R I T R A N S P A R E N C Y R E P O RT
2020
HSBC Global Asset Management

An investor initiative in partnership with UNEP Finance Initiative and UN Global Compact

About this report
The PRI Reporting Framework is a key step in the journey towards building a common language and industry standard forreporting responsible investment (RI) activities. This RI Transparency Report is one of the key outputs of this Framework.
Its primary objective is to enable signatory transparency on RI activities and facilitate dialogue between investors and theirclients, beneficiaries and other stakeholders. A copy of this report will be publicly disclosed for all reporting signatories on
the PRI website, ensuring accountability of the PRI Initiative and its signatories.
This report is an export of the individual Signatory organisation’s response to the PRI during the 2020 reporting cycle. It
includes their responses to mandatory indicators, as well as responses to voluntary indicators the signatory has agreed tomake public. The information is presented exactly as it was reported. Where an indicator offers a response option that is
multiple-choice, all options that were available to the signatory to select are presented in this report. Presenting theinformation exactly as reported is a result of signatory feedback which suggested the PRI not summarise the information.
As a result, the reports can be extensive. However, to help easily locate information, there is a Principles index whichhighlights where the information can be found and summarises the indicators that signatories complete and disclose.

Understanding the Principles Index
The Principles Index summarises the response status for the individual indicators and modules and shows how these
relate to the six Principles for Responsible Investment. It can be used by stakeholders as an ‘at-a-glance’ summary ofreported information and to identify particular themes or areas of interest.
Indicators can refer to one or more Principles. Some indicators are not specific to any Principle. These are highlighted inthe ‘General’ column. When multiple Principles are covered across numerous indicators, in order to avoid repetition, only
the main Principle covered is highlighted.
All indicators within a module are presented below. The status of indicators is shown with the following symbols:
SymbolStatusThe signatory has completed all mandatory parts of this indicatorThe signatory has completed some parts of this indicatorThis indicator was not relevant for this signatory-

The signatory did not complete any part of this indicatorThe signatory has flagged this indicator for internal review

Within the table, indicators marked in blue are mandatory to complete. Indicators marked in grey are voluntary to complete.

1Principles Index

2

Principle

Organisational Overview
Indicator

Short description

OO TG

StatusDisclosure



n/a

1

2

3

4

5

General6

OO 01

Signatory category and services



Public

OO 02

Headquarters and operational countries



Public

OO 03

Subsidiaries that are separate PRI
signatories



Public

OO 04

Reporting year and AUM

Public

OO 05

Breakdown of AUM by asset class

Asset mix
disclosed in
OO 06



OO 06

How would you like to disclose your asset
class mix

Public

OO 07

Fixed income AUM breakdown

Public

OO 08

Segregated mandates or pooled funds



Public

OO 09

Breakdown of AUM by market



Public

OO 10

Active ownership practices for listed
assets

Public

OO 11

ESG incorporation practices for all assets

Public

Modules and sections required tocomplete
Breakdown of listed equity investmentsby passive and active strategies
Reporting on strategies that are <10% ofactively managed listed equities
Breakdown of fixed income investmentsby passive and active strategies
Reporting on strategies that are <10% ofactively managed fixed income
Fixed income breakdown by market andcredit quality
Breakdown of externally managed
investments by passive and active
strategies
Breakdown of private equity investments
by strategy
Typical level of ownership in private
equity investments

Public

Public





n/a





Public





n/a





Public

Public





n/a





n/a



Breakdown of property investments

Public

Breakdown of property assets bymanagement

Public

Largest property types



Public

Breakdown of infrastructure investments



n/a



Breakdown of infrastructure assets bymanagement



n/a



Largest infrastructure sectors



n/a



OO HF 01

Breakdown of hedge funds investments
by strategies



PublicOO EndModule confirmation page



-

OO 12
OO LE 01
OO LE 02
OO FI 01
OO FI 02
OO FI 03
OO SAM
01
OO PE 01
OO PE 02
OO PR
01
OO PR
02
OO PR
03
OO INF
01
OO INF
02
OO INF
03

3

Principle

CCStrategy and GovernanceIndicator

Short description

SG 01

StatusDisclosure

RI policy and coveragePublic

SG 01 CC

Climate risk



Public

SG 02

Publicly available RI policy or guidance
documents

Public

SG 03

Conflicts of interest

Public

SG 04

Identifying incidents occurring within
portfoliosPublic

SG 05

RI goals and objectives



Public

SG 06

Main goals/objectives this yearPublic

SG 07

RI roles and responsibilities



Public

SG 07 CC

Climate-issues roles and responsibilities



Public

SG 08

RI in performance management, reward
and/or personal development

Public

SG 09

Collaborative organisations / initiatives



PublicSG 09.2

Assets managed by PRI signatories



PublicSG 10

Promoting RI independently



Public

Dialogue with public policy makers or
standard setters
Role of investment consultants/fiduciary
managers

Public  Public

ESG issues in strategic asset allocationPublic

Public

Public

Public

Allocation of assets to environmental andsocial themed areas
ESG issues for internally managed
assets not reported in framework
ESG issues for externally managed
assets not reported in frameworkPublic

Public

Public

SG 18

Innovative features of approach to RIPublic

SG 19CommunicationPublicSG EndModule confirmation page



-

SG 11
SG 12
SG 13
SG 13 CC
SG 14

Long term investment risks andopportunity

SG 14 CC
SG 15
SG 16
SG 17

4

1

2

3

4

5

General
6



 












Principle

Direct - Listed Equity Incorporation
Indicator
LEI 01
LEI 02
LEI 03
LEI 04
LEI 05
LEI 06
LEI 07
LEI 08
LEI 09
LEI 10
LEI 11
LEI 12
LEI 13LEI End

Short description

StatusDisclosure

1

Percentage of each incorporation
strategy
Type of ESG information used ininvestment decision
Information from engagement and/or
voting used in investment decisionmaking



Public

Public

PublicTypes of screening applied

Public

Processes to ensure screening is basedon robust analysis
Processes to ensure fund criteria are notbreached
Types of sustainability thematic
funds/mandates
Review ESG issues while researchingcompanies/sectors
Processes to ensure integration is basedon robust analysis
Aspects of analysis ESG information is
integrated into

Public

Public

Public

Public

Public

Public

ESG issues in index construction

Public

How ESG incorporation has influenced
portfolio composition
Examples of ESG issues that affectedyour investment view / performance

Public

Public

Module confirmation page



-

5

2

3

4

5

General6Principle

Direct - Listed Equity Active Ownership
Indicator

Short description

StatusDisclosure

LEA 01

Description of approach to engagement

Public

LEA 02

Reasoning for interaction on ESG issues

Public  

LEA 03

Process for identifying and prioritisingengagement activities



Public

LEA 04

Objectives for engagement activities



Public

LEA 05

Process for identifying and prioritisingcollaborative engagement

Public

LEA 06

Role in engagement process

Public

LEA 07

Share insights from engagements withinternal/external managers



Public 

LEA 08Tracking number of engagements

Public

LEA 09Number of companies engaged with,intensity of engagement and effort



Public

LEA 10Engagement methods



Public

LEA 11

Examples of ESG engagements

Public

Typical approach to (proxy) voting
decisions
Percentage of voting recommendations
reviewed

Public





n/a



Securities lending programme

Public

Informing companies of the rationale ofabstaining/voting against management
Informing companies of the rationale ofabstaining/voting against management

Public

Public

Percentage of (proxy) votes castPublic

Proportion of ballot items that were
for/against/abstentions
Proportion of ballot items that were
for/against/abstentions



Public

Public

Shareholder resolutions



Public

LEA 21

Examples of (proxy) voting activities



Public

LEA EndModule confirmation page-

LEA 12
LEA 13
LEA 14
LEA 15
LEA 16
LEA 17
LEA 18
LEA 19LEA 20

6

1

2

3

4



5

General6Principle

Direct - Fixed Income
Indicator

Short description

StatusDisclosure

1

FI 01

Incorporation strategies applied

PublicFI 02

ESG issues and issuer research

Public

FI 03

Processes to ensure analysis is robust

Public

FI 04

Types of screening applied

Public

FI 05

Examples of ESG factors in screening
process

Public

FI 06

Screening - ensuring criteria are metPublic

FI 07

Thematic investing - overview



Public

FI 08

Thematic investing - themed bondprocesses

Public

FI 09

Thematic investing - assessing impactPublicFI 10

Integration overview



PublicFI 11

Integration - ESG information in
investment processes



PublicFI 12

Integration - E,S and G issues reviewed



Public

FI 13

ESG incorporation in passive funds



Public

FI 14Engagement overview and coveragePublic

FI 15

Engagement method

Public 

FI 16Engagement policy disclosure

Public 

FI 17Financial/ESG performance

PublicFI 18

Examples - ESG incorporation or
engagement

PublicFI EndModule confirmation page



-

7

2

3

4

5

General6 Principle

Direct - Hedge Funds
Indicator

Short description

HF 01

StatusDisclosure

Rationale for adopting a RI policyPublic

HF 02

Normative codes/initiatives in the Hedge
Fund industry



Public

HF 03

Organisation of RI responsibilities



Public

RI training programme

Public

Performance/remuneration metrics linked
to RI incorporation
ESG data, research and other resourcesused
ESG incorporation into quantitative andfundamental analysis
Changes to the RI incorporation process
over the past 12 months



Public

Public

Public Public

HF 09

Integration of Active OwnershipPublic 

HF 10

Examples of ESG risks/opportunities ininvestment decisions

Public 

HF 11

Derivatives products and ESG impactPublicHF 12

Long/short exposure and reporting

Public 

HF 13

Metrics/KPI for RI progressPublic 

HF 14

Exposure to climate risk



Public

HF 15

Reports to investors

Public

HF EndModule confirmation page



-

HF 04
HF 05
HF 06
HF 07
HF 08

1

Short description

CM1 01

3

4

5

6


 













Principle

Confidence building measures
Indicator

2

GeneralStatusDisclosure

Assurance, verification, or review



Public

CM1 02

Assurance of last year`s PRI dataPublic

CM1 03

Other confidence building measuresPublic

CM1 04Assurance of this year`s PRI dataPublic

CM1 05External assurance



n/a



CM1 06

Assurance or internal audit



n/a



CM1 07

Internal verificationPublic

CM1 01End

Module confirmation page



-

8

1

2

3

4

5

General6HSBC Global Asset Management

Reported Information
Public version
Organisational Overview

PRI disclaimer
This document presents information reported directly by signatories. This information has not been audited by the PRISecretariat or any other party acting on their behalf. While this information is believed to be reliable, no representations or
warranties are made as to the accuracy of the information presented, and no responsibility or liability can be accepted forany error or omission.

9Basic information
OO 01

Mandatory

PublicGateway/Peering

General

Select the services and funds you offer

OO 01.1

Select the services and funds you offer% of asset under management (AUM) in ranges

Fund management

 0%
 <10%
 10-50%
 >50%

Fund of funds, manager of managers, sub-advised products  0%
 <10%
 10-50%
 >50%Other 0%
 <10%
 10-50%
 >50%

Total 100%

Further options (may be selected in addition to the above) Hedge funds
 Fund of hedge funds
OO 02

Mandatory

OO 02.1

PublicPeering

Select the location of your organisation’s headquarters.

United Kingdom

OO 02.2

Indicate the number of countries in which you have offices (including your headquarters).

1
 2-5
 6-10 >10

10GeneralIndicate the approximate number of staff in your organisation in full-time equivalents (FTE).

OO 02.3

FTE
1854
OO 03

Mandatory

PublicDescriptive

GeneralIndicate whether you have subsidiaries within your organisation that are also PRI signatories intheir own right.

OO 03.1
 Yes
 No

Additional information. [Optional]

OO 03.3

HSBC Global Asset Management signed up to the PRI in June 2006 covering all its locations.

OO 04

Mandatory

OO 04.1

PublicGateway/Peering

GeneralIndicate the year end date for your reporting year.

30/09/2019

OO 04.2

Indicate your total AUM at the end of your reporting year.

Include the AUM of subsidiaries, but exclude advisory/execution only assets, and exclude the assets of your PRI
signatory subsidiaries that you have chosen not to report on in OO 03.2
trillions
Total AUM
Currency
Assets in USD

billions

millions

thousands

hundreds

516

366

000

000

516

366

000

000

USD

 Not applicable as we are in the fund-raising process

OO 04.4

Indicate the assets which are subject to an execution and/or advisory approach. Provide this figure
based on the end of your reporting year Not applicable as we do not have any assets under execution and/or advisory approach11

OO 04.5

Additional information. [Optional]

Our Multi Assets and balanced strategies represent some 25% of our global AUMs and have bee reallocated toEquities and Fixed Income based on a 30/70 split.

OO 06

Mandatory

OO 06.1

PublicDescriptive

Select how you would like to disclose your asset class mix.

 as percentage breakdown as broad ranges
Internally managed (%) Externally managed (%)
Listed equity

10-50%<10%

Fixed income

>50%

0

Private equity

0

0

12

GeneralProperty<10%0Infrastructure00Commodities

00

Hedge funds

00Fund of hedge funds

<10%

0

Forestry00Farmland00Inclusive finance

0

0

Cash

10-50%

0

Money market instruments 00

Other (1), specify00Other (2), specify

00

OO 06.2

Publish asset class mix as per attached image [Optional].

OO 06.3

Indicate whether your organisation has any off-balance sheet assets [Optional].

 Yes
 No

OO 06.5

Indicate whether your organisation uses fiduciary managers.

 Yes, we use a fiduciary manager and our response to OO 5.1 is reflective of their management of our assets.
 No, we do not use fiduciary managers.

OO 06.6

Provide contextual information on your AUM asset class split. [Optional]

Our Multi Asset and balanced strategies represent some 25% of our global AUMs and have bee reallocated toEquities and Fixed Income based on a 30/70 split.

OO 07

Mandatory to Report Voluntary toDisclose

Public13

Gateway

GeneralProvide to the nearest 5% the percentage breakdown of your Fixed Income AUM at the end of yourreporting year, using the following categories.

OO 07.1

Internallymanaged

SSA
25

Corporate (financial)
38

Corporate (non-financial)
29

Securitised
8

Total
100%
OO 08

Mandatory to Report Voluntary toDisclose

PublicPeering

GeneralNew selection options have been added to this indicator. Please review your prefilled responses carefully.
Provide a breakdown of your organisation’s externally managed assets between segregatedmandates and pooled funds or investments.

OO 08.1

Asset classbreakdown

Segregatedmandate(s)Pooled fund(s) or pooled
investment(s)[a] Listed equity

 0%

 0%

 <10%

 <10%

 10-50%

 10-50%

 >50 %

 >50 %OO 08.2

Total of the asset class(each row adds up to
100%)

100%

Additional information. [Optional]

The core of our externally managed equities are invested into third party ETFs.

OO 09

Mandatory

Public14

Peering

General

OO 09.1

Indicate the breakdown of your organisation’s AUM by market.

Developed Markets
79.6

Emerging Markets
17.4

Frontier Markets
3

Other Markets
0

Total 100%
100%

Asset class implementation gateway indicators
OO 10

Mandatory

OO 10.1

PublicGateway

General

Select the active ownership activities your organisation implemented in the reporting year.

