HSBC 2011 Annual Report Download - page 242

HSBC HOLDINGS PLC
Report of the Directors: Corporate Governance (continued)
Board committees > Corporate Sustainability Committee // Internal control
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50 years earlier; people are also living longer – the
percentage of the global population aged 65 years or
older is now estimated to be about 7.5% of the total
population, compared with about 5% 50 years ago.
Increasing urbanisation is also a significant trend
with over half the world’s population now living in
cities. The effects of continued population and
economic growth are reflected in rising atmospheric
CO2 levels and high commodity prices, and are
raising concerns over potential resource constraints.
HSBC will continue to play a leading role in shaping
the market response to these challenges, identifying
how business can adapt in ways that bring both
social and environmental benefits, while providing
viable economic returns. In 2011, we continued to
research the likely effects that climate change, and
the responses to it, will have on our business and
those of our customers. For example we published
research reports into ‘The World in 2050’ and
‘Scoring Climate Change Risk – Which countries
are most vulnerable?’
Operational environmental efficiency
We focus our environmental initiatives primarily on
addressing and responding to issues associated with
climate change, including energy use, water and
waste management. This issue has the potential to
affect materially our customers and, by extension,
our long-term success, introducing new risks to
business activity. At the end of 2011, we committed
to a series of targets stretching through to 2020,
which will further reduce HSBC’s impact on the
environment.
Community investment
We have a long-standing commitment to the
communities in which we operate. Many of our key
markets are emerging economies. Our operations
bring benefits to our host countries through tax
contributions, and to local people and businesses
through employment, training, purchasing and
investment. Beyond our core business, we aim to
encourage social and economic opportunity through
community investment activities.
Our focus is on education and the environment
because we believe they are essential building blocks
for the development of communities and are
prerequisites for economic growth. These
philanthropic programmes aim to involve employees
in the work of local NGOs and charities. Our
global education programmes focus on helping
disadvantaged children, promoting financial literacy
and environmental education and understanding. Our
flagship US$100m environmental programme, the
HSBC Climate Partnership, came to an end at the
close of 2011. Over the last five years we have
worked alongside The Climate Group, Earthwatch,
Smithsonian Tropical Research Institute and WWF
on tackling climate change. The Climate Partnership
has created a global community of 2,233 HSBC
employees, called Climate Champions, who have
conducted research in the field and applied this
learning to our business. The Partnership also
benefitted from 63,000 days of volunteering HSBC
colleagues.
In 2011, we donated a total of US$96m to
community investment projects (2010: US$108m).
Employee issues
‘Employee engagement’ describes employees’
emotional and intellectual commitment to their
organisation and its success and is critical to the
long-term ability of the Group to deliver the highest
quality of financial services. Our Global People
Survey shows that employees value our commitment
to sustainable business practices and view us as
being a leader in this regard. In 2011, 81% of
colleagues said they were satisfied with the actions
HSBC is taking to embed sustainability (e.g.
environmental and social issues) into the way we
run our business.
Sustainability risk
Our approach to managing sustainability risk is
detailed in the Appendix to Risk on page 210.
Internal control
The Directors are responsible for internal control
in HSBC and for reviewing its effectiveness.
Procedures have been designed for safeguarding
assets against unauthorised use or disposal; for
maintaining proper accounting records; and for the
reliability and usefulness of financial information
used within the business or for publication. Such
procedures are designed to manage and mitigate the
risk of failure to achieve business objectives and can
only provide reasonable and not absolute assurance
against material misstatement, errors, losses or fraud.
The procedures also enable HSBC Holdings to
discharge its obligations under the Handbook of
Rules and Guidance issued by the FSA, HSBC’s
lead regulator.
The key procedures that the Directors have
established are designed to provide effective internal
control within HSBC and accord with the Internal
Control: Revised Guidance for Directors on the
Combined Code on corporate governance issued by
the Financial Reporting Council. Such procedures
for the ongoing identification, evaluation and