Transcript
Speaker: This is HSBC Global Viewpoint, your window into the thinking, trends and issues shaping global banking and markets.
Speaker: Join us as we hear from industry leaders and HSBC experts on the latest insights and opportunities for your business.
Speaker: A heads up to our listeners that this episode has been recorded remotely, therefore the sound quality may vary.
Speaker: Thank you for listening.
Speaker: Welcome to TMI's TreasuryCast and HSBC's Cyboss Spotlight.
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.
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,
Speaker: and technological innovation.
Speaker: We'll also examine the opportunities and challenges in the areas of payments, securities, cash management and trade.
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,
Speaker: and Siraj Khalati, Global Head of Liquidity and Investments Products, Global Liquidity and Cash Management, HSBC.
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.
Speaker: So welcome both of you.
Speaker: Great to have you here.
Speaker: Excited to have this chat with you.
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.
Speaker: I'm just wondering how your clients' attitudes towards ESG have changed.
Speaker: How are you seeing it evolve?
Speaker: Do they see it as a business imperative and a value add?
Speaker: Or are some of them still maybe a little bit more skeptical, a little bit of eye rolling?
Speaker: Yes.
Speaker: Thank you, Eleonore.
Speaker: Thank you first for giving me and Siraj the opportunity to talk about this very important topic.
Speaker: It's great to be able to share with the listeners some of what we're doing.
Speaker: As you know, I lead the business development team covering financial institutions and public sector clients.
Speaker: So we have a wide range, banks, asset managers, asset owners, insurers, government.
Speaker: So I can try to answer that question in a wider brief.
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.
Speaker: And the facts are that when you look at the public commitment,
Speaker: that each of the industry players have made.
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.
Speaker: So if you just take the bank side, for example, many of our clients are members of the Net Zero Banking Alliance.
Speaker: This now has 53 banks from 27 countries
Speaker: representing almost a quarter of global banking assets that are committed to aligning all type of activity with the hashtag ESG.
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
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
Speaker: possibility to partner in reducing the net zero carbon footprint.
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.
Speaker: You know, when you ask me, is this important for a customer?
Speaker: I mean, clearly those public commitments show that.
Speaker: And it's not just public commitment, but in every conversation we have with customers.
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.
Speaker: Yeah, awesome.
Speaker: Amazing stats, Bernadine.
Speaker: And I think you're right.
Speaker: It gives a very good impression of the direction of travel and how important this theme really is for everyone.
Speaker: But you mentioned there a little bit about how you partner, what you can do.
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.
Speaker: Maybe you could give us an example or two.
Speaker: Sure, sure, sure.
Speaker: But firstly, there's two sides of it.
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
Speaker: region and multiple assets.
Speaker: So that's very important.
Speaker: So leading by example is very, very important.
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.
Speaker: Following the response, HSBC ESG credential was one of the area where the client asked to hear more about it.
Speaker: alongside the usual deep dive into technical capability.
Speaker: I don't recall seeing this a couple of years ago, and this is not just one-off.
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.
Speaker: I mean, it's known, and I know you've done other podcasts, that it is part of our strategy.
Speaker: you know, we've made some very large commitment in our own operation and supply chain to net zero by 2030 or sooner.
Speaker: And the line of finance emission to the Paris Agreement goal to achieve net zero by 2050 or sooner.
Speaker: And I think it might be sooner, but don't quote me on this.
Speaker: Fingers crossed.
Speaker: So the second part, the customer, you know, we're seeing more that the clients are looking forward
Speaker: to us to work with them and support them in their own journey.
Speaker: And I think that's more than an individual conversation.
Speaker: This is true across all the different parts of HSBC that work with clients.
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.
Speaker: But on the GLCM side,
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.
Speaker: Sounds pretty basic, but there's still many, many checks out there in many, many countries.
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.
Speaker: Yeah.
Speaker: Shifting from paper-based process to digital process and shifting from cheque to electronic.
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.