Listed equity – engagement
 We engage with companies on ESG factors via our staff, collaborations or service providers.
 We require our external managers to engage with companies on ESG factors on our behalf.
 We do not engage directly and do not require external managers to engage with companies on ESG factors.
Listed equity – voting
 We cast our (proxy) votes directly or via dedicated voting providers
 We require our external managers to vote on our behalf.
 We do not cast our (proxy) votes directly and do not require external managers to vote on our behalf
Fixed income SSA – engagement
 We engage with SSA bond issuers on ESG factors via our staff, collaborations or service providers.
 We do not engage directly and do not require external managers to engage with SSA bond issuers on
ESG factors. Please explain why you do not.

15

Fixed income Corporate (financial) – engagement
 We engage with companies on ESG factors via our staff, collaborations or service providers.
 We do not engage directly and do not require external managers to engage with companies on ESG
factors. Please explain why you do not.
Fixed income Corporate (non-financial) – engagement
 We engage with companies on ESG factors via our staff, collaborations or service providers.
 We do not engage directly and do not require external managers to engage with companies on ESG
factors. Please explain why you do not.
Fixed income Corporate (securitised) – engagement
 We engage with companies on ESG factors via our staff, collaborations or service providers.
 We do not engage directly and do not require external managers to engage with companies on ESG
factors. Please explain why you do not.
OO 11

Mandatory

OO 11.1

PublicGateway

General

Select the internally managed asset classes in which you addressed ESG incorporation into yourinvestment decisions and/or your active ownership practices (during the reporting year).

Listed equity
 We address ESG incorporation.
 We do not do ESG incorporation.

Fixed income - SSA
 We address ESG incorporation.
 We do not do ESG incorporation.

Fixed income - corporate (financial) We address ESG incorporation.
 We do not do ESG incorporation.

Fixed income - corporate (non-financial) We address ESG incorporation.
 We do not do ESG incorporation.

Fixed income - securitised
 We address ESG incorporation.
 We do not do ESG incorporation.

16

Property
 We address ESG incorporation.
 We do not do ESG incorporation.

Fund of hedge funds
 We address ESG incorporation.
 We do not do ESG incorporation.

Cash We address ESG incorporation.
 We do not do ESG incorporation.

OO 11.2

Asset
class

Select the externally managed assets classes in which you and/or your investment consultants
address ESG incorporation in your external manager selection, appointment and/or monitoringprocesses.

ESG incorporation addressed in your external manager selection, appointment and/or
monitoring processes

Listed equity
Listed equity - ESG incorporation addressed in your external manager selection,
appointment and/or monitoring processes We incorporate ESG into our external manager selection process We invest only in pooled funds and external manager appointment is not applicable We incorporate ESG into our external manager monitoring process We do not do ESG incorporation

OO 11.4

Provide a brief description of how your organisation includes responsible investment considerations
in your investment manager selection, appointment and monitoring processes.

We appoint third party managers through investing into ETFs contributing to the fulfilment of some of our multi asset
strategies. But it's fair to say, this type of fulfilment is relatively limited - around 1% of our global AUMs - as we are
generally privileging internal capabilities and are also fast developing proprietary ETFs for both equities and fixedincome.

OO 11.5

For your externally managed pooled funds, describe any mechanisms in place to set expectations
as part of the appointment or commitment process.

We check exclusion of banned weapons and progressively move to also measure carbon footprint and ESG qualityof the selected third party ETFs.

OO 12

Mandatory

Public17

Gateway

GeneralOO 12.1

Below are all applicable modules or sections you may report on. Those which are mandatory toreport (asset classes representing 10% or more of your AUM) are already ticked and read-only.
Those which are voluntary to report on can be opted into by ticking the box.

Core modules
 Organisational Overview
 Strategy and Governance

RI implementation directly or via service providers

Direct - Listed Equity incorporation
 Listed Equity incorporation

Direct - Listed Equity active ownership Engagements (Proxy) voting

Direct - Fixed Income
 Fixed income - SSA
 Fixed income - Corporate (financial) Fixed income - Corporate (non-financial) Fixed income - Securitised

Direct - Other asset classes with dedicated modules
 Property
 Hedge Funds and/or Fund of Hedge Funds

Closing module Closing module

OO 12.2

Additional information. [Optional]

We've had some recent developments at the HSBC group level which have a bearing on our PRI submission.
Alongside our Group Management Board and its audit committee, decision has been taken to explicitly consider as
ESG inclusive only those strategies which are very formally embedding ESG considerations in their investment
decision making and risk monitoring processes. This proves to be the case for 90% of our assets undermanagement. This doesn't mean the remaining 10% have no ESG integration process at all ... However, as it is thecase for alternative investments - hedge funds and hedge funds of funds -, the concerned process has to be viewed
rather as being under development than fully mature.

Peering questions
18

OO LE 01

Mandatory to Report Voluntary toDisclose

PublicGateway

GeneralProvide a breakdown of your internally managed listed equities by passive, active - quantitative(quant), active - fundamental and active - other strategies.

OO LE
01.1

Percentage of internally managed listed equities

Passive
10

Active - quantitative (quant)35

Active - fundamental and active - other
55

Total
100%
OO FI 01

Mandatory to Report Voluntary toDisclose

OO FI 01.1

PublicGateway

GeneralProvide a breakdown of your internally managed fixed income securities by active and passive
strategies

19

SSA

Passive
0

Active - quantitative (quant)0

Active - fundamental and active - other
100

Total
100%

Corporate (financial)

Passive
10

Active - quantitative (quant)0

Active - fundamental and active - other
90

Total
100%

Corporate (nonfinancial)

Passive
10

Active - quantitative (quant)0

Active - fundamental and active - other
90

Total
100%

20

Securitised

Passive
0

Active - quantitative (quant)0

Active - fundamental and active - other
100

Total
100%
OO FI 03

Mandatory

PublicDescriptive

GeneralUpdate: this indicator has changed from "Mandatory to report, voluntary to disclose" to "Mandatory". Your responseto this indicator will be published in the Public Transparency Report. This change is to enable improved
analysis and peering.

OO FI 03.1

Indicate the approximate (+/- 5%) breakdown of your SSA investments, by developed markets andemerging markets.

SSA
Developed markets
70

Emerging markets
30

Total
100%

OO FI 03.2

Indicate the approximate (+/- 5%) breakdown of your corporate and securitised investments byinvestment grade or high-yield securities.

21

Type

Investment grade (+/- 5%)

High-yield (+/- 5%)

Corporate (financial)

 >50%

 >50%

 10-50%

 10-50%

 <10%

 <10%

 0%

 0%

Corporate (non-financial)  >50%

Securitised

Total internally managed

100%

 >50%

 10-50%

 10-50%

 <10%

 <10%

 0%

 0%

 >50%

 >50%

 10-50%

 10-50%

 <10%

 <10%

 0%

 0%

100%

100%

If you are invested in private debt and reporting on ratings is not relevant for you, please indicate
below
 OO FI 03.2 is not applicable as our internally managed fixed income assets are invested only in private debt.
OO SAM 01

Mandatory to Report Voluntary toDisclose

PublicGateway

GeneralProvide a breakdown of your externally managed listed equities and fixed income by passive,
active quant and, active fundamental and other active strategies.

OO SAM
01.1

Listed equity(LE)

Passive
100

Active - quantitative (quant)0

Active - fundamental and active - other
0100%

OO PR 01

Mandatory to Report Voluntary toDisclose

Public22

Descriptive

GeneralOO PR
01.1

Indicate the level of ownership you typically hold in your property investments.

 a majority stake (50% and above) a significant minority stake (10 and above, and under 50%)
 a limited minority stake (<10%) a mix of ownership stakes
 N/A, we manage properties, new constructions and/or refurbishments on behalf of our clients, but do not holdequity in property on their behalf

Provide a breakdown of your organisations allocation to Real Estate Investment Trusts (REITs) or
similar

OO PR
01.2
 >50%
 10 – 50%
 <10% 0%
OO PR 02

OO PR
02.1

Mandatory to Report Voluntary toDisclose

PublicGateway

GeneralProvide a breakdown of your organisation’s property assets based on who manages the assets.

23

Property assets managed by

Breakdown of your property assets (by number)Managed directly by your organisation

 >50%
 10-50%
 <10%
 0%Managed via third-party property managers appointed by you  >50%
 10-50%
 <10%
 0%Managed by other investors or their property managers

 >50%
 10-50%
 <10%
 0%Managed by tenant(s) with operational control

 > 50% 10-50%
 < 10% 0%

Total 100%OO PR 03

OO PR
03.1

Mandatory to Report Voluntary toDisclose

PublicDescriptive

Indicate up to three of your largest property types by AUM.

24

GeneralTypesMain property types (by AUM)

Largest property type

 Industrial
 Retail Office Residential
 Leisure/Hotel Mixed use Other, specify

Second largest property type  Industrial
 Retail Office Residential
 Leisure/Hotel Mixed use Other, specify
Third largest property type

 Industrial
 Retail Office Residential
 Leisure/Hotel Mixed use Other, specify

OO HF 01

OO HF
01.1

Mandatory to Report Voluntary toDisclose

PublicDescriptive

Please describe your hedge fund strategies and classification

Options presented for fund of hedge funds

25

GeneralFund of hedge fund sub-strategies

Approximate % of internally managed hedge fund AUM

Conservative

 >50%
 10-50%
 <10%
 0%

Diversified

 >50%
 10-50%
 <10%
 0%Market Defensive

 >50%
 10-50%
 <10%
 0%Strategic

 >50%
 10-50%
 <10%
 0%

Total 100% (of internal Fund of Hedge Fund AUM)

26

HSBC Global Asset Management

Reported Information
Public version
Strategy and Governance

PRI disclaimer
This document presents information reported directly by signatories. This information has not been audited by the PRISecretariat or any other party acting on their behalf. While this information is believed to be reliable, no representations or
warranties are made as to the accuracy of the information presented, and no responsibility or liability can be accepted forany error or omission.

27

Investment policy
SG 01

Mandatory

PublicCore Assessed

GeneralNew selection options have been added to this indicator. Please review your prefilled responses carefully.

SG 01.1

Indicate if you have an investment policy that covers your responsible investment approach.

 Yes

SG 01.2

Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

 Policy setting out your overall approach Applicable policies cover all AUM

 Formalised guidelines on environmental factors

 Applicable policies cover a majority of AUM

 Formalised guidelines on social factors

 Applicable policies cover a minority of AUM

 Formalised guidelines on corporate governance factors
 Fiduciary (or equivalent) duties
 Asset class-specific RI guidelines
 Sector specific RI guidelines Screening / exclusions policy Engagement policy (Proxy) voting policy Other, specify (1) Other, specify(2)28Indicate if the investment policy covers any of the following

SG 01.3

 Your organisation’s definition of ESG and/or responsible investment and it’s relation to investments
 Your investment objectives that take ESG factors/real economy influence into account Time horizon of your investment
 Governance structure of organisational ESG responsibilities
 ESG incorporation approaches
 Active ownership approaches
 Reporting Climate change Understanding and incorporating client / beneficiary sustainability preferences Other RI considerations, specify (1) Other RI considerations, specify (2)SG 01.4

Describe your organisation’s investment principles and overall investment strategy,interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real
economy impact.

We believe that environmental, social and governance (ESG) factors can have a material effect on company
long-term fundamentals, in terms of both opportunity and risk. As such, and in line with the Principles for
Responsible Investment, we incorporate ESG factors into investment analysis and decision-making processes
and consider it our fiduciary duty to do so.
This benefits our investment decisions, for example facilitating a better understanding of risks and opportunities
that may impact valuations, and therefore ultimately benefits our clients. We also believe that over time active
stewardship by ourselves and others will have a beneficial impact upon the real economy.

SG 01.5

Provide a brief description of the key elements, any variations or exceptions to yourinvestment policy that covers your responsible investment approach. [Optional]

As long term investors we believe ESG factors can materially impact a company's performance.
Taking ESG into account allows us to identify possible risks and opportunities. For us, climate change andenergy transition are undoubtedly the most significant and relevant criteria to look at.
It can also provide an early warning of potential deterioration in company fundamentals. This enables us tomake more considered valuations and can enhance investment performance. As such, it is consistent with our
fiduciary duty to safeguard clients' money.
 No
SG 01 CC

SG 01.6
CC

Mandatory to Report Voluntary toDisclose

PublicDescriptive

GeneralIndicate whether your organisation has identified transition and physical climate-related risks andopportunities and factored this into the investment strategies and products, within theorganisation’s investment time horizon.

 Yes

29

Describe the identified transition and physical climate-related risks and opportunities and how
they have been factored into the investment strategies/products.
We have published alongside Vivid Economics an analysis of climate change scenarios equities valuations
which is detailed below and can be found under the following link:
https://no.assetmanagement.hsbc.com/en/institutional-and-professional-investor/news-and-insights/lowcarbon-transition-scenarios

 No

SG 01.7
CC

Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

 Yes

Describe the associated timescales linked to these risks and opportunities.
We worked with Vivid Economics to develop six new illustrative low carbon transition scenarios, initially looking
at two critical axes of uncertainty - the timing of action and the technology pathway of the transition. The
scenarios chosen for this report are in line with the IEA Sustainable Development Scenario (SDS), as well as
its earlier WEO 450 scenario. In comparison to the IPCC 1.5° Special Report (IPC 1.5 SR) scenarios, thescenarios used here are in between IPCC scenarios for achieving 1.5° C with a 50-66% probability, andscenarios for achieving 2° C with a 50-66% a probability.
The scenarios are produced using Imperial College London's TIMES Integrated Assessment Model (TIAMGrantham). TIAM is a global system model with a high degree of disaggregation, containing thousands oftechnologies, fourteen regions and five major energy end-use sectors. All analysis was based on modelling of
the economic impacts from 2018 to 2050.
We have also worked on a comparable analysis applied this time to corporate credits.

 No

SG 01.8
CC

Indicate whether the organisation publicly supports the TCFD?

 Yes
 No

SG 01.9
CC

Indicate whether there is an organisation-wide strategy in place to identify and manage material
climate-related risks and opportunities.

 Yes

Describe
We have a clear policy aimed at increasing the climate resilience of our clients' investments as well as
contributing towards financing the transition to a low carbon economy.
Two key pillars of our strategy are firstly, to identify and integrate climate-related risks and opportunities
presented by climate change and climate policy to our investment portfolios using relevant data and analysis,
including scenario analysis, to inform our investment decisions and secondly to engage with investee
30companies to better understand and support their disclosure and management of the risks and opportunities
presented by climate change and climate policy.
We engage directly and collaboratively, using our voting decisions, where appropriate, to escalate.
 No

SG 1.10
CC

Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.

 Public PRI Climate Transparency Report Annual financial filings
 Regular client reporting Member communications
 Other We currently do not publish TCFD disclosures
SG 02

Mandatory

PublicCore Assessed

PRI 6

New selection options have been added to this indicator. Please review your prefilled responses carefully.

SG 02.1

Indicate which of your investment policy documents (if any) are publicly available. Provide a URL
and an attachment of the document.

