Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
HSBC’s Sibos Spotlight: Investing in the Future – from Diversity to Green Deposits
18 Plays4 years ago
In the final instalment of our Sibos miniseries, TMI’s Eleanor Hill invites HSBC’s Nadine Lagarmitte and Suraj Kalati to consider how corporates' attitudes to ESG are changing, including a growing interest in ESG investment. Our guests explain the incentives behind HSBC's green deposit scheme, explore how ESG product development is evolving in response to tighter regulation, and share their key lessons for leaders looking to embrace the social values of ESG.
This is HSBC’s Sibos Spotlight, a podcast miniseries in collaboration with Treasury Management International (TMI). Throughout this series we will explore the critical topics on the Sibos 2021 agenda that will shape our industry in the next decade, including sustainability, digital acceleration and technological innovation.
To find out more about HSBC’s presence at Sibos 2021, Visit here.
Hosted on Acast. See acast.com/privacy for more information.
Recommended
Transcript
Introduction to HSBC Global Viewpoint
00:00:00
Speaker
This is HSBC Global Viewpoint, your window into the thinking, trends and issues shaping global banking and markets.
00:00:09
Speaker
Join us as we hear from industry leaders and HSBC experts on the latest insights and opportunities for your business.
00:00:18
Speaker
A heads up to our listeners that this episode has been recorded remotely, therefore the sound quality may vary.
00:00:24
Speaker
Thank you for listening.
Collaboration and Key Topics from Cyboss 2021
00:00:46
Speaker
Welcome to TMI's TreasuryCast and HSBC's Cyboss Spotlight.
00:00:50
Speaker
I'm Eleanor Hill, Editor of TMI, and I'm delighted to be working with HSBC to bring you an in-depth look at the events from this year's Cyboss.
00:00:58
Speaker
So throughout this series, we'll explore the critical topics on the Cyboss 2021 agenda, those which are shaping our industry in the next decade, including sustainability, digital acceleration,
00:01:10
Speaker
and technological innovation.
00:01:12
Speaker
We'll also examine the opportunities and challenges in the areas of payments, securities, cash management and trade.
ESG Aspects and Investments
00:01:20
Speaker
I'm delighted to be joined in the studio today by Nadine Lagamit, Managing Director, Global Head of Financial Institutions, Global Liquidity and Cash Management, HSBC,
00:01:30
Speaker
and Siraj Khalati, Global Head of Liquidity and Investments Products, Global Liquidity and Cash Management, HSBC.
00:01:36
Speaker
We're gonna talk through some of the aspects of ESG that perhaps deserve a little more attention, as well as the evolution of ESG investments.
00:01:46
Speaker
So welcome both of you.
00:01:48
Speaker
Great to have you here.
00:01:50
Speaker
Excited to have this chat with you.
00:01:51
Speaker
Nadine, I'd like to kick off with you, I think, because we talk so much about ESG these days, which is a great thing.
00:01:59
Speaker
I'm just wondering how your clients' attitudes towards ESG have changed.
00:02:04
Speaker
How are you seeing it evolve?
00:02:05
Speaker
Do they see it as a business imperative and a value add?
00:02:09
Speaker
Or are some of them still maybe a little bit more skeptical, a little bit of eye rolling?
00:02:14
Speaker
Yes.
00:02:15
Speaker
Thank you, Eleonore.
00:02:16
Speaker
Thank you first for giving me and Siraj the opportunity to talk about this very important topic.
00:02:22
Speaker
It's great to be able to share with the listeners some of what we're doing.
00:02:27
Speaker
As you know, I lead the business development team covering financial institutions and public sector clients.
00:02:34
Speaker
So we have a wide range, banks, asset managers, asset owners, insurers, government.
00:02:40
Speaker
So I can try to answer that question in a wider brief.
00:02:45
Speaker
But I would say from the beginning is that in my view, in the discussion with the customer, it is becoming a business imperative.
00:02:52
Speaker
And the facts are that when you look at the public commitment,
00:02:57
Speaker
that each of the industry players have made.
00:03:00
Speaker
And I think it's worth, you know, even so it might be known, but it does give a really important fact that what is the commitment out there publicly.
00:03:10
Speaker
So if you just take the bank side, for example, many of our clients are members of the Net Zero Banking Alliance.
