkong Bank Foundation fundedthe 2003 Exhibition for DisadvantagedChildren in Beijing, China. The exhibition

featured 130 paintings and handicrafts ofstudents from 15 special schools.

• For the past two years, HSBC in the UnitedStates has supported the multiculturalHSBC Children’s Gardening Program atQueens Botanical Garden, New York City,contributing US$50,000 per year throughthe HSBC in the Community (USA) Inc.foundation. The programme makeshorticulture and science educationaccessible to around 100 school-age childrenfrom diverse cultures and backgrounds. In2003, the Council of the City of New Yorkpresented a proclamation to HSBC inrecognition of this work.

Although these projects are small and on alocal scale, they have a big impact on thecommunities in which they operate.


Special schoolstudents performingat the launch of the2003 Exhibition for

DisadvantagedChildren in Beijing.

Below: Elementaryschool children

investigating plants at Queens

Botanical Garden,New York City.

Schooling in Bangalore

HSBC’s presence in Bangalore has enabled usto help children living in the Bhuvaneshwarislum. Krupa Martin, founder of the SukrupaCommunity Development Trust, which wasstruggling to provide a school, said: ‘We had atiny, stinking room right in the middle of theslum in which we were trying to give morethan 100 children an education. We werefighting a losing battle. HSBC’s funding hasenabled us to transform these children’s lives.’

The organisation now has a dedicated centrein which 150 children are fed, clothed andeducated. Krupa said: ‘The difference in thesechildren is quite astounding. They want tolearn, they look healthy, they have pride inthemselves, they want to work towards abetter future — all because we now have themoney we needed to achieve things. No childwould want to go to school dressed in rags, sothey didn’t and fell into stealing or were usedas child labour. By providing them with aschool uniform, they are now no different fromany other child at the school, and they want tolearn. We educate them and feed them a goodnourishing dinner. We basically take the strainoff parents who can barely look afterthemselves, let alone provide for their children.HSBC’s money is doing so much good here.’

In 2002, we announced ‘Investing in Nature’,our US$50 million, five-year programme tosupport three leading environmental charities— Botanic Gardens Conservation International(BGCI), Earthwatch and WWF. Details of ourvarious projects and the progress we have madeso far feature in this chapter. We believe,however, that the groundwork has been laid foreven greater achievements in the future.Common to all these programmes is acommitment to finding long-term solutions toenvironmental problems. We can achieve thisaim through education, co-operation with arange of NGOs, governmental and civil societygroups, and the participation of HSBCemployees around the world.

Saving endangered plant species

The plant challenge

Scientists believe that two-thirds of the world’splants could be extinct by the end of thiscentury. Already 100,000 of the world’s 440,000plant species are under threat. We simplycannot afford to let them disappear. Four inevery five of the world’s people rely on plantsfor primary health care, and plants help regulateour climate and bind our soils. They providefood, fibres, timber, fuel and habitats for thewildlife, birds and insects that keep our fragileecosystem in balance.

Our Investing in Nature programme will,through BGCI, help save 20,000 rare plantspecies from extinction. Work includes helpingBGCI to implement a global plant conservationstrategy, to educate key audiences about thevalue of plants to local livelihoods and as asource of food and medicine, and to providegreen havens in busy cities for more than 200million people who visit them each year.

Progress in 2003

BGCI provided vital support to develop andimplement a Global Plant Conservation

Strategy, which was agreed by 187 governmentsin 2002. Since then, it has continued to work onimplementing the International Agenda forBotanic Gardens in Conservation, registeringmore than 200 botanic gardens from 69countries, now conserving more than 10,000threatened species. New targets for achievingthe International Agenda will be set in 2004 atBGCI’s World Congress of Botanic Gardens inSpain. BGCI has contributed to betterunderstanding of biodiversity issues bydeveloping both its own web site — visitors tothe site increased six-fold in 2003 — and onlinecommunications and education materials forthe botanic gardens network as a whole. Acrossthe world, BGCI has awarded scholarships foryoung scientists in Hong Kong, mainlandChina and Indonesia, among others; set upnetworks between national botanical gardensand policy makers in India, Brazil, South-EastAsia, the United States and Canada; andestablished community-level conservation and

We regard support for the environment as an integral part ofoperating our business in a sustainable and equitable way.