 Policy setting out your overall approach

URL/Attachment
 URL

URL
http://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing Attachment (will be made public)
 Formalised guidelines on environmental factors

URL/Attachment
 URL

URL
http://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing/climatechange Attachment (will be made public)
 Formalised guidelines on social factors
 Formalised guidelines on corporate governance factors
31

URL/Attachment
 URL

URL
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsibleinvesting/stewardship Attachment (will be made public)
 Fiduciary (or equivalent) duties

URL/Attachment
 URL

URL
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing Attachment (will be made public)
 Asset class-specific RI guidelines Screening / exclusions policy

URL/Attachment
 URL

URL
https://www.assetmanagement.hsbc.co.uk/-/media/files/attachments/common/responsible-investmentpolicy-may-2017.pdf
 Attachment (will be made public)
 Engagement policy

URL/Attachment
 URL

URL
https://www.global.assetmanagement.hsbc.com/-/media/files/attachments/common/resourcedocuments/engagement-policy-en.pdf
 Attachment (will be made public) (Proxy) voting policy

32

URL/Attachment
 URL

URL
https://www.global.assetmanagement.hsbc.com/-/media/files/attachments/common/resourcedocuments/global-voting-guidelines-en.pdf
 Attachment (will be made public)
 We do not publicly disclose our investment policy documents

SG 02.2

Indicate if any of your investment policy components are publicly available. Provide URL and an
attachment of the document.

 Your organisation’s definition of ESG and/or responsible investment and it’s relation to investments

URL/Attachment
 URL

URL
http://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing Attachment
 Your investment objectives that take ESG factors/real economy influence into account Time horizon of your investment
 Governance structure of organisational ESG responsibilities
 ESG incorporation approaches

URL/Attachment
 URL

URL
http://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing/esgintegration
 Attachment
 Active ownership approaches

URL/Attachment
 URL

33

URL
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsibleinvesting/stewardship Attachment
 Reporting

URL/Attachment
 URL

URL
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing Attachment
 Climate change

URL/Attachment
 URL

URL
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing/climatechange Attachment
 We do not publicly disclose any investment policy components

SG 02.3

Additional information [Optional].

We have developed a set of policies outlining our commitment and approach to embed ESG and stewardship within
our investment practices. We view these as part of our stewardship and fiduciary responsibilities.
* Responsible Investment Policy: Applying to all asset classes, this document describes the overarching principles
framing our ESG Integration and broader RI and stewardship commitment.
* Climate Change Policy: Outlines our approach to addressing climate-related risks and opportunities for our clients.
* Banned Weapons Policy: Outlines our approach to excluding those companies involved in the manufacture of
weapons banned by international conventions* The Green Impact Investments Guidelines: Detailing our commitment to mobilising sustainable capital with a viewto contributing to the United Nations Sustainable Development Goals (SDGs) and the global transition to a lowcarbon economy.
* Voting guidelines: We believe high standards of corporate governance help companies deliver sustainable returns
to shareholders. In our dealings with investee companies, and in our voting, we encourage adherence tointernational and local best practice standards in corporate governance. Our Voting Guidelines have beendeveloped leveraging our experience voting across the markets in which we invest as well as reflect widely accepted
principles of good governance as reflected in local corporate governance codes.
* Engagement policy: Outlines our approach to engagement and how this links with our voting activity.

34

SG 03

Mandatory

PublicCore Assessed

GeneralIndicate if your organisation has a policy on managing potential conflicts of interest in theinvestment process.

SG 03.1
 Yes

Describe your policy on managing potential conflicts of interest in the investment process.

SG 03.2

We are a global organisation which provides a wide range of financial products and services. As such, we, or acompany with whom we have an association may from time-to-time have interests which conflict with ourclients' interests or with the duties we owe our clients. While we are part of the HSBC Group, we arefunctionally and operationally independent from, and maintain an arm's length commercial relationships with,other HSBC Group companies.
Our voting guidelines are intended to identify the best interest of all clients as investors in a particular company.
Basing our voting decisions upon these guidelines helps us to manage conflicts of interest. When voting,situations where there may be a potential or actual conflict of interest are considered. Our processes permit
deviating from vote recommendations provided by ISS, and if the deviation is because there is a conflict ofinterest the matter is escalated to the Stewardship and Fiduciary Conflicts Forum for guidance before
submitting our vote. If a conflict arises through holdings in both sides of a transaction, the holding in eachcompany is voted in the interest of clients as investors in each company.
 No

SG 03.3

Additional information. [Optional]

In addition to the above:- Clients in segregated mandates can undertake their own voting or instruct votes on their own portfolios on an ad
hoc basis.
- When undertaking engagement we maintain a high standard of research, communication and documentation. If
proposed or actual engagement creates a conflict of interest, the conflict is escalated to relevant parties anddocumented accordingly.
- If a conflict cannot be managed, the conflict is escalated to Compliance. Upon concurrence of the conflict byCompliance, the conflict is then communicated to the Conflicts of Interest Register Owner who is responsible for
updating the Conflict of Interest Register as well as reporting the conflict to the HSBC Group's Conflict Management
Office, our Global Chief Executive Officer, our Global Chief Risk Officer, and our relevant conflict of interest
governance forum.

SG 04

Voluntary

SG 04.1

PublicDescriptive

GeneralIndicate if your organisation has a process for identifying and managing incidents that occur within
investee entities.

 Yes
 No

35

Describe your process on managing incidents

SG 04.2

We monitor companies through our investment process. For active portfolios, this includes assessment ofcompanies' own and market data, consideration of research from brokers and other independent research providers-including ESG & voting research, attending individual & group meetings with company management and directors,
visiting production sites, talking to competitors and customers, and our own financial modelling. For companies held
only in passive portfolios, we assess external ESG & voting research and engage with company management and /or directors to raise company specific or thematic issues of concern. We also would like to highlight that we are
currently supplementing our existing framework with a new tool - Reprisk - enabling us to track companies'
reputational risk and involvement in ESG-related controversies.
Whilst investors can never know all that is happening inside a company and or receive price sensitive information,
we believe that our investment process for active portfolios makes us acutely sensitive to variations in company
performance, drivers of value and risk, strengths and weaknesses of corporate leadership and the quality ofcompanies' reporting.
Where we have concerns with a company that has not demonstrated that an issue has been adequately addressed,
we have a variety of escalation options. In the first instance, issues which have not been addressed satisfactorily byexecutive management may be raised with board members. At each stage of our escalation, we are seeking
confidence that our concern is either misplaced or is acknowledged and being addressed appropriately. If that
confidence is lacking, we consider further escalation in our engagement. For example, this may result in ourattending and making public statements at company AGMs or co-filing shareholder resolutions.

Objectives and strategies
SG 05

Mandatory

SG 05.1

PublicGateway/Core Assessed

GeneralIndicate if and how frequently your organisation sets and reviews objectives for its responsible
investment activities.

 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad-hoc basis
 It is not set/reviewed

SG 05.2

Additional information. [Optional]* In 2015 we set up a quarterly investment ESG Oversight Forum chaired by the Global CIO and comprising
many of the most senior members of the Investment Function: Global CIO Equities, Global CIO Fixed Income,Global Head of Credit Research, Global Head of Corporate Governance, Global Head of ESG Research, Deputy
CIO Equities and UK CIO. The purpose of this Forum is for the Investment team to oversee its progress in
implementing Stewardship and ESG integration. Its members are also those responsible for providing investment
function approval of our annual submission to the PRI survey.
* In 2018 our Governance framework was enhanced further with a view to further embed ESG and Stewardshipconsiderations into our various investment strategies and also strengthen top management's oversight.
As such we now have the following structure in place:* Stewardship and Fiduciary Conflicts Forum (SFCF) : The purpose of this forum is (a) to manage and monitor
AMG's stewardship responsibilities at Board level, including voting and engagement, and (b) to serve as a forum fordiscussion and guidance on complex issues which could lead to a conflict in fulfilling our fiduciary obligation tocustomers. This Forum runs on a quarterly basis.
Membership includes: Global Chief Executive Officer, Global Chief Investment Officer, Head of Responsible
Investment, Global Chief Risk Officer and Global Head of Compliance.
36

* Stewardship, Engagement & ESG Quarterly Committee: The purpose of this group is to: (i) ensure consistency of
stewardship activities with broader asset management priorities, (ii) to oversee Front Office adherence to obligations(such as UNPRI, Controversial weapons etc.); and (iii) to oversee the high level ESG process.
Membership includes: Global Head of ESG, Global Head of Corporate Governance, Global CIO, Equity CIO, Fixed
Income CIO, and Responsible Investment Specialists.
* ESG Investment Oversight Committee: This is a sub-working group of the above committee that drives ESG
integration within asset class research and portfolio management processes. It strives to promote best practice withregard to ESG integration.
Membership includes: Global Head of ESG, Global Head of Corporate Governance, UK CIO, Heads of Research for
Equities and Fixed Income respectively.
* Fixed Income ESG Investment Committee: This is a fixed income single asset class committee, which is
responsible for the application of the responsible investment process in fixed income portfolios. It is also responsible
for the ratification of green bond approvals and ongoing re-certification. This committee is supplemented by a Green
Bonds committee.
Membership includes: Global CIO of Fixed Income, Heads of Credit Research, Senior Credit Research Analysts,
Senior Credit Portfolio Managers and the Global Head of ESG

SG 06

Voluntary

SG 06.1

PublicDescriptive

GeneralList the main responsible investment objectives that your organisation set for the reporting year.

Responsible investment processes
 Provide training on ESG incorporation

Key performance indicator
Updating all teams on our ESG methodology and expected deliverables.

Progress achieved
With the help of one of our third party research providers, we held a number of training sessions to provide
investment teams in key locations with a methodological update regarding ESG rating and broader ESG
integration.
The training served as a refresher of the PRI Academy training (previously RI Academy training) which wasattended by all our desk heads and CIOs some years ago.
The training was supplemented by sector specific calls, providing sector analysts with an update regarding
the evolving and tightening regulatory framework, disclosure guidelines, best practices and new technologies
within their respective sectors.
Additionally, our global fixed income team held regional seminars which included responsible investment
topics to support ESG integration. The seminars were supported by webinars co-hosted by our Global Headof ESG Research and the investment team on subjects such as carbon risk, engagement and green bonds.
All training materials and other supporting documents are centrally stored and updated on a dedicated fixedincome ESG sharepoint site, including responsible investment policies and guidance notes.
More recently, in 2019, our equities teams have hosted a series of Webex sessions dealing with numerous
ESG topics ranging from carbon-focused engagement (Carbon 100+), Impact Investing ...

 Provide training on ESG engagement
37

Key performance indicator
Increasing the % of ESG inclusive corporate meetings

Progress achieved
We consider meetings with issuers as an opportunity to gather valuable investment-related information as
well as raise concerns/encourage adoption of best practice as appropriate.
To support our process, we have developed "ESG key topic sheets", each focused on a specific industry
group, outlining sector specific material ESG issues. Each of the ESG key topics sheets included a set of
potential engagement questions to guide our analysts and PMs when meeting a company. These documents
are set to be revised on a yearly basis going forward.
In 2016 we developed a logging and tracking system for engagements activity conducted by our Investment
and Stewardship teams. In 2018 this was migrated to an Outlook/Bloomberg application. As a result, wehave observed better understanding of the role of engagement in the investment process, increased
willingness to raise ESG concerns, as well as enhanced reporting on engagement activity. All thesechecklists were updated in 2019 alongside equities and credit research teams. They are now aligned with
SASB guidelines and show concerned industry's carbon footprint.
This has enabled to further increase to 1,200+ the number of ESG-inclusive engagements which are now all
tracked and reported thanks to a dedicated tool called STAR launched in 2019.

 Improved communication of ESG activities within the organisation

Key performance indicator
Achieve lower weighted average carbon and higher ESG scores

Progress achieved
In 2018, the ESG/Sustainability section of our corporate website was very substantially upgraded in order tobetter reflect the breadth and depth of all our RI achievements, encompassing the full spectrum of voting,engagement, stewardship, ESG integration, sustainable products, research, advocacy...
We have also launched a series of ESG e-learnings and hosted multiple ESG briefing sessions. Finally wehave more proactively distributed within the organisation: stewardship reports, white papers, quarterly
reporting...
All of this contributes to raise our staffs' awareness and hence raise the level of the playing field.
 Improved engagement to encourage change with regards to management of ESG issues
 Improved ESG incorporation into investment decision making processes

Key performance indicator
Systematise pre investment ESG assessment

38

Progress achieved
All internal company-level research documents - for equities and credit - have now an ESG section and wekeep our investment teams updated on any changes to our ESG material issues framework, thanks to tools
such as RepRisk which we onboarded in 2019, which helps us tracking most pressing ESG issues.
Companies that we identify as high risk based on our in house ESG rating process require an Enhanced Due
Diligence (EDD). This is a compulsory part of our investment process, applying to equally to Fixed Income
and Equities.
During Q4 2018 we began work to consider to which extent an ESG scoring could fit in our internal credit
and equities ratings and this work is still ongoing. However, in 2019, we made some very good progressconcerning the inclusion of an ESG assessment in our credit scoring process.
Some Equities teams are now prototyping a quantitative ESG pre-scoring relying on Bloomberg data. This isframed around the ESG issues identified when creating the 24 sector checklists. The 3 first sectors we havestarted to work on are European utilities, automotive industry and banks: a diversified panel enabling us totest the relevance of the methodology .
 Other, specify (1) Other, specify (2)other description (2)Continue to develop sustainable investment solutions

Key performance indicator
Broadening products range available to meet our clients’ investment needs, measured by client interest and
AUMs

Progress achieved* We have 3 French-domiciled SRI portfolios managed according to a best-in-class methodology. These 3
strategies have attracted substantial inflows and the plan is to keep on promoting them this year. They all
have ISR accreditation.
* This range was supplemented in December 2018 by a TEEC strategy: Environmental and Energy
Transition, aligned with French Energy Transition Law. Notwithstanding its ISR accreditation, this sub-fundalso has Greenfin accreditation.
* We continue to develop our two lower carbon strategies launched in September 2017. HSBC Global
Investment Funds Lower Carbon Equity Fund and HSBC Global Investment Funds Global Lower Carbon
Bond Fund are both pursuing a double objective consisting in tracking mainstream benchmarks while striving
to achieve a significantly lower carbon intensity.
* In 2019 we also launched various multi-assets strategies in both France and the UK and have beenmarketing a new Real Economy Green Investment Opportunity called REGIO. This innovative strategy istargeting institutional investors and is aiming at contributing to the development of the green bond market in
low and middle income countries.
* In 2020, our product development pipeline has ESG and Low Carbon ETFs as a high priority.
 Other, specify (3) None of the above

39

Financial performance of investments Increase portfolio performance by consideration of ESG factors
 Other, specify (1) Other, specify (2) Other, specify (3) None of the above

ESG characteristics of investments
 Over or underweight companies based on ESG characteristics
 Improve ESG ratings of portfolio

Key performance indicator
Achieve lower weighted average carbon and ESG scores

Progress achieved
As part of the fixed income regional seminars, we undertook portfolio reviews that included various ESG
metrics of certain bond funds.
As a result, we identified opportunities to reduce portfolio carbon risk or increase weighted average ESG
scores Setting carbon reduction targets for portfolio

Key performance indicator
For our Lower Carbon range, explicit carbon intensity reduction targets - compared to benchmark - havebeen set

Progress achieved
After a 2+ year track record we can confirm average carbon intensity targets have been fully met and provesignificantly lower than that of respective global equities and global corporate bonds universe averages.