00:03:18
Speaker
This now has 53 banks from 27 countries
00:03:23
Speaker
representing almost a quarter of global banking assets that are committed to aligning all type of activity with the hashtag ESG.
00:03:34
Speaker
If you look at the investor and the asset manager world, many of our clients are members of Net Zero Asset Owner Alliance or the Net Zero Asset Manager Alliance, and the latter now has more than 125
00:03:51
Speaker
signatories and listen to the 43 trillion worth of assets under management globally that are no link to net zero emission goal then on the insurance side there was brand new news in july that eight global insurance and reinsurance player have signed up as well to the net zero insurance alliance and those company will be looking at the underwriting they claim the operation and this is where we will be talking to them about
00:04:22
Speaker
possibility to partner in reducing the net zero carbon footprint.
00:04:28
Speaker
On the public sector side, I don't have to say that more than 190 governments have signed the Paris Agreement and virtually every government around the world is setting up a plan to contribute.
00:04:40
Speaker
You know, when you ask me, is this important for a customer?
00:04:44
Speaker
I mean, clearly those public commitments show that.
00:04:47
Speaker
And it's not just public commitment, but in every conversation we have with customers.
00:04:52
Speaker
They want to know one, how do we partner together to join together, but they also want to know about what we do as a leader.
Corporate ESG Initiatives at HSBC
00:05:02
Speaker
Yeah, awesome.
00:05:03
Speaker
Amazing stats, Bernadine.
00:05:04
Speaker
And I think you're right.
00:05:05
Speaker
It gives a very good impression of the direction of travel and how important this theme really is for everyone.
00:05:12
Speaker
But you mentioned there a little bit about how you partner, what you can do.
00:05:15
Speaker
So tell us a bit more about the kind of solutions and insight that clients might be looking for and how HSBC has actually responded to these needs.
00:05:23
Speaker
Maybe you could give us an example or two.
00:05:25
Speaker
Sure, sure, sure.
00:05:26
Speaker
But firstly, there's two sides of it.
00:05:28
Speaker
The first one at the basic level, our clients want to understand what we're doing as a corporate, as a bank with our own plan, as we are such a large company touching multiple
00:05:42
Speaker
region and multiple assets.
00:05:45
Speaker
So that's very important.
00:05:47
Speaker
So leading by example is very, very important.
00:05:51
Speaker
But just more practically on the cash management side, you know, an example in a recent RFP, my team worked on the regional cash management mandate for a big financial institution.
00:06:02
Speaker
Following the response, HSBC ESG credential was one of the area where the client asked to hear more about it.
00:06:12
Speaker
alongside the usual deep dive into technical capability.
00:06:16
Speaker
I don't recall seeing this a couple of years ago, and this is not just one-off.
00:06:22
Speaker
And the focus there, first and foremost, is to learn what we do as a corporation ourselves so they can copy-paste what we're doing in many ways.
00:06:31
Speaker
I mean, it's known, and I know you've done other podcasts, that it is part of our strategy.
00:06:36
Speaker
you know, we've made some very large commitment in our own operation and supply chain to net zero by 2030 or sooner.
00:06:47
Speaker
And the line of finance emission to the Paris Agreement goal to achieve net zero by 2050 or sooner.
00:06:55
Speaker
And I think it might be sooner, but don't quote me on this.
00:06:58
Speaker
Fingers crossed.
00:07:00
Speaker
So the second part, the customer, you know, we're seeing more that the clients are looking forward
00:07:06
Speaker
to us to work with them and support them in their own journey.
00:07:10
Speaker
And I think that's more than an individual conversation.
00:07:13
Speaker
This is true across all the different parts of HSBC that work with clients.
00:07:17
Speaker
And I know, Eleonore, that you've already heard from some of our experts in other podcasts at HSBC on ESG financing and sustainable supply chain.
Digital Transformation in Payments
00:07:29
Speaker
But on the GLCM side,
00:07:31
Speaker
There is an ESG angle to a lot of work we're doing with clients on helping them become more digital and less paper-based.
00:07:40
Speaker
Sounds pretty basic, but there's still many, many checks out there in many, many countries.
00:07:47
Speaker
So for a long time now, we've been at the forefront to work, to help to move clients, move away from using paper or plastic.