Investing in Nature


BGCI is supportingeducationprogrammes inCanadian botanicalgardens through theInvesting in Naturepartnership. Here, ayoung student learnsabout wetlands at theRoyal BotanicalGardens, Burlington.

education projects in South America, Africa,Russia and Asia. Capacity building is key, andmore than 300 botanic garden staff havereceived training in their own countries in 2003.

Improving the vitality of three

great rivers

The freshwater challenge

In the world today, 1.2 billion people do nothave access to safe drinking water and 2.4

billion are denied access to basic sanitation.This threatens not only their health, but alsothe societies in which they live. Too much waterin the wrong place or at the wrong time, on theother hand, causes floods that ruin homes, landand livelihoods. Flooding in China killed nearly5,000 people between 1998 and 2002.

Crops, animals and fish, upon which wedepend for food, also suffer. Freshwater speciesand habitats are especially at risk from theagricultural pesticides and fertilisers and erodedsoil that drain into rivers and wetlands.

Our Investing in Nature programme will,through WWF, benefit millions of people byhelping to restore three of the world’s majorrivers. Work includes restoring river basinhabitat, implementing better policies anddecisions on water management, and modellinggood practices in water and land managementon the Yangtze in China. A similar project onthe Amazon in Brazil is also developing asustainable fishery model. Another priority iswater conservation in the Rio Grande riverbasin along the US-Mexican border, a regionwith particular social and environmentalchallenges. In the UK, the focus is on examplesof wetland restoration and best practice inwater and river management.

Progress in 2003

In mainland China, WWF has continued itssuccess in creating a number of vital links withnational and provincial governments. As a resultof these links, a national demonstration site isbeing established near Wuhan in Hubei province.This will show the benefit to people and wildlifeof relinking lakes to the Yangtze River.

Good progress has been made in Brazil withthe continued support of the Braziliangovernment and local communities, many ofwhom are now benefiting from the developmentof sustainable fishing and other livelihoods. Aregional campaign was launched in Brasiliaaimed at improving water quality and reducingpollution. Four more national and regionalcampaigns are planned over the life of Investingin Nature.


Below: HSBC’sInvesting in Nature

programme hassupported a long-

term educationprogramme on

Brazil’s Lake Ituqui.The programme is

demonstratingsustainable methods

for managing fishresources.

Helping flood victims

Above: The Hongkong Bank Foundationdonated HK$1 million to victims of theHuai River and Yangtze River flood in July2003. More than 125 million people wereaffected by the worst flooding to hit theregion for 12 years.

Our work with WWF aims to reduce theincidence of such flooding by tackling theproblems at their source.

In Mexico and the United States, researchand liaison with environmental organisationsand policy-makers has laid the groundwork forrapid progress in more effective river basinmanagement in 2004. In addition, WWF iscontinuing to lobby the US government insupport of the restoration plans for the FloridaEverglades.

WWF was successful in influencing theimplementation of new European Unionlegislation in the UK, which sets the standardsfor the use, conservation and protection of waterresources in the future. To demonstrate howwetlands can benefit people and wildlife, awetland restoration project has begun at PottericCarr Nature Reserve in north-east England inpartnership with Yorkshire Wildlife Trust.

Fishermen on the lake at Sena Madureira using small ‘throw’ nets, one of anumber of sustainable fishing techniques being promoted by WWF in Brazil.