 Other, specify (1) Other, specify (2) Other, specify (3) None of the above

Other activities
 Joining and/or participation in RI initiatives

40

Key performance indicator
Our participation in industry initiatives

Progress achieved
We are members of a number of industry initiatives in order to learn from others, offer support and use
combined influence to affect change: These include:- Principles for Responsible Investment (Global)- Climate Action 100+ (Global)- International Corporate Governance Network (ICGN) (Global)- Blended Finance Taskforce (Global) - together with HSBC Group- Cambridge Institute for Sustainability Leadership - Investor Leaders Group (Global)- Workforce Disclosure Initiative (Global)- Asian Corporate Governance Association (ACGA) (Asia)- European Fund and Asset Management Association (EFAMA) (Europe)- Institutional Investor Group on Climate Change (IIGCC) (Europe)- Council of Institutional Investors (CII) (North America)- Investor Stewardship Group (North America)- City of London Green Finance Initiative (GFI) (UK)- The Investment Association (UK)- The Investor Forum (UK)- Tomorrow's Company - The Stewardship Alliance (UK)- UK Sustainable Investment and Finance Association (UKSIF) (UK)- FIR Forum pour l'Investissement Responsable (French SIF) (France)- AFG Association Française de Gestion (France)
Most recent addition is our involvement in the One Planet Sovereign Wealth Funds Initiative which
commenced in 2018 and was announced in 2019.

 Encouraging others to join a RI initiative Documentation of best practice case studies
 Using case studies to demonstrate engagement and ESG incorporation to clients

Key performance indicator
Communicate further on integration

Progress achieved
We provided a credit case study for the PRI report on "ESG, credit risk and ratings part 3" and have included
further details and case studies on integration in both our 2019 and 2020 Responsible Investment Annual
Reviews.
 Other, specify (1)41other description (1)Increase engagement activities to improve responsible investment approach

Key performance indicator
Number of companies engaged

Progress achieved
We continue to increase the number of companies with whom we engage - as part of our investment due
diligence - and also collectively, alongside other investors, through collaborative engagements.
We have now in excess of +1,200 ESG-focused engagements as reported
 Other, specify (2) Other, specify (3) None of the above

Governance and human resources
SG 07

Mandatory

SG 07.1

PublicCore Assessed

GeneralIndicate the internal and/or external roles used by your organisation, and indicate for each whether
they have oversight and/or implementation responsibilities for responsible investment.

Roles Board members or trustees
 Internal Roles (triggers other options)42Select from the below internal roles
 Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Operating Officer (COO),
Investment Committee Oversight/accountability for responsible investment
 Implementation of responsible investment
 No oversight/accountability or implementation responsibility for responsible investment
 Other Chief-level staff or head of department, specify
 Portfolio managers
 Oversight/accountability for responsible investment
 Implementation of responsible investment
 No oversight/accountability or implementation responsibility for responsible investment
 Investment analysts
 Oversight/accountability for responsible investment
 Implementation of responsible investment
 No oversight/accountability or implementation responsibility for responsible investment
 Dedicated responsible investment staff
 Oversight/accountability for responsible investment
 Implementation of responsible investment
 No oversight/accountability or implementation responsibility for responsible investment
 Investor relations
 Other role, specify (1) Other role, specify (2) External managers or service providers
 Oversight/accountability for responsible investment
 Implementation of responsible investment
 No oversight/accountability or implementation responsibility for responsible investment

SG 07.2

For the roles for which you have RI oversight/accountability or implementation responsibilities,
indicate how you execute these responsibilities.

Our Global Chief Investment Officer is ultimately responsible for our investment process across all asset classes,
which includes our integration and stewardship process.
Our Global Head of ESG Research is responsible for ensuring we have access to adequate data, produce sector
level and thematic ESG research and developing/maintaining the tools required to integrate ESG issues into ourinvestment process.
Our Global Head of Corporate Governance oversees the implementation of our global voting guidelines and our
engagement activities. Both our Global Head of ESG Research and our Global Head of Corporate Governance sit
within our investment function. Our Global CIO chairs our Stewardship, Engagement & ESG Quarterly Committee,
attended by senior management from the investment function to oversee and monitor our integration andstewardship practices.
Our Head of Responsible Investment has oversight of all RI-related products and ESG-related policies.
Finally the Stewardship and Fiduciary Conflicts Forum (SFCF) manages and monitors HSBC Global AssetManagement's stewardship responsibilities at Board level. Its membership includes: Global Chief Executive Officer,
Global Chief Investment Officer, Head of Responsible Investment, Global Chief Risk Officer; Global Head ofCompliance.

43

SG 07.3

Indicate the number of dedicated responsible investment staff your organisation has.

Number12

SG 07.4

Additional information. [Optional]

At HSBC Global Asset Management level, the framework we have designed is the following:* In the core of our investment function we have a team dedicated to the planning, execution and monitoringof ESG integration and stewardship (including voting and engagement).This team is located within each of ourlargest investment offices, Hong Kong, Paris and London.
- For our integration work, the team is responsible for capacity building and ensuring we have the data and tools
required. The integration of ESG issues into investment decision-making itself is the responsibility of all our equity
and credit Analysts and portfolio managers. Then, the ESG Investment Oversight Committee drives ESG integration
within asset class research and portfolio management processes. This committee strives to promote best practicewith regard to ESG integration. The members of the ESG Investment Oversight Committee are all senior members
from the investment function and have operational oversight on ESG integration implementation. There is also aFixed Income ESG Investment Committee, which is responsible for the application of the responsible investment
process in fixed income portfolios. It is responsible for the ratification of green bond approvals and ongoing recertification.
- On stewardship, a team of dedicated specialists develops our global voting policy and oversees the process
globally in close partnership with our investment professionals. This team is also responsible for the planning anddelivering of our engagement activity.
* In addition, our Head of Responsible Investment and team of responsible investment specialists coordinate
all client-related RI activities, leading ESG-focused product development across all asset classes as well our policy
advocacy activities.

But, this framework which is specific to HSBC Global Asset Management forms part of much broader, HSBC Grouplevel infrastructure* HSBC Global Asset Management is a member of HSBC Group's Climate Business Council (CBC), which
was sponsored by HSBC's Global CEO. The CBC is an internal strategic committee whose role is to coordinate
across the whole of HSBC, identifying and developing products and services to meet clients' sustainable financeneeds. The CBC supports banking clients who are transitioning to a low-carbon economy. It also pursues
opportunities for collaboration across customer groups and products to support integrated climate related initiatives,
such as smart cities, and sharing best practices with clients on opportunities to increase energy efficiency andreduce carbon emissions.

SG 07 CC

Mandatory to Report Voluntary toDisclose

SG 07.5CC

PublicDescriptive

GeneralIndicate the roles in the organisation that have oversight, accountability and/or management
responsibilities for climate-related issues.

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Risk Officer (CRO),
Investment Committee Oversight/accountability for climate-related issues
 Assessment and management of climate-related issues
 No responsibility for climate-related issues

44

Portfolio managers
 Oversight/accountability for climate-related issues
 Assessment and management of climate-related issues
 No responsibility for climate-related issues

Investment analysts
 Oversight/accountability for climate-related issues
 Assessment and management of climate-related issues
 No responsibility for climate-related issues

Dedicated responsible investment staff
 Oversight/accountability for climate-related issues
 Assessment and management of climate-related issues
 No responsibility for climate-related issues

External managers or service providers
 Oversight/accountability for climate-related issues
 Assessment and management of climate-related issues
 No responsibility for climate-related issues

SG 07.7
CC

For management-level roles that assess and manage climate-related issues, provide further
information on the structure and processes involved.

As already mentioned, senior staff members have overall ESG oversight and this obviously includes the supervisionof our climate-related practices.


Our Global Chief Investment Officer is ultimately responsible for our investment process across all asset
classes, which includes our integration and stewardship process.



Our Global Head of ESG Research is responsible for ensuring we have access to adequate data, produce
sector level and thematic ESG research and developing/maintaining the tools required to integrate ESG
issues into our investment process.



Our Global Head of Corporate Governance oversees the implementation of our global voting guidelines
and our engagement activities. Both our Global Head of ESG Research and our Global Head of Corporate
Governance sit within our investment function and report to the Chief Investment Officer responsible forinvestment governance. Our Global CIO chairs our investment ESG Oversight committee, attended by senior
management from the investment function to oversee and monitor our integration and stewardship practices.



Our Head of Responsible Investment has oversight of all RI-related products.

Finallythe Stewardship and Fiduciary Conflicts Forum (SFCF) manages and monitors HSBC Global AssetManagement's stewardship responsibilities at Board level. Its membership includes some of our most seniorstaffs: Global Chief Executive Officer, Global Chief Investment Officer, Head of Responsible
Investment, Global Chief Risk Officer; Global Head of Compliance.

45

Indicate how your organisation engages external investment managers and/or service providers on
the TCFD recommendations and their implementation.

SG 07.8CC Request that external managers and/or service providers incorporate TCFD into mainstream financial filings(annual financial reports, other regulatory reporting or similar) Request incorporation of TCFD into regular client reporting Request that external managers complete PRI climate indicator reporting Request responses to TCFD Fund Manager questions in the PRI Asset Owner Guide Other We do not engage with external managers and/or service providers on the TCFD recommendations and theirimplementation
SG 08

Voluntary

SG 08.1

PublicAdditional Assessed

GeneralIndicate if your organisation’s performance management, reward and/or personal development
processes have a responsible investment element.

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Operating Officer (COO),
Investment Committee

SG 08.1a

RI in objectives, appraisal and/or reward Responsible investment KPIs and/or goals included in objectives
 Responsible investment included in appraisal process Variable pay linked to responsible investment performance None of the above

SG 08.1b

RI in personal development and/or training plan Responsible investment included in personal development and/or training plan None of the above

Portfolio managers

SG 08.1a

RI in objectives, appraisal and/or reward Responsible investment KPIs and/or goals included in objectives
 Responsible investment included in appraisal process Variable pay linked to responsible investment performance None of the above

SG 08.1b

RI in personal development and/or training plan Responsible investment included in personal development and/or training plan None of the above

46

Investment analysts

RI in objectives, appraisal and/or reward

SG 08.1a

 Responsible investment KPIs and/or goals included in objectives
 Responsible investment included in appraisal process Variable pay linked to responsible investment performance None of the above

RI in personal development and/or training plan

SG 08.1b

 Responsible investment included in personal development and/or training plan None of the above

Dedicated responsible investment staff

RI in objectives, appraisal and/or reward

SG 08.1a

 Responsible investment KPIs and/or goals included in objectives
 Responsible investment included in appraisal process Variable pay linked to responsible investment performance None of the above

RI in personal development and/or training plan

SG 08.1b

 Responsible investment included in personal development and/or training plan None of the above

Promoting responsible investment
SG 09

Mandatory

SG 09.1

PublicCore Assessed

PRI 4,5

Select the collaborative organisation and/or initiatives of which your organisation is a member or inwhich it participated during the reporting year, and the role you played.

Select all that apply
 Principles for Responsible Investment
Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced

47

Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
One of our Responsible Investment staffs has recently completed a 3 year term on the PRI board.
We have frequently contributed to PRI-led collaborative engagement campaigns.
In 2017 our Engagement Lead joined the PRI ESG Engagement Advisory Committee.
We have been a long standing member of the PRI Fixed Income work stream and provided, in 2018, a casestudy for its PRI Fixed Income "Part 3" report.
We are part of the PRI Global policy reference group and Macroeconomic risk advisory group.
 Asian Corporate Governance Association
Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced
Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
We have attended multiple meetings, participated in field trips and contributed to both Japan and Korea
Working Groups.
 Australian Council of Superannuation Investors
 AVCA: Sustainability Committee
 France Invest – La Commission ESG
 BVCA – Responsible Investment Advisory Board CDP Climate ChangeYour organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced
Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
We are signatory to the initiative, attending workshops and roundtables and participating in the non-disclosure
campaigns.
 CDP Forests48

Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced
Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
We are signatory to the initiative, attending workshops and roundtables and participating in the non-disclosure
campaigns.
 CDP Water
Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced
Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
We are signatory to the initiative, attending workshops and roundtables and participating in the non-disclosure
campaigns.
 CFA Institute Centre for Financial Market IntegrityYour organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced
Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
One of our Credit Analysts has been partnering with CFA Institute on the development of their new ESG
syllabus
 Climate Action 100+Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced

49

Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
One of our Responsible Investment staffs sits on the global steering committee.
 Code for Responsible Investment in SA (CRISA)
 Council of Institutional Investors (CII)Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced
Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
We regularly participate and contribute to the discussions and conferences.
We are represented on the CII Markets Advisory Council.
 Eumedion
 Extractive Industries Transparency Initiative (EITI) ESG Research Australia
 Invest Europe Responsible Investment Roundtable Global Investors Governance Network (GIGN)Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced
Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
We are members and regularly attend workshops and meetings.
 Global Impact Investing Network (GIIN) Global Real Estate Sustainability Benchmark (GRESB) Green Bond Principles

50

Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced
 HKVCA: ESG Committee
 Institutional Investors Group on Climate Change (IIGCC)
Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced
Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
One of our Responsible Investment team chairs the Corporate Programme.
We are active members in the Corporate Programme leading on a number of key companies, as well as active
participants in the Policy Programme and Investor Practices Programme and are currently participating in the
Paris Aligned Investment Initiative.

 Interfaith Center on Corporate Responsibility (ICCR)
 International Corporate Governance Network (ICGN)Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced
 Investor Group on Climate Change, Australia/New Zealand (IGCC)
 International Integrated Reporting Council (IIRC)
 Investor Network on Climate Risk (INCR)/CERES Local Authority Pension Fund Forum Principles for Financial Action in the 21st Century
 Principles for Sustainable Insurance
 Regional or National Social Investment Forums (e.g. UKSIF, Eurosif, ASRIA, RIAA), specify
UKSIF, FIR (French SIF), Eurosif
Your organisation’s role in the initiative during the reporting period (see definitions) Basic
 Moderate Advanced

51

Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
One of our Responsible Investment staffs has recently stepped down as Vice Chair of UKSIF but is still
supporting the Board on a co-opted basis. We also participate in the policy programme.
 Responsible Finance Principles in Inclusive Finance Shareholder Association for Research and Education (Share) United Nations Environmental Program Finance Initiative (UNEP FI)
 United Nations Global Compact
 Other collaborative organisation/initiative, specify
UK Investment Association Sustainability and Responsible Investment CommitteeYour organisation’s role in the initiative during the reporting year (see definitions) Basic
 Moderate Advanced
 Other collaborative organisation/initiative, specify
Cambridge Institute for Sustainability Leadership (Investor Leaders Group)Your organisation’s role in the initiative during the reporting year (see definitions) Basic
 Moderate Advanced
Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
Active role in drafting, alongside Cambridge University staff, a methodology enabling the implementation of the
Sustainable Development Goals into investment methodologies.
 Other collaborative organisation/initiative, specify
The Investor ForumYour organisation’s role in the initiative during the reporting year (see definitions) Basic
 Moderate Advanced

52

Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
We participated in a sector study day, which included site visits, assisted in the preparation for a collaborative
engagement in which Forum staff represented investor members, and provided feedback on other proposed
engagements.
 Other collaborative organisation/initiative, specify
Climate Bonds Initiative (CBI)Your organisation’s role in the initiative during the reporting year (see definitions) Basic
 Moderate Advanced
Provide a brief commentary on the level of your organisation’s involvement in the initiative.
[Optional]
We support CBI's investor outreach program and participate in meeting potential green bond issuers.

