Annual Report and Accounts 2011 - Bermuda Stock Exchange
Annual Report and Accounts 2011 - Bermuda Stock Exchange
Annual Report and Accounts 2011 - Bermuda Stock Exchange
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HSBC HOLDINGS PLC<br />
<strong>Report</strong> of the Directors: Corporate Governance (continued)<br />
Board committees > Corporate Sustainability Committee // Internal control<br />
50 years earlier; people are also living longer – the<br />
percentage of the global population aged 65 years or<br />
older is now estimated to be about 7.5% of the total<br />
population, compared with about 5% 50 years ago.<br />
Increasing urbanisation is also a significant trend<br />
with over half the world’s population now living in<br />
cities. The effects of continued population <strong>and</strong><br />
economic growth are reflected in rising atmospheric<br />
CO 2 levels <strong>and</strong> high commodity prices, <strong>and</strong> are<br />
raising concerns over potential resource constraints.<br />
HSBC will continue to play a leading role in shaping<br />
the market response to these challenges, identifying<br />
how business can adapt in ways that bring both<br />
social <strong>and</strong> environmental benefits, while providing<br />
viable economic returns. In <strong>2011</strong>, we continued to<br />
research the likely effects that climate change, <strong>and</strong><br />
the responses to it, will have on our business <strong>and</strong><br />
those of our customers. For example we published<br />
research reports into ‘The World in 2050’ <strong>and</strong><br />
‘Scoring Climate Change Risk – Which countries<br />
are most vulnerable?’<br />
Operational environmental efficiency<br />
We focus our environmental initiatives primarily on<br />
addressing <strong>and</strong> responding to issues associated with<br />
climate change, including energy use, water <strong>and</strong><br />
waste management. This issue has the potential to<br />
affect materially our customers <strong>and</strong>, by extension,<br />
our long-term success, introducing new risks to<br />
business activity. At the end of <strong>2011</strong>, we committed<br />
to a series of targets stretching through to 2020,<br />
which will further reduce HSBC’s impact on the<br />
environment.<br />
Community investment<br />
We have a long-st<strong>and</strong>ing commitment to the<br />
communities in which we operate. Many of our key<br />
markets are emerging economies. Our operations<br />
bring benefits to our host countries through tax<br />
contributions, <strong>and</strong> to local people <strong>and</strong> businesses<br />
through employment, training, purchasing <strong>and</strong><br />
investment. Beyond our core business, we aim to<br />
encourage social <strong>and</strong> economic opportunity through<br />
community investment activities.<br />
Our focus is on education <strong>and</strong> the environment<br />
because we believe they are essential building blocks<br />
for the development of communities <strong>and</strong> are<br />
prerequisites for economic growth. These<br />
philanthropic programmes aim to involve employees<br />
in the work of local NGOs <strong>and</strong> charities. Our<br />
global education programmes focus on helping<br />
disadvantaged children, promoting financial literacy<br />
<strong>and</strong> environmental education <strong>and</strong> underst<strong>and</strong>ing. Our<br />
flagship US$100m environmental programme, the<br />
HSBC Climate Partnership, came to an end at the<br />
close of <strong>2011</strong>. Over the last five years we have<br />
worked alongside The Climate Group, Earthwatch,<br />
Smithsonian Tropical Research Institute <strong>and</strong> WWF<br />
on tackling climate change. The Climate Partnership<br />
has created a global community of 2,233 HSBC<br />
employees, called Climate Champions, who have<br />
conducted research in the field <strong>and</strong> applied this<br />
learning to our business. The Partnership also<br />
benefitted from 63,000 days of volunteering HSBC<br />
colleagues.<br />
In <strong>2011</strong>, we donated a total of US$96m to<br />
community investment projects (2010: US$108m).<br />
Employee issues<br />
‘Employee engagement’ describes employees’<br />
emotional <strong>and</strong> intellectual commitment to their<br />
organisation <strong>and</strong> its success <strong>and</strong> is critical to the<br />
long-term ability of the Group to deliver the highest<br />
quality of financial services. Our Global People<br />
Survey shows that employees value our commitment<br />
to sustainable business practices <strong>and</strong> view us as<br />
being a leader in this regard. In <strong>2011</strong>, 81% of<br />
colleagues said they were satisfied with the actions<br />
HSBC is taking to embed sustainability (e.g.<br />
environmental <strong>and</strong> social issues) into the way we<br />
run our business.<br />
Sustainability risk<br />
Our approach to managing sustainability risk is<br />
detailed in the Appendix to Risk on page 210.<br />
Internal control<br />
The Directors are responsible for internal control<br />
in HSBC <strong>and</strong> for reviewing its effectiveness.<br />
Procedures have been designed for safeguarding<br />
assets against unauthorised use or disposal; for<br />
maintaining proper accounting records; <strong>and</strong> for the<br />
reliability <strong>and</strong> usefulness of financial information<br />
used within the business or for publication. Such<br />
procedures are designed to manage <strong>and</strong> mitigate the<br />
risk of failure to achieve business objectives <strong>and</strong> can<br />
only provide reasonable <strong>and</strong> not absolute assurance<br />
against material misstatement, errors, losses or fraud.<br />
The procedures also enable HSBC Holdings to<br />
discharge its obligations under the H<strong>and</strong>book of<br />
Rules <strong>and</strong> Guidance issued by the FSA, HSBC’s<br />
lead regulator.<br />
The key procedures that the Directors have<br />
established are designed to provide effective internal<br />
control within HSBC <strong>and</strong> accord with the Internal<br />
Control: Revised Guidance for Directors on the<br />
Combined Code on corporate governance issued by<br />
the Financial <strong>Report</strong>ing Council. Such procedures<br />
for the ongoing identification, evaluation <strong>and</strong><br />
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