00:07:55
Speaker
Yeah.
00:07:56
Speaker
Shifting from paper-based process to digital process and shifting from cheque to electronic.
00:08:02
Speaker
So, for example, we've helped a number of financial institutions and public sector make the transition from using cheque to electronic method from cross-border payment.
00:08:12
Speaker
We have clients who are physically posting hundreds of thousands of cheque around the world every year.
00:08:18
Speaker
think of inefficient use of resources with a paper plane flying, flying piece of paper all over the road.
00:08:26
Speaker
Instead, the clients are now using a global disbursement platform to make all of those payments electronically.
00:08:35
Speaker
And in a way,
00:08:36
Speaker
you know, this is not new, this is something, but I do believe that the pandemic in particular has accelerated this.
00:08:44
Speaker
So there's always something like a silver lining.
00:08:48
Speaker
Absolutely.
00:08:50
Speaker
And then I would say also that, and I know my colleague Suresh will talk more about it, but we've been very proud to launch Green Deposit in our 10 markets with more markets in the pipeline.
00:09:03
Speaker
But I will leave that to Suresh to cover as this
00:09:06
Speaker
He's baby.
00:09:08
Speaker
We also, you know, we do find that financial institution and public sector clients are discerning investors.
00:09:15
Speaker
And they often ask us for more granularity and transparency around what the investment are supporting in part measurement.
00:09:25
Speaker
And I think this is a topic that we will talk more about is the risk management around ESG and the regulatory framework.
00:09:33
Speaker
But this might be for another question of your story.
00:09:36
Speaker
We had another day, but absolutely, you're right.
00:09:39
Speaker
That is becoming front of mind for them.
00:09:41
Speaker
But let's bring Siraj into the conversation.
ESG Investment Options for Treasurers
00:09:44
Speaker
So, Siraj, great to have you here.
00:09:47
Speaker
I know we've got all kinds of things that we could talk about, but.
00:09:50
Speaker
Let's focus a bit on the ESG compliant investment space, because a lot of treasurers that I speak to are very interested in this.
00:09:58
Speaker
In fact, one of our TMI friends has moved all of her short term investments across to being ESG compliant.
00:10:05
Speaker
So what kind of options are available to treasurers for ESG investments?
00:10:11
Speaker
And are there any limitations or considerations when making them?
00:10:15
Speaker
Thanks, Eleanor.
00:10:16
Speaker
Thanks for having me again, and good to speak to you again.
00:10:18
Speaker
So on the investment space, I would say the interest, as you mentioned from your colleague, and it is consistent that we see as well from our clients that there is a lot of increased interest in having more ESG-compliant instruments.
00:10:33
Speaker
The good part is that we're seeing the market also expand, and the market landscape is expanding with a number of new issuers coming in, right, from financial institutions to governments and agencies to even corporates.
00:10:44
Speaker
We're sort of issuing paper to allow them to fund and service and finance projects that have a positive climate impact, positive social impact as well.
00:10:54
Speaker
So there is an expansion in the investment landscape.
00:10:58
Speaker
Alongside that, we're seeing the money fund industry also expand in terms of having options available for corporates to invest in.
00:11:06
Speaker
You know, at the end of 2020, we actually saw the total assets under management
00:11:12
Speaker
in the market increased by 50% to over $148 billion in the money fund market.
00:11:20
Speaker
So you can clearly see that there is a number of funds launching ESG compliant funds.
00:11:26
Speaker
There is a lot of take up in the industry as well, and a number of new issuers are coming in.
00:11:30
Speaker
And sort of complementing that whole transition, we also, as Nadine mentioned in HSBC, have launched the green deposit product in 2020.
00:11:40
Speaker
So that's another product that gives options to customers to invest in a deposit or place money into a deposit that allows us to then utilize those funds and direct it towards our green financing across our portfolio of products as well.
00:11:56
Speaker
So again, another option, an opportunity for customers to place any excess liquidity that they have.
00:12:02
Speaker
into ESG compliant products and solutions.
00:12:05
Speaker
Yeah, certainly a growing market.
00:12:07
Speaker
And as you say, huge growing demand there.
00:12:09
Speaker
But Saraj, tell us a little bit more about the green deposit product.
00:12:13
Speaker
How have clients reacted to that?