SG 09.2

Mandatory to Report Voluntary toDisclose

PublicDescriptive

PRI 1

Indicate approximately what percentage (+/- 5%) of your externally managed assets undermanagement are managed by PRI signatories.

%
80
SG 10

Mandatory

SG 10.1

PublicCore Assessed

PRI 4

Indicate if your organisation promotes responsible investment, independently of collaborative
initiatives.

 Yes

SG 10.2

Indicate the actions your organisation has taken to promote responsible investment
independently of collaborative initiatives. Provide a description of your role in contributing tothe objectives of the selected action and the typical frequency of yourparticipation/contribution.

 Provided or supported education or training programmes (this includes peer to peer RI support) Your
education or training may be for clients, investment managers, actuaries, broker/dealers, investment
consultants, legal advisers etc.)

Description
Contributed to multiple clients events in an ESG advocacy role53Frequency of contribution
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad hoc Other Provided financial support for academic or industry research on responsible investment

Description
Cambridge ILG: Active role in drafting, alongside Cambridge University staff, a methodology enabling theimplementation of the Sustainable Development Goals into investment methodologies.

Frequency of contribution
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad hoc Other Provided input and/or collaborated with academia on RI related work Encouraged better transparency and disclosure of responsible investment practices across the investment
industry

Description
We are committed to playing an active and constructive role in supporting the development of a wellfunctioning and more sustainable financial system. This involves engaging with regulators andpolicymakers directly, for example by responding to consultations or attending in person bilateral meetings
or roundtables, and indirectly through industry bodies.
We are active members of a variety of industry bodies, initiatives and networks that advocate forprogressive public policy development and action on sustainable investment. These include the PRI
Global Policy Reference Group, the IIGCC Policy Group, the UK Investment Association Sustainable andResponsible Investment Committee and UKSIF.
We work closely with our HSBC Group Public Affairs colleagues to respond directly to consultations anddiscussion papers that contribute to shaping a more sustainable financial system.
One of our three focus areas is ‹Improving market standards and transparency on sustainability –transparency enables markets to operate more efficiently with better information. We focus on corporate
sustainability disclosure to strengthen the identification of investment-relevant ESG risks and opportunities
and greater transparency to clients to help build the market. The development of appropriate standards is
playing an increasingly important role.
Details of our activities are outlined in our 2020 RI Review.

54Frequency of contribution
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad hoc Other Spoke publicly at events and conferences to promote responsible investment

Description
We regularly speak at events and conferences promoting, explaining and exploring developments in
responsible investment to a range of audiences. This includes events organized by the PRI, Novethic, UK
Green Finance Initiative, Chatham House, Responsible Investment Association (Canada) OECD and
UKSIF as well as events we have organized ourselves.

Frequency of contribution
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad hoc Other Wrote and published in-house research papers on responsible investment

Description
Internal research papers included thematic pieces relating to Climate Change, carbon measurement andgreen bonds as well as a report analyzing the impact of water scarcity on commodities sectors andanother one dealing with extreme working conditions - forced labour, child labour - in the supply chain ofhigh risk industries such as tech hardware and retail.
In 2019, we published an internal research paper dealing with the various dimensions of impact
investment and more specifically detailing how SDGs - Sustainable Development Goals - can provide avery valid framework for impact measurement.
In early 2020 we issued an update to our low carbon transition scenarios work exploring an expanded setof scenarios and reviewing the impact on credit ratings in addition to equity valuations.

55

Frequency of contribution
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad hoc Other Encouraged the adoption of the PRI
 Responded to RI related consultations by non-governmental organisations (OECD, FSB etc.)

Description
We are active members of a variety of organisations, initiatives and networks that serve to progress public
policy dialogue on responsible investment. The PRI Global Policy Reference Group, IIGCC Policy Group,and relevant committees of the European Fund and Asset Management Association (EFAMA) and the UK
Investment Association.
We work closely with our HSBC Group Public Affairs colleagues to respond directly to consultations anddiscussion papers that have wide-ranging impact on establishing a more sustainable financial system. In
support of the EU Sustainable Finance Action plan proposals, HSBC Group responded to the series ofconsultations throughout 2018.
We provided responses to a range of consultations in 2019, including:- FCA (UK) Climate Change and Green Finance discussion paper (January)- EU Technical Expert Group (TEG) report on climate-related disclosures (January)- ESMA (EU) consultation on integrating sustainability risk and factors in MiFID II (February)- EU TEG consultation on taxonomy and usability (February)- Investment Association (UK) Consultation on Sustainability and Responsible Investment- IOSCO´s Growth and Emerging Market Committee (GEMC) consultation on ‘Sustainable finance inemerging markets and the role of securities regulators’ (April)- EU Green Bond Standard: interim report consultation (April)- UK Parliament Treasury Select Committee inquiry into Decarbonisation of the UK Economy and Role ofGreen Finance (July)- HKEx Consultation on their ESG reporting guide and listing rules (July)- EU TEG publishes EU taxonomy for consultation (September)

Frequency of contribution
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad hoc Other Wrote and published articles on responsible investment in the media

Description
Members of our Responsible Investment team are often quoted in prominent newspapers - like the FT - aswell as specialist press on topics such as the integration and increased financial relevance of climatechange related risks and opportunities.

56

Frequency of contribution
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad hoc Other A member of PRI advisory committees/ working groups, specify

Description
One of our Responsible Investment team has recently completed a 3 year term on the PRI board.
We have frequently contributed to PRI-led collaborative engagement campaigns.
In 2017 our Engagement Lead joined the PRI ESG Engagement Advisory Committee.
We have been a long standing member of the PRI Fixed Income work stream and provided, in 2018, acase study for its PRI Fixed Income "Part 3" report.
We are part of the PRI Global policy reference group and Macroeconomic risk advisory group.

Frequency of contribution
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad hoc Other On the Board of, or officially advising, other RI organisations (e.g. local SIFs)

Description
One of our Responsible Investment team has recently stepped down as Vice Chair of UKSIF but is still
supporting the Board on a co-opted basis. We also participate in the policy programme. .

Frequency of contribution
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad hoc Other Other, specify
 No

57

Describe any additional actions and initiatives that your organisation has taken part in during thereporting year to promote responsible investment [Optional]

SG 10.3- In July 2019, at an event hosted by President Emmanuel Macron of France at the Elysee Palace in Paris, HSBC
Global Asset Management was announced as one of eight founding asset managers of the 'One Planet AssetManager Initiative.' This initiative supports the implementation of the One Planet Sovereign Wealth Fund
Framework, which sets out the three principles of alignment, ownership and integration with respect to climatechange analysis and investment decision-making for sovereign wealth funds. Together, the asset managers havecommitted to further the objectives set out in the Framework and advance the understanding of the implications ofclimate-related risks and opportunities within long-term investment portfolios.
- We are also one of the industry participants in the Cambridge University Institute of Sustainability Leaders' Investor
Leaders Group ("ILG") which focuses on advancing the practice of responsible investment. As part of this group we
played an active role in drafting a framework to measure the impact of investments and supported the creation andimplementation of a Virtual Investment Experiment (VIE), which looked at willingness of investors to give up returns
where investment portfolios show stronger ESG performance. The Impact Framework and results of the VIE were
published in 2019.

SG 11

Voluntary

SG 11.1

PublicAdditional Assessed

PRI 4,5,6

Indicate if your organisation - individually or in collaboration with others - conducted dialogue withpublic policy makers or regulators in support of responsible investment in the reporting year.

 Yes

If yes Yes, individually Yes, in collaboration with others

SG 11.2

Select the methods you have used.

 Endorsed written submissions to governments, regulators or public policy-makers developed by others Drafted your own written submissions to governments, regulators or public-policy markers
 Participated in face-to-face meetings with government members or officials to discuss policy Other, specify

SG 11.3

Where you have made written submissions (individually or collaboratively) to governments andregulatory authorities, indicate if these are publicly available.

 Yes, publicly available

provide URL
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing
 No
 No

58

SG 11.4

Provide a brief description of the main topics your organisation has engaged with public policymakers or regulators on.

We are committed to playing an active and constructive role in supporting the development of a well-functioning andmore sustainable financial system. This involves engaging with regulators and policymakers directly, for example byresponding to consultations or attending in person bilateral meetings or roundtables, and indirectly through industry
bodies.
We are active members of a variety of industry bodies, initiatives and networks that advocate for progressive public
policy development and action on sustainable investment. These include the PRI Global Policy Reference Group,
the IIGCC Policy Group, the UK Investment Association Sustainable and Responsible Investment Committee and
UKSIF.
We work closely with our HSBC Group Public Affairs colleagues to respond directly to consultations and discussion
papers that contribute to shaping a more sustainable financial system.
We have identified three focus areas for our activities:- Supporting the transition to a low carbon economy: we recognise climate change as a top and emerging risk andtherefore support policy and action to support the transition from high carbon to low carbon.
- Improving market standards and transparency on sustainability: transparency enables markets to operate more
efficiently with better information. We focus on corporate sustainability disclosure to strengthen the identification of
investment-relevant ESG risks and opportunities and greater transparency to clients to help build the market. The
development of appropriate standards is playing an increasingly important role.
- Mobilising private capital to deliver on the Sustainable Development Goals and Paris Climate Agreement - theinvestment gap to deliver on the SDGs and Paris Climate Agreement is considerable and requires capacity building
across markets and innovation in new investment models and instruments.

Outsourcing to fiduciary managers and investment consultants
SG 12

Mandatory

PublicCore Assessed

PRI 4

New selection options have been added to this indicator. Please review your prefilled responses carefully.

SG 12.1

Indicate whether your organisation uses investment consultants.

 Yes, we use investment consultants No, we do not use investment consultants.

ESG issues in asset allocation
SG 13

Mandatory

SG 13.1

PublicDescriptive

PRI 1

Indicate whether the organisation carries out scenario analysis and/or modelling, and if it does,
provide a description of the scenario analysis (by asset class, sector, strategic asset allocation,etc.).

 Yes, in order to assess future ESG factors
 Yes, in order to assess future climate-related risks and opportunities

Describe
Vivid Economics, Equities and Fixed Income59 No, our organisation does not currently carry out scenario analysis and/or modelling

SG 13.2

Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation ofassets between sectors or geographic markets.

We do the following Allocation between asset classes
 Determining fixed income duration
 Allocation of assets between geographic markets
 Sector weightings
 Other, specify
Impact of countries' ESG ratings on Balanced Strategies' strategic asset allocation is currently being
scrutinized.
 We do not consider ESG issues in strategic asset allocation
SG 13 CC

Mandatory to Report Voluntary toDisclose

SG 13.4
CC

PublicDescriptive

GeneralDescribe how your organisation is using scenario analysis to manage climate-related risks andopportunities, including how the analysis has been interpreted, its results, and any future plans.

 Initial assessment

Describe
In December 2017, HSBC Global Asset Management began working on its climate scenario analysis with Vivid
Economics to develop a construct for understanding company-level climate-related risks and opportunities tohelp investors make informed decisions. The first report, published in 2018, included six potential scenarios,
three focused on policy timing and three on future technology costs.
Following the IPCC 1.5ºC special report, we expanded our initial work - increasing the number of scenarios to
10 to represent a broader range of low-carbon futures and taking into account the latest IPCC carbon budgets.
We used three bottom-up value stream models to estimate company-level revenue and cost flows under eachscenario.
• Carbon costs and competition: Considers how companies cut direct carbon costs, whether by abating
emissions or passing through cost increases to customers• Fossil fuel demand destruction: Estimates the effect of lower global output for fossil fuels for companies
involved in extraction and production processes as well as coal producers and conventional automobile
manufacturers• Green upside: Looks at demand growth of clean technology companies due to the lower emissions
associated with their productsThis modelling approach includes a range of simplifying assumptions in order to produce consistent results
across scenarios for a large number of companies. Breaking down the impacts along the three value streams inthis way allows for greater transparency into how the various paths to a 2ºC or below 2ºC world might affectcompanies and what that means for shareholders and bondholders
 Incorporation into investment analysis

60Describe
Analysts are expected to take material climate-related factors into account in their research recommendation.
This includes identification of material risks and opportunities using third party and in-house analysis andassessment and integration of these risks and opportunities into the investment cases as part of our
fundamental research process.
In 2020 we will be working on integrating scenario analysis further into our equity and credit tools.
 Inform active ownership

Describe
Climate change is a critical theme of our engagement which we carry out collaboratively through initiatives suchas the Climate Action 100+ initiative and directly with companies.
Our climate-related engagement and focus is informed by analysis of the climate-related risks facing key
holdings
 Other

SG 13.5
CC

Indicate who uses this analysis.

 Board members, trustees, C-level roles, Investment Committee Portfolio managers
 Dedicated responsible investment staff
 External managers
 Investment consultants/actuaries
 Other

specify
Investment analysts

SG 13.6
CC

Indicate whether your organisation has evaluated the potential impact of climate-related risks,
beyond the investment time horizon, on its investment strategy.

 Yes

Describe
The scenario analysis looks out to 2050 but we recognise that this can have implications in the short, medium
and long term
 No

61

SG 13.7
CC

Indicate whether a range of climate scenarios is used.

 Analysis based on a 2°C or lower scenario
 Analysis based on an abrupt transition, consistent with the Inevitable Policy Response Analysis based on a 4°C or higher scenario No, a range is not used

SG 13.8
CC

Indicate the climate scenarios your organisation uses.

62

Provider

Scenario used

IEA Beyond 2 Degrees Scenario(B2DS)IEA

 Energy Technology
Perspectives (ETP) 2 Degrees
scenario

IEA

 Sustainable Development
Scenario (SDS)IEA

 New Policy Scenario (NPS)IEA

 Current Policy Scenario (CPS)IRENA

 RE Map

Greenpeace Advanced Energy [R]evolution

Institute for
Sustainable
Development

 Deep Decarbonisation Pathway
Project (DDPP)

Bloomberg

 BNEF reference scenario

IPCC

 Representative Concentration
Pathway (RCP) 8.5

IPCC

 RPC 6IPCC

 RPC 4.5

IPCC

 RPC 2.6

Other

 Other (1)Other (1) please specify:
Bespoke scenarios as outlined below

Other Other (2)Other Other (3)SG 14

Mandatory to Report Voluntary toDisclose

Public63

Additional Assessed

PRI 1

SG 14.1

Some investment risks and opportunities arise as a result of long term trends. Indicate which of thefollowing are considered.