Right: HSBC volunteers in Singaporemarked World Environment Day with amemorable ‘green outing’ for childrenfrom the Singapore Children’s Society.Some 52 children, chaperoned byHSBC volunteers, learned aboutwetland ecology at Singapore’s onlywetland reserve at Sungei Buloh.

Meanwhile, in Brunei, support fromHSBC enabled 400 primary schoolchildren to mark the day by taking partin a drawing competition to raise theirawareness of the environment.

Above: In celebration of Earth Day,around 100 HSBC employeevolunteers from Indonesia took part ina clean-up at the Bogor BotanicGarden. HSBC also donated US$2,000to initiate a project to preserve thegiant water lily, Victoria amazonica,and the lychee tree.

Below: HSBCvolunteer LorraineLim introduceschildren to thewildlife at SungeiBuloh wetlandreserve in Singapore.


Engaging our people in the

environment

The role of employees

As we describe elsewhere in this report, HSBCbelieves the management of its own direct andindirect environmental impacts is increasinglyimportant. Awareness and appreciation ofenvironmental issues are vital to the sustainabledevelopment of both our business and the

communities in which we operate. The 223,000people employed by us around the world allhave a part to play.

Our Investing in Nature programme will,through Earthwatch, send 2,000 HSBC staff towork on vital conservation research projectsaround the world. It will also provide trainingfor 200 emerging scientists from developingcountries to help protect some of the world’sbiodiversity hot spots. The work aims to achievea century of conservation research in just fiveyears, provides grants to HSBC staff to set uplocal environmental projects on return from thefield, and builds scientific expertise indeveloping countries.

Progress in 2003

Under the Employee Environmental FellowshipProgramme, HSBC volunteers assist scientistswith their conservation research projects aroundthe world. On their return, these volunteers areexpected to brief their colleagues about their


As part of theEmployee

EnvironmentalFellowship

Programme inassociation withEarthwatch, UK

employee Peter Bullassisted on aconservation

research project inGhana, west Africa.

HSBC funding is helping twovillages to introduce rainwaterharvesting methods in an arid

part of Maharashtra, India.The project is carried out bySophia College Ex-Students

Association. Once the villageshave water, the project will

address wider social issues,focusing on education,

empowerment of women andthe generation of local

employment opportunities tohelp check the migration oflabour to the nearby city ofMumbai. HSBC volunteers

from Mumbai also take part inthe project.

Women fetch waterfrom a makeshift

dam erected as partof the water

harvesting project inone of the villages.

field project and to carry out a localenvironmental project with a grant from HSBCand support from Earthwatch. This helps themrelate their experience in the field to their localenvironment and illustrates the key role theythemselves can play in their own communitiesand at work.

By the end of 2003, more than 500 HSBCemployees from across the world hadparticipated in projects and had contributed theequivalent of one scientist working for 25 years.All participants highlighted the immensepersonal development they gained as a result.Fellows in more than 20 countries have gone onto establish or contribute to environmentalnetworks among colleagues and in their localcommunities.

During 2003, Investing in Nature withEarthwatch has also enabled 26 conservationprofessionals from 10 developing countries inAfrica, Asia and South America to experienceprofessional scientific training.


Since its launch in 1998, theAnnual Learning Programmeof HSBC in Taiwan hasenriched the education ofsome 3,500 Taiwanesechildren by providingopportunities in the arts,environment and sciences.Among the courses offered in2003 was an environmentclass, organised by theNational Guandu Nature Park,to raise children’s awarenessof environmental protection.The nine sessions includedwetland exploration andobservation of wild birds.

HSBC staff volunteers(‘wetland warriors’)assist with themaintenance of thepaddy field inGuandu Nature Park,Taiwan.

HSBC Fellow Keshini Jayawardena of Sri Lanka (right) on a project to monitor cetaceans off the coast of Spain.