00:12:15
Speaker
Has it been really positive uptake?
00:12:17
Speaker
How do you see that uptake evolving?
00:12:19
Speaker
And are there any barriers to investment in the green deposit at all?
00:12:23
Speaker
Yeah, actually, we've been tremendously encouraged by the client's interest and acceptance of the product.
00:12:28
Speaker
We've launched the product in 10 markets and continue to expand the footprint for the product.
00:12:33
Speaker
We've had over a hundred clients who invested into the product and continue to build a portfolio of clients who hold their deposits in the green product.
00:12:43
Speaker
It is something that we see being limited to the extent of green financing out in the industry as well.
00:12:50
Speaker
And it's a balance sheet that will grow on both sides.
00:12:54
Speaker
And as we see more projects,
00:12:56
Speaker
being financed for the purpose of having a positive climate impact, we see more options and opportunities for us to also expand the green deposit portfolio and extend that to additional markets as well.
00:13:08
Speaker
But I would say the evolution from a product standpoint expands beyond just the deposit product as well.
00:13:14
Speaker
We've also seen innovation as an example in the guard space where the use of more recyclable plastic
00:13:21
Speaker
is another way of, you know, trying to make a positive impact in terms of the products that we provide in the market over here.
00:13:27
Speaker
Yeah, very exciting.
00:13:29
Speaker
I like that reusable plastic in the car space.
00:13:32
Speaker
And I think that we'll see a lot more innovation around that.
00:13:34
Speaker
But
00:13:35
Speaker
Definitely need to make a note in the diary to check in with you for next year's Cyboss and see how we've moved on.
00:13:41
Speaker
It'll be interesting to
Diversity and Social Values in ESG
00:13:42
Speaker
get a bit of a comparison.
00:13:44
Speaker
And now, Nadine, I wanted to bring you back in because we've talked a lot here about green deposits and a lot of green.
00:13:50
Speaker
And that is one of the things when we talk about ESG, we often tend to focus on that E side of things.
00:13:56
Speaker
But how important do you think it is to embrace the S, the social values of ESG, things like diversity and
00:14:03
Speaker
Can you maybe give some examples from your team or your clients as to how you're doing this?
00:14:08
Speaker
Yes, we have to recognize that ESG goes beyond tackling climate change.
00:14:13
Speaker
And I think this is where we, I think, industry and company have done incredible work starting a few years ago to make it really a way,
00:14:26
Speaker
of managing people, a way of making a career decision, a way for future wellbeing.
00:14:35
Speaker
I mean, if you're not well, you don't work well.
00:14:38
Speaker
HSBC is really, I think we already very much a large diverse company, 64 countries, 168 nationalities.
00:14:51
Speaker
I don't have the DNI exact KPIs here, but I'm sure you can find them.
00:14:58
Speaker
But, you know, that's what makes us very different is that we are very diverse, but more to do, more to do.
00:15:07
Speaker
But on the DNI, which is one of my passion, you know, we have been very strict from a leadership point of view and from the top of the bank to have some gender balance KPI,
00:15:19
Speaker
and to work on initiatives like gender pay and so on.
00:15:24
Speaker
But in particular this year, starting this year, the bank has also embraced a commitment of ethnicity.
00:15:31
Speaker
You know, I particularly sponsor a pilot with a few of my colleagues, and this is sponsored by a member of the board, to really look at our Black population and just give them an opportunity and a path that supports their growth.
00:15:49
Speaker
very much what we have done over the past on the gender inclusion.
00:15:54
Speaker
So lots of pilot, lots of program, depending where you are sitting at the HSBC, but making a priority in managing our workforce.
00:16:07
Speaker
I think what's also important is from sitting today in brand new renovated office, and this is not just an only one, but the commitment of future of works and the flexibility
00:16:19
Speaker
and allowing people to manage their personal life and work-life balance in a much more realistic way.
00:16:27
Speaker
And I think the pandemic has definitely challenged all of us and we've all been wowed by the commitment and loyalty of people and the customer around this very difficult time.
00:16:40
Speaker
And it's not over.
00:16:42
Speaker
And within GLCM, we were, I think at the far front within HSBC of launching initiative.
00:16:51
Speaker
I don't think we need to launch initiative anymore.
