Climate Change a Fact Not a Possibility

Q: What role does sustainability play in the company’s strategy?

A: Sustainability is a priority for us globally, with our efforts in sustainable financing at the forefront, especially over the last few years. Inside HSBC, we call our global sustainability strategy, REDUCE. It is part of our wider operational strategy and it helps to streamline the business, as well as drive efficiencies that reduce our overall impact on the environment. The energy HSBC consumes releases carbonemissionsintotheatmosphere,whichareamajor contributor to climate change, something the scientific community and the UN agree is measurable and happening today. In 2013 the UN’s Intergovernmental Panel on Climate Change (IPCC) stated that global warming was “unequivocal,” and caused by human activity.

As a global company, becoming more efficient helps reduce HSBC’s contribution to climate change and over the last three years we have cut our average CO2 emissions per employee from 3.5 to less than 3 tons. HSBC has the responsibility to manage its contribution to climate change and find ways to operate more sustainably.

Q: What global trends are driving companies to establish PPAs with renewable energy producers?

A: The broad direction of future legislation is clear. Governments around the world have made major commitments to reduce carbon emissions over the long term. Technology has also improved, with some forms of renewable energy competing on price with fossil fuels. Today, renewables are a growing part of the energy mix in dozens of countries. For example, Portugal met its electricity needs using renewables alone for four consecutive days in 2016. While on a windy day, Germany can meet more than 100 percent of its national electricity needs from renewables.

Thinking about renewable energy has become “business as usual” for most major companies. Technology firms, high-street retailers and oil and gas companies are among those studying the sector and assessing the opportunities. Some have made such substantial investments in renewables that they have more energy than they can use themselves and want to sell the surplus to consumers, subject to permission from regulators.

Q: What made you decide on a 10-year PPA with Enel Green Power and what are the terms of this agreement?

A: After performing a deep analysis of different technologies considering reliability and risks, we concluded that wind power was the best option for HSBC in the Mexican market. HSBC then signed a 10-year agreement to buy power generated by a new 200MW wind farm in the northeast state of San Luis Potosi, which will provide 50 percent of our energy needs in the country starting mid-2017. By signing this long-term deal we are helping bring new clean energy onto the market, cutting carbon emissions produced by our operations in Mexico by 22.9kt annually. That is the same amount of CO2 generated by around 3,600 cars each year.

Our goal is to have 75 percent of the electricity we consume in Mexico come from new renewable sources by 2018. In this first phase, we are going to use a wind source to supply the energy consumption of our branch network. We are also planning to replace the energy supply of our corporate buildings for a clean energy source in a second phase in 2018.

Q: What advice would you give to other off-takers that might not have the same expertise as HSBC?

A: It is important to keep in mind and analyze the size and characteristics of their real estate portfolio and their growth/reduction strategy to define the amount of energy to be introduced. On the other hand, clients often ask about emerging technologies, new policies and changing legal requirements. Given the pace of change over the past decade, it would be unwise to make categorical claims about the future. Not all new technologies will succeed: some investors will see the products they have backed become obsolete before they even reach the market.