Investing in the Community

Highlights of 2003

• The Community Action Programme ofHSBC in Argentina gives employees thechance to win funding from the Group forcharitable projects in which they arepersonally involved. Nominations for 86proposals were received in 2003, and 69 havebeen given the go-ahead. One of these,proposed by employee Valeria D’Amato,provides assistance to the Asociación dePescadores de Goya, Corrientes, to findalternative sources of food and employmentto Goya’s fishermen.

• Household in the United States hasEmployee Involvement Committees thatsupport local, non-profit organisations withfundraising events and employee volunteers.The committees co-ordinated more than 150community events in 2003. Employees raisedmoney, volunteered to mentor young peopleand spent time with senior citizens.

• Household also invested more than US$3.3million in financial education for a variety ofneedy groups, including young people, theelderly, women, single parents and heads oflow-income households. The aim is topromote economic development by

partnering with organisations — 44 in 2003— that help individuals and families learnhow to make financial decisions.

• More than 100 HFC and Beneficialemployees in 11 US cities took part inCommunity Build Day 2003, partneringwith Habitat for Humanity to build safe,decent and affordable housing. Householdalso made grants of more than US$74,000for local buildings.

• The HSBC Basketball Classic in Vancouver isthe largest high school basketball tournamentin Canada. The event includes a senior boys’and girls’ tournament as well as wheelchairand First Nation competitions. In addition,our C$20,000 donation provided scholarshipsfor 20 graduating high school students whodemonstrated outstanding leadership andcitizenship in their communities.

• CCF partnered the Cité de la Réussite NewWorlds conference in Lyon, France. Eightyprominent speakers from the world ofpolitics, science, the arts and economicstook part in some 30 debates. CCF’spartnership with Cité de la Réussite makesa clear commitment to future generationsand is a valuable opportunity to meet youngpeople and find out their views andconcerns about major trends in society.

• A total of 25 employees from HSBC inAustralia donated 175 hours of their time topacking gift bags to be sold in aid of theSalvation Army. They packed a record 3,000bags during the day. ‘It was a great feelingto have packed so many bags in such a shorttime, knowing that they will help such aworthy cause,’ one employee said. ‘It was afun day and a great team-building exerciseas everyone contributed and helped each

Encouraging our employees to engage with the communitiesin which we do business is a vital part of CSR.

More than 100 HFCand Beneficial

employees in 11 UScities took part inCommunity Build

Day 2003.


other out.’ Fifteen employees also spent aday decorating the Salvation Army’s OranaLodge, a home for women and childrenfleeing domestic violence.

• HSBC in Singapore has been awarded theOutstanding Corporate Volunteer of theYear in the National Volunteerism Awards2003, organised by Singapore’s NationalVolunteer and Philanthropy Centre. Theaward honours excellence in corporatecitizenship, reflecting the way organisationsfacilitate employee volunteering on asustainable basis.

• HSBC in Pakistan has raised awareness ofthe need to conserve turtles, in support of aWWF turtle conservation project atSandspit, Karachi. In Brunei, 450 membersof HSBC staff and their families celebratedTurtle Awareness Day 2003 by cleaning up athree-kilometre stretch of beach andreleasing 50 turtles into the sea.

• The HSBC in the Community Middle EastFoundation is supporting a project to tackletwo problems affecting coral reefs on theeast coast of the United Arab Emirates:marine pollution and the destruction ofcoral by the crown of thorns starfish. Themonitoring and research programme isendorsed by the United NationsEnvironment Programme and conducted bythe Environment and Research Departmentof the Emirates Diving Association.


In addition to our help for customers and colleagues in Hong Kongaffected by SARS (see pages 22 and 45), HSBC provided supportfor the wider community in the form of a HK$250,000 donation tothe Hong Kong Red Cross and a HK$1 million donation to TheCommunity Chest of Hong Kong’s Operation UNITE, which offerscrisis relief to SARS victims and to front-line medical and socialwelfare workers. HSBC volunteers (above) manned the donationhot lines for UNITE. We also participated in Project Shield to raisefunds to buy protective gear for medical staff in Hong Kong. Inmainland China, through the Hong Kong Red Cross, we made adonation of HK$2 million to the China Red Cross.