00:16:54
Speaker
That is part of our DNA that we care for people and we really spend time also educating our leaders to let people speak up.
00:17:07
Speaker
about many things and I will hand over to Suraj because he sponsored a few things this year in particular with some of the colleagues around the time and the stress around the pandemic, which actually landed very well.
00:17:20
Speaker
So Suraj, all yours.
00:17:21
Speaker
Thanks Nadine.
00:17:22
Speaker
And Eleanor, just to build on what Nadine said, I think the point around, you know, the transformation in the industry from a technology standpoint, but also the pandemic presented different types of challenges for us working in the industry.
00:17:35
Speaker
you know, from remote working to having, you know, to take care of loved ones in different ways.
00:17:41
Speaker
And I think the toll it took on people's well-being and mental health is something that we've focused on within the business and sharing those experiences with our clients, with, you know, external to the market as well is something that we're really trying to do very consciously as well.
00:17:57
Speaker
Helping our colleagues with the right tools, you know, giving them the ability to really balance the day at work
00:18:05
Speaker
We've introduced things like Mindful Mondays and different activities that allow people to really bring their best to work in these circumstances and give them the right support.
00:18:17
Speaker
And that's really been well accepted.
00:18:19
Speaker
And we can see that we get that back in terms of positive feedback.
00:18:23
Speaker
And this is the change we're trying to drive in the industry as well.
00:18:25
Speaker
Tell us more a little bit about a Mindful Monday.
00:18:27
Speaker
What might happen on a Mindful Monday?
00:18:30
Speaker
So on a Mindful Monday, we invite certain organizations who come in and guide our colleagues through meditation sessions or sort of mindfulness sessions, allows them to focus their minds and reduce and remove some of the noise around them that can get created.
00:18:47
Speaker
through a stressful environment as well.
00:18:49
Speaker
And, you know, that way of sort of focusing and channeling your energy has been quite powerful for me as well, personally.
00:18:55
Speaker
you know, to be able to then bring my best into what I do for the week.
00:18:59
Speaker
Yeah, I think that's so important, particularly when you're working remotely, because you don't have those colleagues to kind of bounce ideas off or get frustrations out to in person.
00:19:08
Speaker
And so you kind of keep it to yourself, which isn't always good.
00:19:11
Speaker
Speaking from experience, having worked from home for a long time, as you both know, but it's great to hear what's going on and, uh,
00:19:18
Speaker
think I might have to sign myself up for a mindful Monday.
00:19:22
Speaker
Suraj, just coming back to the product side of things for a quick moment.
Future Growth and Standardization in ESG
00:19:28
Speaker
I'm just wondering if we could take a little look at the future there.
00:19:32
Speaker
And what are you expecting in terms of
00:19:34
Speaker
maybe tied to regulation around ESG products?
00:19:37
Speaker
And do you see any evolution in ESG products as the space matures?
00:19:42
Speaker
Absolutely.
00:19:42
Speaker
I think maybe thematically two things that stand out.
00:19:45
Speaker
One is, as you mentioned, regulations and I would say standards in terms of how products are evaluated and what are the principles applied for them to be qualified to having a positive impact on the environment or on social projects and programs.
00:20:02
Speaker
And I think those standards are not consistently defined today in markets or for projects.
00:20:09
Speaker
So the greater adoption or standardization of those guidelines and principles is one step.
00:20:14
Speaker
But what we've seen is companies and institutions sort of issuing investments and paper are also prescribing what are their standards that they're using and utilizing.
00:20:25
Speaker
So for anyone sort of subscribing to these products and propositions,
00:20:29
Speaker
it is also important to understand how the companies or the issuers actually qualifying these investments.
00:20:35
Speaker
How are they assessing what these projects are doing and what's the benefit of these projects, not only at the time of making the investment, but also on an ongoing basis, how are you looking back in terms of the impact these programs have made?
00:20:49
Speaker
And I think that's something, till we get much more standardization in the industry, this sort of self-governance is something that is very important to observe.
00:20:58
Speaker
The other piece which I would highlight, which is also important and an area of focus of the industry is data.
00:21:06
Speaker
Data across the supply chain that really talks to and demonstrates the impact, the social impact, the environmental impact of a transaction, of a financial transaction, of a financing project, and transparency of that data through to
00:21:22
Speaker
the investor or the parties being impacted by that financial transaction is also very important.