 Changing demographics
 Climate change Resource scarcity
 Technological developments
 Other, specify(1)other description (1)Exposure to green revenues.
 Other, specify(2) None of the above

SG 14.2

Indicate which of the following activities you have undertaken to respond to climate change risk andopportunity

 Established a climate change sensitive or climate change integrated asset allocation strategy
 Targeted low carbon or climate resilient investments

Specify the AUM invested in low carbon and climate resilient portfolios, funds, strategies orasset classes.
trillions
Total AUM
Currency
Assets in USD

billions

millions

thousands

hundreds

5

295

000

000

5

295

000

000

USD

Specify the framework or taxonomy used.
Assets Under Management (AUM) above combine various strategies or processes which all benefit from anexternal or internal certification:- All the sub-compartments of the recently-created Responsible Investment Fund Sicav, totalizing in excess of
1.5 USD Bn AUMs. This "umbrella vehicle" hosts the 6 French-domiciled SRI/"best in class" strategies: euro
bonds, euro equities, global equities which we have been managing for up to 19 years (euro equities) or 16
years (euro bonds) and 3 recently launched SRI strategies all benefiting from the French government SRI
label,.
- A French-domiciled money market strategy tailored mostly to suit the need of employees' savings schemes- RIF Sicav now also includes a thematic Energy transition strategy benefiting from the French Government
Greenfin label, with some USD 60 M
- 2 Luxembourg-domiciled thematic strategies lower carbon strategies reviewed and approved by SIEG andhaving, in total in excess of USD 500 M AUMs
- UK range was supplemented by the launch of risk-profiled multi-asset strategies- All these pooled funds are supplemented by mandates or dedicated strategies we manage on behalf ofinstitutional clients, all asking us to explicitly consider strong sustainability commitments.

64 Phase out your investments in your fossil fuel holdings
 Reduced portfolio exposure to emissions intensive or fossil fuel holdings
 Used emissions data or analysis to inform investment decision making
 Sought climate change integration by companies
 Sought climate supportive policy from governments
 Other, specify

other description
HSBC was represented on the Task Force on Climate-related Financial Disclosure (TCFD) and we are strong
supporters of and contributors to its on-going work.
 None of the above

SG 14.3

Indicate which of the following tools the organisation uses to manage climate-related risks andopportunities.

 Scenario analysis
 Disclosures on emissions risks to clients/trustees/management/beneficiaries
 Climate-related targets
 Encouraging internal and/or external portfolio managers to monitor emissions risks
 Emissions-risk monitoring and reporting are formalised into contracts when appointing managers
 Weighted average carbon intensity
 Carbon footprint (scope 1 and 2)
 Portfolio carbon footprint Total carbon emissions
 Carbon intensity
 Exposure to carbon-related assets
 Other emissions metrics
 Other, specify

other description
Green revenues analysis.
 None of the above

SG 14.4

If you selected disclosure on emissions risks, list any specific climate related disclosure tools orframeworks that you used.

As signatories to the Montreal Pledge since 2015, we have committed to measure and publicly disclose the carbon
footprint of our clients' investment portfolios on an annual basis.
In 2018, we reported on all equity portfolios and corporate fixed income portfolios managed in five major locations USA, UK, France, Hong Kong and Germany. This represents approximately 80% of both our equity and corporate
fixed income holdings - approximately 33% of our total assets under management.

65SG 14.5

Additional information [Optional]

Portfolio managers have ESG and carbon data embedded in the decision support tools they use. This allows for ahigh level assessment of climate-related risk exposure on an absolute and relative basis.

SG 14 CC

SG 14.6
CC

Voluntary

PublicGeneralProvide further details on the key metric(s) used to assess climate-related risks and opportunities.

66

Metric Type

Climaterelated
targets

Coverage

PurposeMetric Unit

Metric Methodology

 All
assetsAssess the climate risk
management by thecompany

Governance score
0-10

Governance score relating toquality of climate risk managementfrom 3rd party data providers

Compare fund carbon
performance tobenchmarkmT co2e/$m
revenue

Using company annual carbon
emissions from our carbon data
providers (scope 1 and 2)
normalised by annual revenue.
Where data is missing forcomparison we use the sector
averageto measure carbon
emission associatedwith fund holdings
compared tobenchmark.

mT co2e

Using company annual carbon
emissions from our carbon data
providers (scope 1 and 2)

Compare the carbon
efficiency of companies
in the universe tofacilitate investment
allocations

mT co2e/$m
revenue

Using company annual carbon
emissions from our carbon data
providers (scope 1 and 2)
normalised by annual revenue.
Where data is missing forcomparison we use the sector
average.

Demonstrate minimum
or zero exposure tocoal assets

mt Co2e equivalentof coal reserves or$m holdings of coal
related assets

Using coal reserve company data
attributed to portfolio holdings.

 Majorityof assets
 Minorityof assets

Weighted
averagecarbonintensity

 All
assets Majorityof assets
 Minorityof assets

Carbonfootprint(scope 1
and 2)

 All
assets Majorityof assets
 Minorityof assets

Portfolio
carbonfootprint

 All
assets Majorityof assets
 Minorityof assets

Carbonintensity

 All
assets Majorityof assets
 Minorityof assets

Exposure tocarbonrelated
assets All
assets Majorityof assets
 Minorityof assets

SG 14.7
CC

Describe in further detail the key targets.

67

Targettype

Baseline year AbsolutetargetShort, medium
and long term

Targetyear

Description

Attachments

lower carbon funds target a portfolio weighted
average carbon intensity below the benchmark

 Intensity
target Absolutetarget Intensity
target Absolutetarget Intensity
target Absolutetarget Intensity
target Absolutetarget Intensity
targetSG 14.8
CC

Indicate whether climate-related risks are integrated into overall risk management and explain therisk management processes used for identifying, assessing and managing climate-related risks.

 Processes for climate-related risks are integrated into overall risk management

Please describe
Ex-ante: We aim at embedding climate-risk analysis into our pre-investment research. Having opted for full
ESG integration, our process involves an analysis of the key Environmental (E), Social (S), Governance (G)issues, those showcasing the highest level of financial materiality.
In many industries including automotive, agriculture, utilities or extractive industries, the most impactfulenvironmental issues relate to climate-related risk and/or opportunities: gas flaring, draughts and/or water
scarcity, internal combustion engines emissions and shift towards electric or hybrid vehicles, just to name afew...
To let analysts and portfolio managers embed these climate-related dimensions into their investment thinking,these are depicted into a series of sector/industry-specific ESG sector checklists. Designed in house, theseconcise documents provide investment professionals with a summary of the issues, strive to anticipate how the
related legal framework is set to evolve. They also point to the climate indicators to look for when scanningcompanies' filings or interacting with a company when having a corporate access meeting.
In order to better assess a company's actual level of climate-risk, an analyst can then benchmark it with its
sector peers in terms of carbon intensity for instance: a very good first proxy to the overall level of climate risk.
Ex-post now, these same metrics mentioned in 14.6 and 14.7 CC can be used to compare the level of climaterisk of a portfolio compared to its benchmark, a valid indicator to track for portfolio managers. As we benefit
from Scope 1 and Scope 2 data for a very vast majority of our strategies and have uploaded this information
into the decision support tools supporting Equities, Fixed income, Liquidity and Multi-assets strategies. As aconsequence, producing such assessments proves now very easy. Let's highlight that for our 2 lower carbon
strategies, the level of the portfolio's carbon intensity has to be permanently and significantly inferior to that of
the benchmark.
68For us, due to the ever growing importance of climate change, measuring its impact on our investment
strategies has fast become unavoidable. Going forward in order to make this risk measurement even moreaccurate and investment-relevant we will supplement existing carbon intensity data by more prospective
metrics like: exposure to stranded assets, capex and/or R &D allocated to the development of green projects or
technologies, balance between the green and brown share of business ...
 Processes for climate-related risks are not integrated into overall risk management

Indicate whether your organisation, and/or external investment manager or service providers acting
on your behalf, undertake active ownership activities to encourage TCFD adoption.

SG 14.9CC Yes

Please describe
The Chair of the Trustee board of the HSBC Bank (UK) Pension Fund is the Special Advisor to the Task Forceon Climate-related Financial Disclosures (TCFD) and we are strongly supportive of their recommendations.
We are founding signatories and on the steering committee of the Climate Action 100+ initiative. One of thethree overarching engagement objectives for this initiative is for target companies to provide enhanced
corporate disclosure in line with the final recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD) to enable investors to assess the robustness of companies' business plans against arange of climate scenarios, including well below 2-degrees Celsius, and improve investment decision-making.
More broadly on climate-related disclosure, we have over many years engaged with companies from carbon
intensive sectors that do not disclosure Scope 1 and Scope 2 emissions, report to the Carbon Disclosure
Project or have otherwise inadequate reporting. In 2018, we explicitly articulated in our Global Voting Policythat in our engagement, we encourage companies to disclose their carbon emissions and climate-related risks
in line with the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD). Where
companies in energy intensive sectors have persistently failed to disclose their carbon emissions and climate
risk governance, we will normally vote against the re-election of the company chairman.
We support shareholder resolutions aligned with our focus on climate strategy and disclosure. In the past year
we have supported more than 70 climate-related shareholder resolutions. These resolutions included reportingon climate-related risks, 2 degree portfolio alignment and setting greenhouse gas (GHG) emissions reduction
targets.
We were amongst the co-filers of the resolution at Exxon Mobil requesting that the company annually assess
the portfolio impact of 2 degree policies following unsuccessful engagement with the company on climate
disclosure over the course of a year. We were delighted that this resolution was supported by almost two thirdsof shareholders, the first time a climate resolution had received majority support at Exxon Mobil. We shallcontinue our engagement to encourage the company to make progress.
 No, we do not undertake active ownership activities.
 No, we do not undertake active ownership activities to encourage TCFD adoption.
SG 15

Mandatory to Report Voluntary toDisclose

SG 15.1

PublicDescriptive

PRI 1

Indicate if your organisation allocates assets to, or manages, funds based on specificenvironmental and social themed areas.

 Yes

SG 15.2

Indicate the percentage of your total AUM invested in environmental and social themed areas.

%
1
69

Specify which thematic area(s) you invest in, indicate the percentage of your AUM in theparticular asset class and provide a brief description.

SG 15.3

Area Energy efficiency / Clean technology
 Renewable energy
 Green buildings
 Sustainable forestry
 Sustainable agriculture Microfinance SME financing
 Social enterprise / community investing Affordable housing Education
 Global health Water Other area, specify
Climate Change / Lower Carbon
Energy Transition
Green Bonds
SRI: Sustainable Responsible Investment

Asset class invested
 Listed equity

Percentage of AUM (+/-5%) per asset class invested in the area40
 Fixed income - SSA

Percentage of AUM (+/-5%) per asset class invested in the area15
 Fixed income - Corporate (financial)

Percentage of AUM (+/-5%) per asset class invested in the area15
 Fixed income - Corporate (non-financial)

Percentage of AUM (+/-5%) per asset class invested in the area
20

70 Fixed income - Securitised
 Property
 Fund of hedge funds
 CashPercentage of AUM (+/-5%) per asset class invested in the area
10

Brief description and measures of investment
Our ESG/SRI/thematic range of products combines various strategies or processes which all benefit
from an external or internal certification:- All the sub-compartments of the recently-created Responsible Investment Fund Sicav, total in excess
of 1.5 USD Bn AUMs. This "umbrella vehicle" hosts the 6 French-domiciled SRI/"best in class"strategies: euro bonds, euro equities, global equities which we have been managing for up to 19 years(euro equities) or 16 years (euro bonds) and 3 recently launched SRI strategies all benefiting from the
French government SRI label,.
- A French-domiciled money market strategy tailored mostly to suit the need of employees savings
schemes- RIF Sicav now also includes a thematic Energy transition strategy benefiting from the French
Government Greenfin label, with some USD 60 M
- 2 Luxembourg-domiciled thematic strategies lower carbon strategies reviewed and approved by SIEG
and having, in total in excess of USD 500 M AUMs
- UK range was supplemented by the launch of risk-profiled multi-assets strategies- All these pooled funds are supplemented by mandates or dedicated strategies we manage on behalfof institutional clients, all asking us to explicitly consider strong sustainability commitments.
 No

Asset class implementation not reported in other modules
SG 16

Mandatory

SG 16.1

PublicDescriptive

GeneralDescribe how you address ESG issues for internally managed assets for which a specific PRI
asset class module has yet to be developed or for which you are not required to report because
your assets are below the minimum threshold.

71

AssetClass

Property

Cash

Describe what processes are in place and the outputs or outcomes achieved

We invest in equity-listed real estate companies and developers and subsequently apply the entirety of
the ESG integration process described in the LEI section. This is supplemented by some asset classspecific internal and third party research inputs.

Issuer selection is pivotal to our liquidity funds process. It is based on a cautious credit quality
assessment performed by credit research teams who integrate ESG concerns into their analysis.
To be considered as investable, a short term asset needs to have been reviewed by this team. If theasset has been issued by a company considered to be potentially high ESG risk, an enhanced due
diligence is required, without which, investment in an ESG high risk name is prohibited.

SG 16.2

Additional information [Optional].

As already explained in the Organisational Overview (OO) section an ESG integration process is being developedfor Hedge Funds.
We are also busy developing an investment process for an ESG-inclusive private debt/direct lending strategy, anasset class to which we hadn't applied ESG considerations as of yet. Implementation of ESG into our direct lending
investment process is focused on assessing the ESG Risk within each investment decision (as opposed toconsidering ESG opportunities). We assign an ESG Credit Risk Assessment Score (0-10, please see the tablebelow), using a proprietary qualitative grid framework for the sector specific criteria for each transaction.
We will assign an ESG Risk Score as follows:
ESG Risk ESG Score ESG Score Description
High 0-3 Issuer performs weakly on a weighted basis against AMG ESG Risk assessment criteria
Medium 4-5 Issuer performs moderately on a weighted basis against AMG ESG Risk assessment criteria
Low 6-10 Issuer performs well on a weighted basis against AMG ESG Risk assessment criteria
This qualitative grid framework is based on our proprietary ESG sector checklists, built with our ESG research andcredit research. For each sector, a broad range of ESG categories within Business Profile, Industry Fundamentals,
Competitive Environment, Management Strategy and Ownership structure & Corporate Governance, and subcategories have been constructed, which include the detailed qualitative ESG assessment criteria against which
each issuer will be assessed and scored. Each sub-category is weighted based on the overall ESG risk materiality,
such that a blended ESG Risk Score is achieved for each loan.
The ESG Risk Score will be then separately considered by the Investment Committee in the context of the wider
assessment of the transaction, and form part of the overall Investment Decision.

SG 17

Mandatory

SG 17.1

PublicDescriptive

GeneralDescribe how you address ESG issues for externally managed assets for which a specific PRI
asset class module has yet to be developed or for which you are not required to report because
your assets are below the minimum threshold.

72

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Listed equities ESG incorporation

Listed equities engagement

Our externally managed Equity strategies are ETFs contributing to the fulfilment of our multi
asset strategies. As such their ESG quality and level of carbon intensity are scrutinized.