Left: Volunteers fromHSBC in Australiaenjoy a day packinggift bags for theSalvation Army.

The Asociación dePescadores de Goyain Argentina helpsthe families offishermen.

Far left: HSBCvolunteersredecorate theSalvation Army’sOrana Lodge inAustralia.


In order to deliver a truly world-class brand, wemust live HSBC’s values throughout the Groupand in all aspects of our work. Our people dothis by the way they respond to and treatcustomers, shareholders, colleagues and otherstakeholders. We know that committed andengaged employees deliver better customerservice and contribute to a higher return forshareholders.

Our employee policies are geared towardsattracting, developing and motivating talentedpeople. We demonstrate corporate socialresponsibility towards our people in a numberof ways. Details of how we engage withemployees are given in the ‘Listening to views’chapter on pages 4-5.

Sharing success

In rewarding people, we aim to provide fair payfor the contributions they make to the business.A significant part of variable pay is based onperformance. Competence, performance andadherence to values and ethical standards arethe criteria for promotion. We share the benefitsof our success through performance-relatedbonuses and the extension of share ownership:over 40 per cent of employees currently hold HSBC shares or options; 5 per cent

of all issued shares are owned by employees.The issue of executive pay is discussed under

‘Listening to views’ on page 6.

Pensions

Pension arrangements, of course, must beappropriate and secure, but we also recognisethat great care must be taken to balance theburdens that successive generations will have tobear for those who went before them. As earlyas 1996, therefore, we took what we believe is aresponsible decision to close our UK definedbenefit pension scheme to new members. All newemployees in the UK have since been offeredmembership of a defined contribution scheme.

There has been a growing understanding overthe last two years of the financial risks inherentin the provision of company pensions. A deficitin our main UK pension scheme was identifiedby the three-yearly actuarial valuation of thescheme. We put an additional £584 million intothe scheme in 2003 to meet our responsibilitiesand will continue to manage arrangements in asound and prudent manner.

Global resourcing

We believe it is in the overall interests of allgroups of stakeholders to reduce our operating

Local, on-the-ground knowledge from people whounderstand local communities has been fundamental to thesuccess of our business wherever we operate in the world.

Investing in our People


costs by transferring work from high-costcountries to lower-cost countries where there isa large pool of talented people. At the end of2003, we employed around 8,000 people in ourGroup Service Centres, an increase of around3,600 on 2002. We are in the early stages of thisinitiative which we expect will expandsignificantly in the coming years. Naturalattrition and redeployment in our more maturemarkets mean that we have managed largely toavoid compulsory redundancies. We willcontinue to adopt this approach where possible.

The issue of global resourcing is discussedunder ‘Listening to views’ on page 7.

Health and safety

The safety of our employees, customers andvisitors is one of our most importantresponsibilities. Our health and safety policiesare designed to promote a healthy and safeworking environment; to ensure employeesaccept health and safety as a major part of theirindividual responsibilities; to identify health,safety and fire hazards in advance and controlthe risks; and to ensure all legal requirementsare satisfied. Line managers throughout theGroup are responsible for implementing ourhealth and safety policies and procedures.

With some 9,500 offices in 79 countries andterritories, we need to manage a wide range ofhealth and safety risks, including theconsequences of potential terrorist threats,construction and refurbishment projects,asbestos, fire, legionella, earthquakes andworkplace accidents. We have specific actionprogrammes in place for each of these risks.

Statistics on fatalities and accidents aredisclosed in the table below. In the UK, we haveset the following targets to be achieved by 2006:

• A 5 per cent reduction in reportable injuries(against the 2001 baseline of 191 reportableinjuries per 100,000 employees).

• A 15 per cent reduction in the number ofworking days lost from work-related injury(against the 2003 baseline of 2,393 per100,000 employees).

