Environmental, Social and Governance (ESG) update

Statement on principal adverse impacts of investment advice on sustainability factors 

The EU Sustainable Finance Disclosure Regulation (“SFDR”) requires HSBC Global Private Bank (‘GPB) (or HSBC Private Bank (Luxembourg) S.A), in our capacity as a financial adviser, to disclose whether and how we take into account principal adverse impacts (PAI) on sustainability factors in our investment advisory process.

• When selecting and advising financial products, where clients have expressed such sustainability preferences, HSBC Global Private Banking (or HSBC Private Bank (Luxembourg) S.A) takes into account certain adverse impact of the underlying investment on sustainability factors, based on data availability and alignment of client’s sustainability preferences and investment objectives. For funds, discretionary portfolio services, alternative investment products and insurance-based investment products and exchange traded funds, investment managers must provide information related to how their portfolios consider PAIs on sustainability factors. We gather this data through European ESG Template (EET). Instruments of this category are considered materially exposed to PAI where over 5 per cent of the underlying are themselves exposed.
• For single line securities, the consideration of PAI on sustainability factors is based on internal evaluation methodology for issuers, where sustainability data is sourced from external data provider and is systematically processed to identify the PAI on sustainability factors. Instruments of that category are either in direct violation of PAI or not.

The PAI on sustainability factors we may consider include:

• Exposures to controversial weapons.
• Violation of UN Global Compact Principles or OECD Guideline for Multinational Enterprises on Responsible Business Conduct.

Where clients have elected to consider PAIs we ensure that more than 5 per cent of their portfolio has no material PAI exposure and that it contains no instrument in direct violation of PAI.

As the data published by FMPs expands and matures, we will keep under review the range of PAIs that we consider when selecting and advising financial products. 

Sustainability risk integration 

The EU Sustainable Finance Disclosure Regulation (“SFDR”) requires HSBC Global Private Bank (‘GPB) (or HSBC Private Bank (Luxembourg) S.A in our capacity as a financial adviser to disclose whether and how we integrate sustainability risks in our investment advice. 

We (“GPB”) recognize that sustainability risks (meaning environmental, social or governance (“ESG”) event or condition) can lead to outcomes that may have a material negative impact on the value of clients’ investments. 

When selecting and advising financial products, HSBC Global Private Bank (‘GPB) (or HSBC Private Bank (Luxembourg) S.A takes into consideration of the sustainability risk under the consideration of Sustainable Investment or EU Taxonomy contribution, where issuers are required to pass Do Not Significant Harm assessment to other environmental or social objective, , and follow good corporate governance processes: 

• For funds, discretionary portfolio services, exchanged traded funds, insurance-based investment products and alternative investment products, Financial Market Participants of products that either have specific sustainable investment objective (SFDR Article 9) or products that promote environmental or social characteristics (SFDR Article 8) are required to report their contribution to sustainable investment and EU taxonomy. We gather this data through European ESG Template (EET). In addition, in our due diligence selection process to create the recommended universe of ESG and sustainable investing products (as classified according to our proprietary internal framework), we assess how our partner Financial Market Participants (“FMPs”) have incorporated material sustainability risks/issues in their investment process and engagement activities (where applicable). 
• For single line securities, the sustainability risk integration is evaluated through the calculation of Sustainable Investment and EU Taxonomy, where sustainability data is sourced from external data provider. 

In the event that we are unable to meet client’s sustainability preferences due to other constraints such as suitability consideration or product availability, this will also be reflected as part of the advice*

Version: 1.1 - Publication date: tentative timeline: November 2024 [Applicable for HSBC Private Bank (Luxembourg) S.A]

The information on this site refers to services or products which are not available in certain locations, or which, in any relevant location, may have components, methods, structures and terms different from the ones described, as well as restrictions on client eligibility. Please contact a Relationship Manager for details of services and products that may be available to you.

The use of the label ‘HSBC Private Bank’, ‘HSBC Private Banking’, ‘we’, or ‘us’ refers to HSBC’s worldwide private banking business, and is not indicative of any legal entity or relationship.

This information is entirely qualified by reference to the terms and conditions of the specific service, if any, provided by the relevant HSBC company.

Nothing here is to be deemed an offer, solicitation, endorsement, or recommendation to buy or sell any general or specific product, service or security and should not be considered to constitute investment advice.

Please note that HSBC Private Banking does not provide Legal and Tax Advice.

Before proceeding, please refer to the full Disclaimer and the Terms and Conditions.

In broad terms “ESG and sustainable investing” products include investment approaches or instruments which consider environmental, social, governance (‘ESG’) and/or other sustainability factors to varying degrees. Certain instruments we classify as sustainable may be in the process of changing to deliver sustainability outcomes. There is no guarantee that ESG and sustainable investing products will produce returns similar to those which don’t consider these factors. ESG and Sustainable investing products may diverge from traditional market benchmarks. In addition, there is no standard definition of, or measurement criteria for, ESG and sustainable investing or the impact of ESG and sustainable investing products. ESG and Sustainable investing and related impact measurement criteria are (a) highly subjective and (b) may vary significantly across and within sectors. HSBC may rely on measurement criteria devised and reported by third party providers or issuers. HSBC does not always conduct its own specific due diligence in relation to measurement criteria. There is no guarantee: (a) that the nature of the ESG / sustainability impact or measurement criteria of an investment will be aligned with any particular investor’s sustainability goals; or (b) that the stated level or target level of ESG / sustainability impact will be achieved. ESG and Sustainable investing is an evolving area and new regulations are being developed which will affect how investments can be categorised or labelled. An investment which is considered to fulfil sustainable criteria today may not meet those criteria at some point in the future.