Our holdings in third party ETFs form an integral part of our equity ownership. As such they
help us prioritzing which companies we engage with - typically those in which we have themost significant holdings - and/or those which are facing some specific ESG issues.

No specific strategy applies.
Listed equities (proxy) voting

Innovation
SG 18

Voluntary

SG 18.1

PublicDescriptive

GeneralIndicate whether any specific features of your approach to responsible investment are particularly
innovative.

 Yes

SG 18.2

Describe any specific features of your approach to responsible investment that you believe areparticularly innovative.

We have asked all our mainstream Equities and Fixed Income investment teams to assess the ESG quality andcarbon footprint of their investee companies.
This has been first undertaken through the completion of templates called ESG checklists. Between 2010 and2015, these checklists helped analysts to identify each company's strengths and weaknesses across our 16
offices. To date more than 1,500 checklists have been produced.
To support this in-house research effort, investment teams have benefited from a large amount of third party
ESG research since 2008. Some 40,000 documents covering 15,000+ financial instruments in total are hosted
on a dedicated ESG intranet capability. We regard the breadth and depth of this coverage, the way it is sharedwith all teams globally and the very fact it is done by our "mainstream" investment professionals as innovative.
Moreover, this research includes Emerging and Frontier Markets.
Our ESG integration evolved in June 2015 with a new functionality: our ESG intranet now produces a two-page
ESG Executive Summary for all covered companies. This still applies now.
Each of the 15,000+ Executive Summaries provides investment teams with a concise view of ESG strengths
and weaknesses and indicates whether the covered companies should be perceived as High Risk, Medium
Risk or Low Risk ESG-wise. The objective of the Executive Summary is to provide our c.600 portfolio
managers and analysts with an instant view of the ESG quality, carbon footprint and also a norms-based
screening of their investment targets.
The High, Medium, Low risk classifications are derived from our proprietary ESG rating model. This model
stems from on an in-house re-configuration of MSCI GICS sector/industry segmentation. For eachsector/industry we have defined the key ESG issues with the highest level of financial materiality andsummarised these in a document called the ESG Roadmap.
In our view, the fact this structured process applies to all our equity and corporate fixed income assets, acrossall our 26 geographies, in either developed and emerging markets, is genuinely "mainstream" and not limited toa small range of SRI and thematic funds, can be considered best practice.
For this year, we think would highlight two developments in particular:- In order to provide our Investment teams with more content and hence let them embed ESG more efficiently,
we have created an ESG "open academy". Its purpose is to house thematic research reports, providing with adeep dive of potentially financially relevant ESG topics like: water intensity in the commodities sectors or73

extreme working conditions in the supply chain of sectors like tech or retail and more recently, an overview of
Impact Investing .
- Then we have developed, at our investment teams' request, a set of 24 concise "ESG key topic sheets" aka
ESG sector checklists, providing analysts and PMs with a summary of each respective sector's key ESG issues
and also with the suggested related engagement questions which investment professionals can use wheninteracting with investee companies. After a first iteration was completed in 2018, we performed in 2019 a full
review of our checklists in order to strengthen their alignment with the most recent ESG trends, the SASB
guidelines and also the numerous evolutions of the legal framework
This is also why our Global Chief Investment Officer has taken the decision to firmly position ESG integrationand stewardship as two building blocks of our overall investments policy. This is evidenced by 3 major action
points.
- The 2018 upgrade of our Responsible Investment / ESG / Stewardship governance - fully described in SG 5.2- evidences our company's ever stronger commitment to fully embedding ESG considerations in all its
investment processes and stewardship activities. The personal involvement of some of our more senior staffs
shows this topic is taken seriously and as such is actually one of our 10 strategic aims. This was further
enhanced in 2019 as evidenced by the most recent report published early 2020 and now available on our
website.
- At a very operational level then, the establishment in 2018 of a permanent ESG Investment OversightCommittee, has proved pivotal. This group drives ESG integration within asset class research and portfolio
management processes. It strives to promote best practice with regard to ESG integration. Membership
includes: Global Head of ESG, Global Head of Corporate Governance, UK CIO, Heads of Research for
Equities and Fixed Income respectively. It has played a major role in the design and revision of bothaforementioned ESG Sector Checklists and ESG Thematic pieces. As a result, these ESG tools genuinely
reflect a shared and consensual ESG house view, which makes them more accurate and hopefully more
relevant.
- A series of offsites took place in 2018 and 2019. These were held in our key locations: London and Hong
Kong (Q1 2018), New York and Vancouver (Q2 2018), Paris and Dusseldorf (Q3 2018). They aimed at
upgrading and up scaling our investments teams' skills in areas such as financial modelling, risk calibration,
portfolio construction. ESG was an agenda item for all of them, being granted more or less one third of theoverall time allocation.
- The fixed income asset class has initiated a "LEAP program" aiming at making progress in terms of overall
financial technicality. ESG was again one of the highlights of this ambitious program comprising numerous subinitiatives. One of LEAP's key action points has been to further enhance fixed income teams' ESG knowledge
and awareness through hosting a series of WEBEX sessions dealing with topics like corporate engagement
applied to bond issuers, green bonds, carbon footprint metrics and measurement.
- In 2019, equities teams have also hosted a series of educational monthly Webex sessions enabling internaland external experts to present topics such as stewardship with an emphasis on our Carbon 100+ commitment,
impact investing, carbon pricing, sustainability impacts of the food industry ... New sessions have already beenscheduled for 2020.

 No

Communication
SG 19

Mandatory

SG 19.1

PublicCore Assessed

PRI 2, 6

Indicate whether your organisation typically discloses asset class specific information proactively.
Select the frequency of the disclosure to clients/beneficiaries and the public, and provide a URL to
the public information.

Listed equity - Incorporation74

Do you disclose?
 We do not proactively disclose it to the public and/or clients/beneficiaries
 We disclose to clients/beneficiaries only.
 We disclose it publicly

The information disclosed to clients/beneficiaries is the same
 Yes
 No

Disclosure to public and URL

Disclosure to public and URL
 Broad approach to ESG incorporation
 Detailed explanation of ESG incorporation strategy used

Frequency
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad-hoc/when requested

URL
http://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing/esgintegration

Listed equity - Engagement

Do you disclose?
 We do not disclose to either clients/beneficiaries or the public.
 We disclose to clients/beneficiaries only.
 We disclose to the public

The information disclosed to clients/beneficiaries is the same
 Yes
 No

75

Disclosure to public and URL

Disclosure to public and URL Details on the overall engagement strategy
 Details on the selection of engagement cases and definition of objectives of the selections, priorities andspecific goals
 Number of engagements undertaken
 Breakdown of engagements by type/topic
 Breakdown of engagements by region
 An assessment of the current status of the progress achieved and outcomes against defined objectives
 Examples of engagement cases Details on eventual escalation strategy taken after the initial dialogue has been unsuccessful (i.e. filing
resolutions, issuing a statement, voting against management, divestment etc.)
 Details on whether the provided information has been externally assured
 Outcomes that have been achieved from the engagement
 Other information

Frequency
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad-hoc/when requested

URL
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing

Listed equity – (Proxy) Voting

Do you disclose?
 We do not disclose to either clients/beneficiaries or the public.
 We disclose to clients/beneficiaries only.
 We disclose to the public

The information disclosed to clients/beneficiaries is the same
 Yes
 No

76

Disclosure to public and URL

Disclosure to public and URL Disclose all voting decisions
 Disclose some voting decisions
 Only disclose abstentions and votes against management

Frequency
 Quarterly or more frequently
 Biannually Annually Less frequently than annually Ad hoc/when requested

URL
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsibleinvesting/stewardship

Fixed income

Do you disclose?
 We do not disclose to either clients/beneficiaries or the public.
 We disclose to clients/beneficiaries only.
 We disclose to the public

The information disclosed to clients/beneficiaries is the same
 Yes
 No

77

Disclosure to public and URL

Disclosure to public and URL
 Broad approach to RI incorporation
 Detailed explanation of RI incorporation strategy used

Frequency
 Quarterly Biannually Annually Less frequently than annually Ad hoc/when requested

URL
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing78

HSBC Global Asset Management

Reported Information
Public version
Direct - Listed Equity Incorporation

PRI disclaimer
This document presents information reported directly by signatories. This information has not been audited by the PRISecretariat or any other party acting on their behalf. While this information is believed to be reliable, no representations or
warranties are made as to the accuracy of the information presented, and no responsibility or liability can be accepted forany error or omission.

79

ESG incorporation in actively managed listed equities

Implementation processes
LEI 01

Mandatory

LEI 01.1

PublicGateway

PRI 1

Indicate which ESG incorporation strategy and/or combination of strategies you apply to youractively managed listed equities; and the breakdown of your actively managed listed equities bystrategy or combination of strategies.

ESG incorporation strategy (select all that apply) Screening alone (i.e., not combined with any other strategies) Thematic alone (i.e., not combined with any other strategies)
 Integration alone (i.e., not combined with any other strategies)
 Screening and integration strategies
Percentage of active listed equity to which thestrategy is applied — you may estimate +/5%%98

 Thematic and integration strategies
Percentage of active listed equity to which thestrategy is applied — you may estimate +/5%%2

 Screening and thematic strategies
 All three strategies combined We do not apply incorporation strategies

Total actively managed listed equities
100%

LEI 01.2

Describe your organisation’s approach to ESG incorporation and the reasons for choosing theparticular strategy/strategies.

Our principal strategy is integration as we believe that ESG factors can impact investment performance overtime.
We regard the breadth and depth of our coverage as innovative, as well as the extent to which it is delivered to'mainstream' investment professionals across all markets, including emerging and frontier. Investment teams
access an ESG Intranet combining a comprehensive third party research library with in house ratings covering
15,000+ financial instruments. For each name under coverage the system generates an executive summary
providing with a summarised vision of the company's ESG credentials and carbon footprint. All these inputs
allow investment teams to produce, when required, an Enhanced Due Diligence paper. With deeper analysis
than the existing ESG "Executive Summary" and previous "checklists", this document assesses ESG risk
80

associated with issuers flagged for a poor ESG rating. Although mainly a risk assessment tool, the process
could result in an intended purchase being blocked or the divestment of an existing holding.
We have also indicated screening above because we exclude stocks with exposure to banned weapons like
Land Mines, Cluster Munitions, Biological and Chemical Weapons and also non-detectable fragments. These
exclusions apply to all strategies: active, passive, active quant. Such exclusions are a requirement under
Luxembourg law, where our flagship SICAV range is domiciled.
To further support the implementation of this ESG integration initiative by our investments teams, we recently
added two new sets of tools: ESG Sector Checklists sheets (initiated in 2018) and Thematic reports (in 2017).
The ESG key topic sheets aka ESG sector checklists are meant to be very practical as they are summarisingon an industry group by industry group basis which are the most relevant ESG issues - those with the highest
degree of potential financial materiality - and suggest the related engagement questions, to be asked while
meeting a company's management. As of now, we produced a full set of 24 checklists in 2018 and have fully
revised and updated them in 2019. The purpose has been to enhance their accuracy though including most
updated sector specific ESG trends, evolutions of the legal framework and SASB guidelines.
Then, the main purpose of the thematic reports is to further educate investment teams and help themembedding some cross sector themes in their investment thinking. To date, two such reports have been
published, one with a clear environmental bias, the second one with a firm social angle. The first one, publishedin October 2017 explored the impact of water intensity on the business model and financial returns ofcompanies belonging to commodities industries like mining and metals, pulp and paper or chemicals.
Following the same philosophy, the second report, published in June 2018, explored "extreme" working
conditions in two very different industries: technology and "retail fast fashion". Extreme working conditions
encompass sub-themes such as child labour, forced labour, de-unionisation... As the related legal framework
combining overarching global principles - defined by bodies like the UN or the ILO (International Labour
Organisation) - is tightening, the lack of compliance with such principles is set to trigger litigation.
Subsequently, understanding which companies include this dimension in their business model and more
specifically into the management of their supply chain will help identifying which names may have placed theirbrand image at risk, could face loss of margin and/or production disruptions.
The most recent report was published fall 2019 and explored "Impact Investing Strategies" and emphasised
how mainstream assets classes like corporate fixed income or listed equities might have a positive andmeasurable impact thanks to their alignment with the UN SDGs (Sustainable Development Goals). We plan to
publish new such reports in 2020, one of the selected topics is "Anti Money Laundering and Anti-Corruption
policies in the Banking sector".
In terms of thematic products, we launched in 2007 a climate change fund and later on, in September 2017, 2
additional strategies - one investing in global equities, the other in global corporate bonds - to deliver
performance aligned with their respective assets classes combined with lower carbon intensity. Even more
recently, in December 2018, was launched an energy transition strategy. The latter fund invests in European
equities directly contributing to the energy transition, due to the very nature of their activities: smart grid, green
buildings, ecologic transportation, and renewables.
In 2020 we will launch a suite of ESG and low carbon ETF's enabling clients to easily implement ESG in theirvarious strategies.

LEI 01.3

If assets are managed using a combination of ESG incorporation strategies, briefly describe
how these combinations are used. [Optional]

See question 1.2: All strategies, active and passive, involve controversial weapons exclusion. Active strategies
emphasise ESG integration, as described above, while passive strategies supplement the initial negative
screening with an engagement overlay.
The latter can be achieved through joining or sometimes initiating collaborative thematic engagement
campaigns via IIGCC or the PRI Clearinghouse for instance. Among the themes we have worked on:
environmental reporting in extractive industries, executive remuneration schemes' fairness and transparency,
Carbon 100+ targeting the largest greenhouse gases emitters and urging them to report according to TCFD
guidelines.
We are also prioritising those names highlighted as allegedly "High Risk" by our ESG screening tool called the"Minesweeper", an in house ESG rating system allocating each name to an ESG risk category. The objective isfurther insight into how the companies under scrutiny are to monitor and eventually mitigate their ESG
weaknesses.
This information is also embedded in Visualiser, equities asset class's decision support tool. This allows
portfolio managers to immediately identify which ESG outliers are held within their portfolios and, if necessary,81to take action accordingly. This draws on multiple data sources to allow a portfolio assessment of carbon
intensity and other ESG factors.

LEI 02

Voluntary

LEI 02.1

PublicAdditional Assessed

PRI 1

Indicate what ESG information you use in your ESG incorporation strategies and who provides
this information.

Type of ESG information
 Raw ESG company data

Indicate who provides this information
 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – analyst or portfolio manager
 Company-related analysis or ratings

Indicate who provides this information
 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – analyst or portfolio manager
 Sector-related analysis or ratings

Indicate who provides this information
 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – analyst or portfolio manager
 Country-related analysis or ratings

Indicate who provides this information
 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – analyst or portfolio manager
 Screened stock list

Indicate who provides this information82 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – analyst or portfolio manager
 ESG issue-specific analysis or ratings

Indicate who provides this information
 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – analyst or portfolio manager
 Other, specify

LEI 02.2

Indicate whether you incentivise brokers to provide ESG research.

 Yes

Describe how you incentivise brokers.

