AfE 2024
Perhaps the biggest testament to the importance of sustainable financing for HSBC in recent years is the fact that chief executive Noel Quinn made sure to have his voice included in our coverage of this award. Quinn, who announced his retirement in April this year, has been central to the evolution of the bank’s capabilities and strategy that have pushed it to the forefront of sustainable finance.
“I’m proud of the material changes that we’ve made over the last four years to enable us to help our clients achieve their sustainability goals and support our ambition of reaching net zero by 2050,” Quinn tells Euromoney. “Our presence in the markets, sectors and segments that will make the biggest impact on future emissions, together with our expertise and global connectivity, mean we can connect our clients to new solutions and partners.”
Shortlisted
One of Quinn’s most important decisions was taken three years ago when he hired Celine Herweijer to be HSBC’s group chief sustainability officer, a rare move that placed at the helm a NASA Fellow and PhD scientist.
For her doctorate, Herweijer focused on earth systems modelling, climate science and policy.
She has played a critical role in developing the bank’s net-zero strategy, which has required the alignment of all parts of the business to meet its objective by 2050, including its portfolio of financed emissions.
Meanwhile, HSBC has also set on-balance sheet financed emissions targets for 2030 for key hard-to-abate sectors and aims to provide between $750 billion and $1 trillion in sustainable finance and investment by 2030.
Such targets require proof that the bank is well on the way to developing decarbonization projects globally, and HSBC can provide it.
In 2023, the bank had considerable success in building its sustainable finance deal book outside its core European market. For example, in Saudi Arabia the firm financed the Neom green hydrogen facility that will generate 600 tonnes of green ammonia daily – a landmark deal for an industry that will be critical in reaching global net-zero targets. HSBC also led the groundbreaking one-gigawatt Hailong offshore wind project in Taiwan.
These mandates were won on the back of the bank’s strategy to develop new clients in these emerging decarbonization industries. Under the leadership of Herweijer, HSBC has set up a sustainability centre of excellence that has a global team of sustainability specialists with deep expertise on sector transitions, new technologies, climate data and analytics, and sustainable finance and regulation. This centre helps bridge the gap between traditional financing teams and new clients and industries.
“There are new financing structures that are needed to unlock and commercialize new technologies in every single sector – and that’s our mindset as well,” says Herweijer. “To unlock steel-sector decarbonization, we need direct reduced iron steel plants. We need clean hydrogen at scale. We need clinker substitutes in cement. So part of what we have in the centre of excellence are technology leads who work with our banker teams, and who work with the risk teams to build out pipelines of these technologies.”
There are new financing structures that are needed to unlock and commercialize new technologies in every single sector – and that’s our mindset as well
The alignment of new technology and financing experts within HSBC has led to some important mandates in hard-to-abate sectors. For example, the bank supported Hyundai Capital Americas on its debut $3 billion green bond, where the proceeds are to be used solely to fund zero-emission vehicles. HSBC provided the first club sustainability-linked loan in aviation leasing to CBD Aviation, with key performance indicators addressing carbon-emissions intensity, which were replicated for British Airways’ and Air France’s sustainability-linked bonds.
There were similar deals in industries such as cement (Cemex), real estate (Proudreed) and infrastructure (Ferrovial).
HSBC – along with other leading banks in this area – somewhat plays down the importance of green debt financing structures such as green bonds and sustainability-linked bonds and loans. The really important thing, they argue, is working with multiple public- and private-sector partners to create new structures that de-risk the financing of new technologies – such as that Neom hydrogen plant.
However, HSBC does have an impressive roll call of deals for 2023 and they remain an important part of the sustainable finance toolkit.
It led a wide range of sustainable debt financings, with landmark green deals (such as a €1 billion perpetual for Iberdrola), sustainability bonds (a $1.25 billion deal for the Republic of the Philippines), sustainability-linked (the Republic of Chile’s €3 billion, triple-tranche transaction), as well as social bonds (the €1 billion four-year deal for CaixaBank in May 2023).
Beyond debt, HSBC led key M&A transactions and advised PPC on its acquisition of Enel’s renewable assets in Romania for €1.9 billion. It also worked on Merkeda Battery Materials’ $610 million IPO and AES Clean Energy’s $646 million senior secured private placement.