Speaker: We have clients who are physically posting hundreds of thousands of cheque around the world every year.
Speaker: think of inefficient use of resources with a paper plane flying, flying piece of paper all over the road.
Speaker: Instead, the clients are now using a global disbursement platform to make all of those payments electronically.
Speaker: And in a way,
Speaker: you know, this is not new, this is something, but I do believe that the pandemic in particular has accelerated this.
Speaker: So there's always something like a silver lining.
Speaker: Absolutely.
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.
Speaker: But I will leave that to Suresh to cover as this
Speaker: He's baby.
Speaker: We also, you know, we do find that financial institution and public sector clients are discerning investors.
Speaker: And they often ask us for more granularity and transparency around what the investment are supporting in part measurement.
Speaker: And I think this is a topic that we will talk more about is the risk management around ESG and the regulatory framework.
Speaker: But this might be for another question of your story.
Speaker: We had another day, but absolutely, you're right.
Speaker: That is becoming front of mind for them.
Speaker: But let's bring Siraj into the conversation.
Speaker: So, Siraj, great to have you here.
Speaker: I know we've got all kinds of things that we could talk about, but.
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.
Speaker: In fact, one of our TMI friends has moved all of her short term investments across to being ESG compliant.
Speaker: So what kind of options are available to treasurers for ESG investments?
Speaker: And are there any limitations or considerations when making them?
Speaker: Thanks, Eleanor.
Speaker: Thanks for having me again, and good to speak to you again.
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.
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.
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.
Speaker: So there is an expansion in the investment landscape.
Speaker: Alongside that, we're seeing the money fund industry also expand in terms of having options available for corporates to invest in.
Speaker: You know, at the end of 2020, we actually saw the total assets under management
Speaker: in the market increased by 50% to over $148 billion in the money fund market.
Speaker: So you can clearly see that there is a number of funds launching ESG compliant funds.
Speaker: There is a lot of take up in the industry as well, and a number of new issuers are coming in.
Speaker: And sort of complementing that whole transition, we also, as Nadine mentioned in HSBC, have launched the green deposit product in 2020.
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.
Speaker: So again, another option, an opportunity for customers to place any excess liquidity that they have.
Speaker: into ESG compliant products and solutions.
Speaker: Yeah, certainly a growing market.
Speaker: And as you say, huge growing demand there.
Speaker: But Saraj, tell us a little bit more about the green deposit product.
Speaker: How have clients reacted to that?
Speaker: Has it been really positive uptake?
Speaker: How do you see that uptake evolving?
Speaker: And are there any barriers to investment in the green deposit at all?
Speaker: Yeah, actually, we've been tremendously encouraged by the client's interest and acceptance of the product.
Speaker: We've launched the product in 10 markets and continue to expand the footprint for the product.
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.
Speaker: It is something that we see being limited to the extent of green financing out in the industry as well.
Speaker: And it's a balance sheet that will grow on both sides.
Speaker: And as we see more projects,
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.
Speaker: But I would say the evolution from a product standpoint expands beyond just the deposit product as well.
Speaker: We've also seen innovation as an example in the guard space where the use of more recyclable plastic
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.
Speaker: Yeah, very exciting.
Speaker: I like that reusable plastic in the car space.
Speaker: And I think that we'll see a lot more innovation around that.
Speaker: But
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.
Speaker: It'll be interesting to get a bit of a comparison.
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.
Speaker: And that is one of the things when we talk about ESG, we often tend to focus on that E side of things.
Speaker: But how important do you think it is to embrace the S, the social values of ESG, things like diversity and
Speaker: Can you maybe give some examples from your team or your clients as to how you're doing this?
Speaker: Yes, we have to recognize that ESG goes beyond tackling climate change.
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,
Speaker: of managing people, a way of making a career decision, a way for future wellbeing.
Speaker: I mean, if you're not well, you don't work well.
Speaker: HSBC is really, I think we already very much a large diverse company, 64 countries, 168 nationalities.
Speaker: I don't have the DNI exact KPIs here, but I'm sure you can find them.