A more detailed health and safety report forthe UK is available in the online version of thisreport at www.hsbc.com/society.

Learning and development

The development of all our employees is vitallyimportant to our continued success and, to this

2001 2002 2003 2006

target (UK only)

Workplace fatalities (worldwide) 0 0 0 N/A

Accidents involving more than three days’ absence (worldwide) 430 386 406 N/A

Reportable injuries per 100,000 employees (UK only) 191 168 163 181

Working days lost from work-related injury (UK only) N/A N/A 2,393 2,033

The 2003 reportable injury rate is already below the 2006 target. As we shallendeavour to set a validated downward trend for 2001-2004, this target will beformally reviewed at the end of 2004.

Statistics exclude fatalities or injuries relating to terrorism.

Helping the victims of terror

Three HSBC employees, Yonca Bilgin, Aynur Erkoca and EthernDogan, tragically lost their lives, and 43 more were injured when twoterrorist bombs exploded in Istanbul in late November 2003.

HSBC set up a counselling service for colleagues in Istanbul anddonated US$1 million to help support staff and families who werebereaved or injured.

Given the enormous size of the bomb used to attack HSBC and thescale of the destruction that resulted, there could have been manymore casualties. We believe that safety measures, such as anti-shatterglass and anti-glare film on windows, made a crucial difference byreducing glass splinter. The exemplary way in which our employeesimplemented their evacuation and business recovery proceduresenabled the business to be fully up and running again the next day.


Eight HSBC employees in Hong Kong contracted the SARS virus andone of our colleagues, Eva Hui, tragically died as a result. HSBC tooka number of measures to protect staff and customers in all theaffected areas. For instance, certain functions within the bank weresplit and staff dispersed to different locations, so the whole teamwould not be disabled if one member fell ill. The frequency ofcleaning in public areas of our branches was increased and oneHSBC branch in Hong Kong was closed temporarily because of thehigh number of SARS cases nearby. We also restricted staff travel toand from the affected areas.

Workplace fatalities and accidents


end, we strive to be a learning organisation. In2003, we invested US$750 per employee ontraining, equating to nearly four days oftraining on average for each person. We employmore than 1,100 training staff worldwide,provide online tuition and make learningmaterials available to everyone.

Regional Training Centres provide localtraining, education and guidance for localpeople in their local language in a way thatrespects all cultural, religious and ethnic issuesand values.

The information we share openly on ourintranet is available to an increasing numberof our colleagues each month. Our self-development library is one of the largest inthe corporate world, providing more than3,000 books, videos and CD-ROMs for ouremployees to use at home or in the office.These training and development programmessupport our diversity policy. The subject ofcorporate social responsibility itself isincluded in induction and leadership trainingat all levels.

Diversity: a report on progress

Employing and managing many different kindsof people contributes to a well-rounded andbalanced organisation. It also makes usadaptable to new situations. Diversity is notsimply about gender, ethnicity, disability or age;it is also about open-mindedness, embracingnon-conformity and creating balanced teams.Respect for individuals of all types inspiresloyalty in employees and customers andultimately plays a big part in the achievement ofbusiness goals.

Our commitment to diversity starts at the top.Our Board is one of the most international inthe world and has four female Directors, morethan most of the world’s leading companies. Wehave an executive Director who is responsiblefor diversity at a global level, but every one ofour 223,000 employees has a part to play. Ourworkforce is also diverse: more than half arewomen, one in four is Asian, one in five is LatinAmerican.

HSBC has a long tradition of diversity. It isintegral to our organisation and to our brand.However, we want to do better and our newGroup strategic plan, ‘Managing for Growth’,clearly positions diversity as an area for furtherdevelopment during the next five years. Themain challenges include:

• The time it takes for changes to occur. Forexample, we still have relatively few womenin senior management positions, a reflectionmore of past recruitment policies than ofpresent opportunities. Nevertheless, it is aweakness that we want to address. Duringthe next few years, we will manage ourpeople in accordance with the specialcharacter of the Group and the HSBCbrand in order to achieve a diversity amongsenior managers that reflects thecomposition of the Group as a whole andensures the best possible use of our talent.