00:21:29
Speaker
So I think the data generation, the data capture and the data presentation is going to be another area that we will see a lot of work and evolution in.
00:21:37
Speaker
It does help to address greenwashing, which is another term in the industry, which sort of is a concern because of the lack of transparency at times in terms of what is the underlying
00:21:51
Speaker
instrument or the underlying activity.
00:21:53
Speaker
Absolutely, greenwashing a key theme at the moment and as you say data is so important and I think actually our listeners, our treasurers will find themselves dealing with ESG related data a lot more in the future even though it doesn't necessarily seem like a natural part of that financial role it definitely will become.
00:22:11
Speaker
So exciting times ahead.
00:22:13
Speaker
Both of you, we've covered quite a lot in this podcast to kind of quickly
00:22:17
Speaker
hit and run of what's going on in ESG at the moment, but what would your key takeaway be from this discussion for listeners who are looking to become ESG leaders?
Becoming ESG Leaders
00:22:27
Speaker
Nadine?
00:22:27
Speaker
Okay, so I'll give them, I'll have a go.
00:22:31
Speaker
So I would say, keep learning and understanding what's happening because it's moving very fast and leap further afield.
00:22:40
Speaker
Don't be shy.
00:22:42
Speaker
The second thing I would say, empower you team to make a difference.
00:22:47
Speaker
Yeah.
00:22:47
Speaker
And maybe experiment.
00:22:50
Speaker
That's what we're trying to do here at HSBC.
00:22:53
Speaker
And then I think more important within our financial institution, my own position, client base, you know, really, and even with our customers, you know, we need to collaborate.
00:23:04
Speaker
We need to learn from each other.
00:23:07
Speaker
And, you know, there will be a time we compete versus this, but this is the time to really engage and learn from each other.
00:23:16
Speaker
Absolutely.
00:23:17
Speaker
So a lot easier to be brave and curious when you've got the right team and the right partners at your side, for sure.
00:23:23
Speaker
Siraj, your final thoughts?
00:23:25
Speaker
Yeah, I mean, building on what Nadine said here, and I think starting with taking the steps to learn about the industry, because this is an area that is evolving and there's a number of ways that companies can make a positive impact, not only from their core activities, but also through the cash management process.
00:23:44
Speaker
So treasurers have different ways of making that impact.
00:23:47
Speaker
So there are options presenting.
00:23:48
Speaker
So, you know, do explore that.
00:23:50
Speaker
I think data and transparency of that information is something I would say continue to be vocal about, ask, and we will see the industry sort of evolve in that space as well.
00:24:01
Speaker
And finally, from a social standpoint, I think, you know, as Nadine said, you know, it is a period where understanding the balance of how business is being done, how people are operating,
00:24:13
Speaker
is something that we see also has a tremendous impact on people's productivity as well.
00:24:18
Speaker
So again, something that we as an organization are obviously quite passionate about and us as individuals and leaders as well are quite vocal about making a difference from a social standpoint as well.
00:24:29
Speaker
Yeah, making a change.
00:24:30
Speaker
I like what Nadine said earlier about just being realistic about how work and home life, they coexist now and that's how it has to be.
00:24:38
Speaker
And it's nice to see that making those changes and bringing in those
00:24:42
Speaker
mindful mondays etc well thank you both ever so much for joining us today it's been a genuine pleasure having you here and hearing about everything that's going on at hsbc and how you're supporting your clients so very much appreciate you taking the time out thank you to you thank you thank you eleanor
00:24:58
Speaker
This has been HSBC's Cyboss Spotlight, a podcast miniseries produced especially by TMI for HSBC Global Viewpoint.
00:25:07
Speaker
To discover other episodes in this series, head to HSBC's Globe at treasury-4-0.com or search for HSBC Global Viewpoint on Apple and Spotify.
00:25:18
Speaker
And to find out more about HSBC's presence at Cyboss, visit gbm.hsbc.com forward slash cyboss.
00:25:45
Speaker
Thank you for listening today.
00:25:46
Speaker
This has been HSBC Global Viewpoint Banking and Markets.
00:25:51
Speaker
For more information about anything you heard in this podcast or to learn about HSBC's global services and offerings, please visit gbm.hsbc.com.