Speaker: But, you know, that's what makes us very different is that we are very diverse, but more to do, more to do.
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,
Speaker: and to work on initiatives like gender pay and so on.
Speaker: But in particular this year, starting this year, the bank has also embraced a commitment of ethnicity.
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.
Speaker: very much what we have done over the past on the gender inclusion.
Speaker: So lots of pilot, lots of program, depending where you are sitting at the HSBC, but making a priority in managing our workforce.
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
Speaker: and allowing people to manage their personal life and work-life balance in a much more realistic way.
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.
Speaker: And it's not over.
Speaker: And within GLCM, we were, I think at the far front within HSBC of launching initiative.
Speaker: I don't think we need to launch initiative anymore.
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.
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.
Speaker: So Suraj, all yours.
Speaker: Thanks Nadine.
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.
Speaker: you know, from remote working to having, you know, to take care of loved ones in different ways.
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.
Speaker: Helping our colleagues with the right tools, you know, giving them the ability to really balance the day at work
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.
Speaker: And that's really been well accepted.
Speaker: And we can see that we get that back in terms of positive feedback.
Speaker: And this is the change we're trying to drive in the industry as well.
Speaker: Tell us more a little bit about a Mindful Monday.
Speaker: What might happen on a Mindful Monday?
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.
Speaker: through a stressful environment as well.
Speaker: And, you know, that way of sort of focusing and channeling your energy has been quite powerful for me as well, personally.
Speaker: you know, to be able to then bring my best into what I do for the week.
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.
Speaker: And so you kind of keep it to yourself, which isn't always good.
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,
Speaker: think I might have to sign myself up for a mindful Monday.
Speaker: Suraj, just coming back to the product side of things for a quick moment.
Speaker: I'm just wondering if we could take a little look at the future there.
Speaker: And what are you expecting in terms of
Speaker: maybe tied to regulation around ESG products?
Speaker: And do you see any evolution in ESG products as the space matures?
Speaker: Absolutely.
Speaker: I think maybe thematically two things that stand out.
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.
Speaker: And I think those standards are not consistently defined today in markets or for projects.
Speaker: So the greater adoption or standardization of those guidelines and principles is one step.
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.
Speaker: So for anyone sort of subscribing to these products and propositions,
Speaker: it is also important to understand how the companies or the issuers actually qualifying these investments.
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?
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.
Speaker: The other piece which I would highlight, which is also important and an area of focus of the industry is data.
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
Speaker: the investor or the parties being impacted by that financial transaction is also very important.
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.
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
Speaker: instrument or the underlying activity.
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.
Speaker: So exciting times ahead.
Speaker: Both of you, we've covered quite a lot in this podcast to kind of quickly
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?
Speaker: Nadine?
Speaker: Okay, so I'll give them, I'll have a go.
Speaker: So I would say, keep learning and understanding what's happening because it's moving very fast and leap further afield.
Speaker: Don't be shy.
Speaker: The second thing I would say, empower you team to make a difference.
Speaker: Yeah.
Speaker: And maybe experiment.
Speaker: That's what we're trying to do here at HSBC.
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.
Speaker: We need to learn from each other.
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.
Speaker: Absolutely.
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.
Speaker: Siraj, your final thoughts?
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.
Speaker: So treasurers have different ways of making that impact.
Speaker: So there are options presenting.
Speaker: So, you know, do explore that.
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.
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,
Speaker: is something that we see also has a tremendous impact on people's productivity as well.
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.
Speaker: Yeah, making a change.
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.
Speaker: And it's nice to see that making those changes and bringing in those
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
Speaker: This has been HSBC's Cyboss Spotlight, a podcast miniseries produced especially by TMI for HSBC Global Viewpoint.
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Speaker: And to find out more about HSBC's presence at Cyboss, visit gbm.hsbc.com forward slash cyboss.
Speaker: Thank you for listening today.
Speaker: This has been HSBC Global Viewpoint Banking and Markets.
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