Environmental Engineering Reference
In-Depth Information
to derivatives covering all tradable emissions
assets. ICE can absorb the expertise of ECX, us-
ing carbon instruments in its own portfolio and
combining existing strategies to take advantage
of the natural energy hedge carbon provides. Such
consolidation moves will not be uncommon as the
fragmented market of exchanges and emissions
service providers are slowly absorbed by either
competitors or banks seeking to risk manage and
gain a foothold in the market.
and risks, environmental operations and social
footprint, and community investment (HSBC,
2010). Below the CEO sit the Heads of Corporate
Sustainability in each of the Group's main regions,
who report to the local Chairman and to the Group
Head of Corporate Sustainability. The Chairman
of Personal and Commercial Banking and Insur-
ance is responsible for Corporate Sustainability
on behalf of the Group Chief Executive and the
HSBC Holdings Board. In addition to these func-
tions, Lord Nicholas Stern, author of the seminal
2006 Stern Review on the Economics of Climate
Change was appointed Special Adviser to HSBC's
Group Chairman on Economic Development and
Climate Change. Overseeing this is the Corporate
Sustainability Committee, a sub-committee of
the HSBC Holdings Board. This sub-Board ad-
vises the HSBC Holdings Board and executive
management on sustainability policies, including
environmental issues. Below these executives are
a cadre of individuals having undergone training
for implementing HSBC's sustainability practices
in credit risk, purchasing, IT and relationship
management (HSBC, 2010).
Understandably, this type of intricately inter-
woven corporate structure is unmanageable and
financially untenable for smaller organisations
but shows the breadth and depth available for
full disclosure and transparency among a bank
operating in over 80 countries and providing
financial services to more than one hundred mil-
lion customers. It requires even its most senior
executives to have the knowledge of sustainability
and the flexibility to be an environmentally aware
business.
Solutions and Recommendations
What can be inferred from the preceding sections
is the host of opportunities that abound for using
carbon to assess and manage risk, to identify new
opportunities and to manage existing ones, but
what remains to be seen are the recommendations
for companies interested in applying carbon to
their business models. For this, the case study of
HSBC is used, pointing out the opportunities to
integrate carbon into businesses, which HSBC has
successfully done in a non-traditional way. When
most businesses think of integrating green finance
into their existing models, carbon trading is the
most frequently cited example that comes to mind.
Other than outsourcing it to a third party, building
an emissions trading/procurement desk for a bank,
utility or large corporate is often the easiest way
to for executives to point to environmentally pro-
gressive measures being taken internally. Indeed,
trading provides another revenue stream and can
be seen as proof that the company is concerned
with climate change. HSBC however has built an
entire sustainability practice, a freestanding rep-
resentative division of a world-renowned global
banking business.
Corporate Strategy
Corporate Structure
At the strategic level, this is implemented in
one part by the guidance of Lord Stern, who is a
globally recognised expert in the space of climate
change, adaptation and sustainability. Below this,
HSBC established separate practices and adopted
sustainability guidelines to structure their invest-
HSBC's corporate structure integrates corporate
sustainability teams that work at the Group,
regional and national levels to assess the bank's