• Delivering diversity globally by inspiringemployees to learn about others as a keypart of business success. At the same time,

Recognition and awards

HSBC has won a number of awards around the world for itspeople management policies. Among these, our US subsidiary,Household, is recognised as one of America’s best places to work.In 2003, it received numerous ‘employer of choice’ awards,including:

• Training magazine — ‘Training top 100’.

• Computerworld magazine — ‘100 best places to work in IT’.

• Working Mother magazine — ‘100 best companies for workingmothers’.

In the UK, First Direct was voted 36th in the Sunday Times ‘Top100 companies to work for’ in 2003.

‘Together For customers’

In April 2003, HSBC Bank Malaysia Berhad ran a one-day trainingsession for all its 3,000 employees. Known as ‘Together forCustomers’, the course emphasised key work ethics such asproviding quality customer service, practising effective workprocesses, teamwork and striving to meet ever-changing customerdemands and expectations.


we recognise that diversity is itself not anexact science. There are substantialdifferences in approach, legislation and,indeed, definitions of diversity from countryto country. Consequently, there is no singlebest practice that we can adopt. As theworld’s local bank, HSBC aims to respectthe local position, national framework, andbusiness and social context of each countryin which we operate.

Highlights of 2003

• We were the first bank in the UK to offershariah-compliant mortgages, gaining strongsupport from Muslim customers — a cleardemonstration of how diversity can helpbuild successful business (see also the‘Responsibility to Customers’ chapter onpages 20-21).

• We looked specifically at cultural differenceswithin the HSBC Group. This analysishighlighted the need to balance globaldiversity values with local culturaldifferences.

• Our training video, ‘The Same Difference:Working with Diversity’, won the goldaward for the best employee relations videoat the New York Film Festival. The videochallenges perceptions and attitudes.

• We positioned diversity prominently on ourhsbc.com web site, especially in the careersarea where we want to ensure that wecontinue to attract a diverse range ofcandidates.

• We set up a diversity committee for Asia-Pacific involving managers from across thebusiness within the region.

Aims for 2004

• Understand and share best practice ondiversity around the world. This will includepublishing information on our employeeintranet and inviting contributions fromaround the Group.

• Ensure wide understanding of the brand,the diversity strategy and the action plans ineach region.

• Introduce straightforward measures tomonitor our progress.

• Re-examine all our employee processes, suchas capabilities assessment, talent poolselection and international secondmentselection, so that all employees arerepresented.

• Deliver further training to reinforce theculture of a diverse organisation.

Profile of HSBC’s employees at 31 December 2003

About 1,000 employees work outside their country of origin,including 380 International Managers.

Gender

Male 44%

Female 56%

Women comprise 39% of executive grades.

Ethnic diversity

White 41%

Asian 26%

Latin American 20%

Black 4%

Hispanic 2%

Arab 2%

Others 5%

Age profile

Under 25 13%

25-29 20%

30-34 21%

35-39 15%

40-44 13%

45-49 9%

50 plus 9%

External Commentary


We believe this fourth report marks a significantstep forward in HSBC’s engagement on issuesof corporate social responsibility in two mainrespects. First, by extending the breadth anddepth of disclosure on specific topics, thecompany has increased transparency towards itsbroad range of stakeholders and articulatedmore explicitly the business case for CSR.Examples include diversity as a customer issue,non-prime lending, outsourcing, employeehealth and safety, and the process ofstakeholder dialogue.

These advances build on strengths wehighlighted last year, particularly support forcommunity projects on education and theenvironment, and what we judge to be aninternational leadership position on diversity,backed up by a global action plan. We note thatsome progress was made during 2003 onextending the environmental reporting systembeyond the original 10 countries, and lookforward to performance targets being set andpublished.

