Insurance Sustainable Finance Disclosure Regulation

HSBC Life adheres to the HSBC Insurance Sustainability Procedures (the “Sustainability Procedures”) set out at the level of HSBC Group Insurance (the “HSBC Life Group”) which are reflected in the Company’s Investment Policy (“Investment Policy”). The Investment Policy is geared towards ensuring that sustainability risks are integrated into the investment decision-making process. On this basis, prior to proceeding with any investments, HSBC Life is able to include environmental, social or governance (“ESG”) factors into its analysis in order to evaluate the risks and associated impacts, while also ensuring ongoing monitoring during the investment cycle.

In so far as direct investments are being made by HSBC Life and/or by HSBC Global Asset Management (Malta) Limited (“HSBC Asset Management”) for and on behalf of HSBC Life pursuant to an investment management agreement entered into to this effect (thereby excluding mutual funds, or passive strategies replicating an index, etc.), HSBC Life adopts and implements negative screening practices which are intended to restrict or prohibit investments in selected securities where these do not meet the sustainability standards established in the Investment Policy. These restrictions are applied to the extent that specific data thresholds used for the purpose of identifying and assessing the severity (or otherwise) of any given investee company’s effect on sustainability factors are met. The HSBC Life Group consolidates these restrictions in the form of a prohibited investment list which is updated from time to time to align with its commitments and policies. HSBC Life is prohibited from making any new investments in securities of companies or assets which are on this list. As for legacy investments falling outside the prohibited investment list (as updated from time to time), an exit plan is formulated.

These restrictions / prohibitions in turn align with the HSBC Holding plc (“HSBC Group”) stand-alone Sustainability Risk Sector Policies (available at: Sustainability risk which relate to:

(i) Agricultural Commodities

(ii) Chemicals Industry

(iii) Energy

(iv) Forestry

(v) Mining and Metals

(vi) Thermal Coal Phase Out

(vii) World Heritage Sites and Ramsar Wetlands, and

(viii) Defence Equipment Policies.  

Such restrictions also align with the HSBC Group Defence Equipment Policy  (available at: Defence Equipment Policy).

In addition, HSBC Asset Management itself abides by the Responsible Investment Policy (available at: Policies and Disclosures),  which outlines its approach to responsible investing; focusing on the ten principles of the UN Global Compact (“UNGC”). The UNGC sets out key areas of non-financial risk which are to be considered as part of the investment process i.e., human rights, labour, environment and anti-corruption.

As for those instances where HSBC Life is directly investing in collective investment schemes (which are in turn administered by asset managers exercising exclusive discretion to invest in other underlying securities and/or funds), HSBC Life seeks to primarily, but not necessarily exclusively, engage and work with those asset managers who are signatories to the Principles for Responsible Investment (“PRI”) and/or others who have sustainability integration and investment stewardship practices in place. These asset managers need to be able to demonstrate, to HSBC Life’s satisfaction, the adoption and implementation of sustainability principles and standards in the course of their respective investment decision-making processes.

In accordance with Commission Delegated Regulation (EU) 2022/1288, HSBC Life is required to publish a statement on its consideration of principal adverse impacts on sustainability factors by not later than 30 June of each year. Furthermore, any updates or changes to the principal adverse impacts statement can be accessed from the updated versions included below and further details on the change undertaken can be accessed from the change log.

2024 Statement on principle adverse impacts of investment decisions on sustainability factors V1 (PDF, 5,227KB)
 

Historic Principal Adverse Impacts Statements

2023 Statement on principle adverse impacts of investment decisions on sustainability factors V2 (PDF, 3,941KB)

2023 Statement on principle adverse impacts of investment decisions on sustainability factors V1 (PDF, 4,115KB)

Principal Adverse Impacts Methodology

Further detailed information, including each PAI calculation methodology, is available in the methodology document:

Statement on principle adverse impacts of investment decisions on sustainability factors methodology (PDF, 213KB)

Pursuant to article 5 of Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on SFDR, HSBC Life is required to: (i) include in its remuneration policy, information on how the said policy is consistent with the integration of sustainability risks, and (ii) publish and maintain this information on its website.

Additionally, pursuant to article 275(4) of Commission Delegated Regulation (EU) 2015/35 of the 10 October 2014 supplementing the Solvency II Directive, HSBC Life is required to include in its remuneration policy information on how it takes into account the integration of sustainability risks in its risk management system.

HSBC Life, being a subsidiary of HSBC Bank Malta p.l.c. (“HSBC Bank Malta”), adopts the same remuneration policy as HSBC Bank Malta. As a result, the remuneration policy of HSBC Bank Malta also applies to the employees of HSBC Life; albeit the latter are further subject to a supplementary policy for the purpose of taking into account Solvency II requirements.

The remuneration policy (which can be found on the Investor Relations page of HSBC Bank Malta) is consistent with the integration of sustainability risks. To this end, HSBC Life has adopted sustainable remuneration practices which are geared towards mitigating the potential adverse effects (if any) of its variable remuneration model on the risk profile of the Company. Indeed, even though the Company’s variable pay pool is expected to fluctuate in accordance with its overall business performance, any variable remuneration awarded to the Company’s employees shall be linked to the achievement of pre-defined targets which would have been set by the Company at beginning of the year.

The main quantitative and qualitative performance and risk metrics used for the assessment of employee performance against the pre-defined targets referred to above are included in a balanced scorecard of clear and relevant objectives. The objectives included in the performance scorecards of senior management take into account appropriate measures linked to sustainability risks, such as: reduction in carbon footprint; facilitating financing to help clients with their transition to net zero; employee diversity targets; and risk and compliance measures. Additionally, a mandatory and measurable sustainability goal such as training is assigned to all employees across the board. The employees receive a behaviour rating as well as a performance rating, which ensures that performance is assessed not only on what is achieved but also on how it is achieved – thereby minimising the risk of engaging in undesirable practices (such as, for instance, behaviour which is to the detriment of the Company’s sustainability efforts and/or adherence to sustainability-related laws and regulations) for the purpose of driving business and improving their financial performance at all costs.