Second, 2003 saw several measures thatincreased HSBC’s commitment to CSR.Notable among these are the formation of adedicated committee of the Board, the inclusionof specific commitments in the new five-yearstrategic plan, ‘Managing for Growth’, theadoption of the Equator Principles — togetherwith internal training and monitoring systemsto give them real effect — and the publicationof clear expectations about the standardsrequired from suppliers.

HSBC has included several futurecommitments in this report, such as moresystematic surveys of employee attitudes,greater disclosure of project financeinformation, and the development of sector-specific lending policies on freshwater and useof forest land. Looking ahead, we believe theprocess of management and reporting would bestrengthened by considering each of the maincommitments made in HSBC’s statement ofbusiness principles and values and in theexternal standards it has endorsed; thenassessing the extent to which these are being

lived out in practice, with an account ofprogress in next year’s report. In doing this, webelieve the views of key stakeholders, such ascustomers, employees and investors, should betaken into account and responded to.

In our view, HSBC’s primary responsibility isto continue providing essential financial servicesas efficiently, reliably and ethically as possible,while at the same time engaging in its localcommunities and with society as a whole on theeconomic, social and environmental impacts ofthese operations. This report helps that process.

The Corporate Citizenship Companywww.corporate-citizenship.co.ukLondon, 8 March 2004

Assurance statement

The Corporate Citizenship Company acts asspecialist adviser to international corporationsseeking to improve their economic, social andenvironmental performance as goodcorporate citizens. We have worked with HSBC since 2000.

This statement provides externalcommentary and assurance on HSBC inSociety: Corporate Social ResponsibilityReport 2003, the company’s fourth annualreport on corporate social responsibility. Inour opinion, the report provides a fairrepresentation of progress HSBC has made inliving out its commitments on socialresponsibility. In the absence of statutoryguidelines, we have based our judgement onbest practice among other companies, keyprinciples underlying various voluntaryreporting and assurance standards, viewsexpressed by main stakeholders, and our ownexperience and expertise. We have checkedand are satisfied that the contents of thereport are consistent with underlying records,mainly data provided by Group companiesand obtained from audited financialstatements. We have assessed the correctnessof data trends and received satisfactoryexplanations where appropriate. We have notindependently verified otherwise unauditedinformation.

Tell us what you think

HSBC welcomes your comments on any of theissues raised by this corporate socialresponsibility report.

Please write to:HSBC in the CommunityLevel 36HSBC Holdings plc8 Canada SquareLondon E14 5HQUnited Kingdom

E-mail: [email protected] Web: www.hsbc.com/society

This report is printed on Revive Silk paper using vegetable oil-based inks. Made in the UK, the paper comprises 75% de-inkedpost-consumer waste and 25% mill broke and virgin fibre.

© Copyright HSBC Holdings plc 2004All rights reserved

No part of this publication may be reproduced, stored in aretrieval system, or transmitted, in any form or by any means,electronic, mechanical, photocopying, recording, or otherwise,without the prior written permission of HSBC Holdings plc.

Designed by Group Marketing, HSBC Holdings plc, London(20527 04/04)

Printed by Butler and Tanner Limited, Frome, Somerset,United Kingdom

Photo credits

Page 1: Ian Lloyd

Page 6: www.markharwoodstudio.co.uk

Page 37: Royal Botanical Gardens, Burlington

Page 38 (bottom): WWF

Page 39 (top): WWF

Page 41 (top): Keshini Jayawardena HSBC/Earthwatch

Page 44: HSBC Group Training

Issued by HSBC Holdings plcGroup Corporate Affairs8 Canada SquareLondon E14 5HQUnited KingdomTelephone: 44 020 7991 8888Facsimile: 44 020 7992 4880Web: www.hsbc.comStock number 96952-1

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