LEI 02.3

As we promote ESG integration, we do not isolate the ESG output to incentivise brokers. ESG is "part andparcel" of both our equity and fixed income processes, ESG is included in our overall assessment of theresearch output we expect from brokers and in the feedback we give.
The recent implementation of MIFID 2 has provided an opportunity to reaffirm this commitment: ESG is partof the equation and, if sell side brokers expect to work with us, they clearly have to include this dimension in
their research output.
 No
LEI 03

Voluntary

LEI 03.1

PublicAdditional Assessed

PRI 1

Indicate whether your organisation has a process through which information derived from ESG
engagement and/or (proxy) voting activities is made available for use in investment decisionmaking.

 Engagement
 We have a systematic process to ensure the information is made available.
 We occasionally make this information available.
 We do not make this information available.
 (Proxy) voting
 We have a systematic process to ensure the information is made available.
 We occasionally make this information available.
 We do not make this information available.

LEI 03.2

Additional information. [Optional]* Active Equity Portfolios:
Our fund managers and analysts exercise close oversight of companies held in active equity portfolios, which
includes meeting company management and directors on a regular basis; as well as monitoring the company's
83performance, business strategy, risk management, and culture. Stewardship is a collective effort with fundmanagers voting the active holdings and engagement being undertaken by fund managers, analysts, and our
Stewardship Team.
* Passive Equity Portfolios:
Many of our holdings are in passive equity portfolios that track major indices. Although our proportionate holding
may be small, our Stewardship Team exercises oversight of these companies and where necessary engages withcompanies regarding areas of concern.

(A) Implementation: Screening
LEI 04

Mandatory

LEI 04.1

PublicDescriptive

PRI 1

Indicate and describe the type of screening you apply to your internally managed active listed
equities.

Type of screening Negative/exclusionary screening

Screened by Product
 Activity
 Sector Country/geographic region
 Environmental and social practices and performance Corporate governance

Description
Production and/or marketing of cluster munitions, antipersonnel mines, biological and chemical weapons
and also non-detectable fragments are the activities we systematically screen out.
A third party research provider, Ethix SRI Advisors, highlights which names are involved in the marketingand development of this banned weaponry. Based on this, we issue an exclusion list which is updated on
an ongoing basis. The list is then distributed to all Investments, Products, Risk and Compliance teams andthis within multiple HSBC Group's businesses.
This exclusion list is prescriptive and the related strict ban has applied to equities and fixed income active
strategies since 2010. At the end of 2015, we extended this to all passive strategies.
 Positive/best-in-class screening

Screened by84 Product Activity
 Sector Country/geographic region
 Environmental and social practices and performance Corporate governance

Description
In addition to our core ESG integration strategy, we have two SRI equities strategies, specifically designed
to suit the needs of some continental European clients. Based on a "Best in class" process, these focus
on global equities and euro equities.Their investment process requires Portfolio Managers to invest only inthe most ESG-friendly companies in the respective sectors/industries. Within 30 sectors, companies areranked according to their aggregated ESG rating produced by our proprietary ESG rating system. Portfolio
Managers are required to prioritise stocks ranked above median and are prohibited from investing instocks ranked in the lower quartile.
Our range also comprises climate focused strategies:- A lower carbon strategy, launched in September 2017, seeks outperformance of the MSCI worldcombined with a significant reduction of its portfolio's carbon intensity, compared to its benchmark. In
order to meet this dual target, the strategy leverages an optimiser in which carbon intensity - Scope 1 and
2 - is factored.
- In December 2018, an energy transition strategy completed our range. Its focus is on European
companies with "green activities" like renewables, smart grid, green transportation...
- In 2020, we will launch a full range of ESG and lower carbon ETFs.
 Norms-based screening

Screened by
 UN Global Compact Principles
 The UN Guiding Principles on Business and Human Rights
 International Labour Organization Conventions
 United Nations Convention Against Corruption
 OECD Guidelines for Multinational Enterprises
 Other, specify

Description
The UNGC principles have significant weight in our ESG analysis process. We have mandated a research
third party to systematically review the degree of compliance of some 8,200 names with the 10 principlesof the United Nations Global Compact. All names assessed to be non-compliant are flagged as high risk
and have to go through enhanced due diligence. Its purpose is to double-check to which extent the
principle breach, if any, is genuine and if yes, to which extent it is priced in and or influences thecompany's financials.
ILO conventions, OECD guidelines or United Nations Convention Against Corruption all constitutereference documents, sets of guidelines, which both ourselves and our research third parties refer to when
formulating an ESG assessment.
As such, they are all embedded into our ESG integration strategy and can even lead us to derive
engagement campaigns from them.
Again, SRI strategies apply more stringent restrictions as all companies failing to comply with at the least
one of the 10 UN Global Compact principles are screened out of their investment universe.

85

LEI 04.2

Describe how you notify clients and/or beneficiaries when changes are made to yourscreening criteria.

The negative screening criterion is mostly stable. We want to avoid investing in companies involved in banned
weapons - covered by international conventions and treaties - like cluster munitions, antipersonnel mines,
biological and chemical weapons. Initially limited to active strategies, this strict ban now also applies to all
passive strategies.
Another change occurred in 2018 since we decided to apply the exclusion not only to companies with a proveninvolvement, but also to those with strong indications of involvement.
The broader ESG and carbon-related criteria we use for our SRI and climate change thematic strategy are
subject to an ongoing review process under the Global Heads of Equity and Credit Research.

LEI 05Mandatory

LEI 05.1

PublicCore Assessed

PRI 1

Indicate which processes your organisation uses to ensure ESG screening is based on robust
analysis.

 Comprehensive ESG research is undertaken or sourced to determine companies’ activities and products.
 Companies are given the opportunity by you or your research provider to review ESG research on themand correct inaccuracies.
 External research and data used to identify companies to be excluded/included is subject to internal audit
by ESG/RI staff, the internal audit function or similar.
 Third-party ESG ratings are updated regularly to ensure that portfolio holdings comply with fund policies.
 Trading platforms blocking / restricting flagged securities on the black list.
 A committee, body or similar with representatives independent of the individuals who conduct company
research reviews some or all screening decisions.
 A periodic review of internal research is carried out.
 Review and evaluation of external research providers.
 Other; specify
 None of the above

LEI 05.2

Indicate the proportion of your actively managed listed equity portfolio that is subject tocomprehensive ESG research as part your ESG screening strategy.

 <10%
 10-50%
 51-90%
 >90%

LEI 05.4

Indicate how frequently you review internal research that builds your ESG screens.

 Quarterly or more frequently
 Bi-Annually Annually Less frequently than annually86

LEI 05.5

Additional information. [Optional]

1- The research inputs and outputs are monitored by our investment teams who check its accuracy on an
ongoing basis. ESG is embedded into our investment and research process for both bonds and equities.
In order to do this more efficiently we have tasked our newly created ESG Investment Oversight Committeewith providing this assessment. This group also strives to promote best practices with regard to ESG
integration. Its membership includes: Global Head of ESG Research, Global Head of Corporate Governance,
UK CIO, Heads of Research for equities and fixed income respectively.
The ESG Investment Oversight Committee then reports back into the Stewardship, Engagement & ESG
Quarterly Committee. The purpose of this group, chaired by the Global Chief Investment Officer, is to: (i)ensure consistency of stewardship activities with broader asset management priorities, (ii) to oversee Front
Office adherence to obligations (such as UNPRI, Controversial weapons etc.); and (iii) to oversee the high level
ESG process. Besides the Global CIO, membership includes: Global Head of ESG Research, Global Head ofCorporate Governance, Global CIO Equity, Global CIO Fixed Income CIO, Responsible Investment Specialists.

2- Our contracts with third party ESG research providers are limited to 3 years. The renewal of these contracts
is subject to a formal RFP overseen by our Global Data Management Department, which is independent fromthe investment function.

LEI 06

Voluntary

LEI 06.1

PublicAdditional Assessed

PRI 1

Indicate which processes your organisation uses to ensure fund criteria are not breached.

 Systematic checks are performed to ensure that stocks meet the fund’s screening criteria
 Automated IT systems prevent investment managers from investing in excluded stocks or those that do
not meet positive screening criteria
 Audits of fund holdings are undertaken regularly by internal audit function
 Periodic auditing/checking of the organisations RI funds by external party Other; specify
 None of the above

LEI 06.2

If breaches of fund screening criteria are identified, describe the process followed to correct
those breaches.

Investment in listed issuers with a proven involvement in banned weapons is prevented via a pre-trade
investment restriction implemented globally in our investment systems(B) Implementation: Thematic
LEI 07

Mandatory

LEI 07.1

PublicDescriptive

PRI 1

Indicate the type of sustainability thematic funds or mandates your organisation manages.

 Environmentally themed funds
 Socially themed funds
 Combination of themes

87

LEI 07.2

Describe your organisation’s processes relating to sustainability themed funds. [Optional]

In addition to our core ESG integration strategy, coupled with banned weapons exclusion, as alreadydescribed, we have two SRI Equities strategies, specifically designed to suit the needs of some Continental
European clients. Based on a "best in class" process, these focus on global equities and euro equities.
These funds go beyond the ESG integration we apply to all funds. The investment process for these funds
requires Portfolio Managers to invest only in the most ESG-friendly companies in the respective
sectors/industries.
Within 30 sectors, companies are ranked according to their aggregated ESG rating produced by our proprietary
ESG rating system. Portfolio Managers are required to prioritise stocks ranked above median and areprohibited from investing invest in stocks ranked in the lower quartile.
These SRI strategies also exclude names with an involvement in tobacco or conventional weapons. Theirinvestment universe also screens out names failing to comply with at the least one of the 10 United Nations
Global Compact (UNGC) principles.
Our range also comprises climate change related strategies which have a global remit and are designed tomeet the needs of clients located in all countries and continents. They are both domiciled in Luxembourg as
compartments of our flagship SICAV HSBC GIF (standing for Global Investments Fund),Our range also comprises climate change related strategies:
A global climate change strategy which was launched as early as 2007,
Then, in September 2017, our company launched two Lower Carbon strategies: one focusing on Global
Corporate Bonds, the second invest in Global Equities. The latter seeks to outperform the MSCI World
combined with a significant reduction of its portfolio's carbon intensity, compared to its benchmark. In order tomeet this dual target, the strategy leverages an optimiser in which carbon intensity - Scope 1 and 2 - isfactored.
Finally, in December 2018, we initiated an Energy Transition strategy investing in European stocks with a directcontribution to the energy and ecologic transition due to the very nature of their activities: renewables, smart
grid, green buildings...
In 2020, we will launch a full suite of ESG and lower carbon ETFs combining quantitative targets in terms of
ESG ratings uplift and carbon intensity reduction, compared to a comparable mainstream benchmark/universe.

(C) Implementation: Integration of ESG factors
LEI 08Mandatory

LEI 08.1

PublicCore Assessed

PRI 1

Indicate the proportion of actively managed listed equity portfolios where E, S and G factors
are systematically researched as part of your investment analysis.

88

ESG issues

Proportion impacted by analysis

Environmental
Environmental
 <10%
 10-50%
 51-90%
 >90%
SocialSocial <10%
 10-50%
 51-90%
 >90%
Corporate
GovernanceCorporate Governance <10%
 10-50%
 51-90%
 >90%

LEI 08.2

Additional information. [Optional]

We first base our ESG analysis on inputs from third party research providers leveraged to create an in-house
ESG rating from which we finally derive a risk level, namely High Risk, Medium Risk, Low Risk. We do this forc.15,000 financial instruments.
Those companies' main ESG characteristics are captured in the automated Executive Summaries, providing
Investments teams with a concise ESG SWOT (standing for Strengths, Weaknesses, Opportunities andThreats) analysis. For companies with the weakest ESG rating, PMs and analysts have then to prepare an
Enhanced Due Diligence (EDD). This ESG inclusive investment case leverages other inputs: sell-side
research, Bloomberg data, CSR (Corporate Social Responsibility) reports and also the outcomes ofengagement.
This process is systematic and applies to all our active Equity and Corporate Fixed Income strategies.

LEI 09Mandatory

Public89

Core Assessed

PRI 1

LEI 09.1

Indicate which processes your organisation uses to ensure ESG integration is based on robust
analysis.

 Comprehensive ESG research is undertaken or sourced to determine companies’ activities and products
 Companies are given the opportunity by you or your research provider to review ESG research on themand correct inaccuracies
 Third-party ESG ratings are updated regularly A periodic review of the internal research is carried out
 Structured, regular ESG specific meetings between responsible investment staff and the fund manager orwithin the investments team
 ESG risk profile of a portfolio against benchmark
 Analysis of the impact of ESG factors on investment risk and return performance Other; specify
 None of the above

LEI 09.2

Indicate the proportion of your actively managed listed equity portfolio that is subject tocomprehensive ESG research as part your integration strategy.

 <10%
 10-50%
 51-90%
 >90%

LEI 09.3

Indicate how frequently third party ESG ratings that inform your ESG integration strategy are
updated.

 Quarterly or more frequently
 Bi-Annually Annually Less frequently than annually

LEI 09.4

Indicate how frequently you review internal research that builds your ESG integration strategy.

 Quarterly or more frequently
 Bi-Annually Annually Less frequently than annually

LEI 09.5

Describe how ESG information is held and used by your portfolio managers.

 ESG information is held within centralised databases or tools, and it is accessible by all relevant staff
 ESG information or analysis is a standard section or aspect of all company research notes orindustry/sector analysis generated by investment staff
 Systematic records are kept that capture how ESG information and research were incorporated into
investment decisions
 Other; specify
 None of the above

90

LEI 09.6

Additional information. [Optional]

We first base our E, S, G analysis on inputs from third party research providers leveraged to create an in-house
ESG rating from which we finally derive a risk level, namely High Risk, Medium Risk, Low Risk. We do this forc.15,000 financial instruments.
Those companies' main ESG characteristics are captured in the automated Executive Summaries, providing
investment teams with a concise ESG SWOT analysis. For the riskiest companies (High Risk), PMs andanalysts have then to prepare an enhanced due diligence report. This ESG inclusive investment caseleverages other inputs: sell-side research, Bloomberg data, CSR reports and also the outcomes ofengagement.
This process is systematic and applies to all our active equity and corporate fixed income strategies.

LEI 10Mandatory to Report Voluntary toDisclose

PublicCore Assessed

PRI 1

New selection options have been added to this indicator. Please review your prefilled responses
carefully.

LEI 10.1

Indicate which aspects of investment analysis you integrate material ESG information into.

 Economic analysis
 Industry analysis

Proportion of actively managed listed equity exposed to investment analysis
 <10%
 10-50%
 51-90%
 >90%
 Quality of management

Proportion of actively managed listed equity exposed to investment analysis
 <10%
 10-50%
 51-90%
 >90%
 Analysis of company strategy

Proportion of actively managed listed equity exposed to investment analysis
 <10%
 10-50%
 51-90%
 >90%
 Portfolio weighting91Proportion of actively managed listed equity exposed to investment analysis
 <10%
 10-50%
 51-90%
 >90%
 Security sensitivity and/or scenario analysis
 Fair value/fundamental analysis
 Other; specify

Describe how you integrate ESG information into portfolio weighting.

LEI 10.3

For around 15 000 financial instruments we have in our ESG Intranet a two page "Executive Summary"indicating each name's ESG risk level: High Risk, Medium Risk and Low risk. This intranet is available to allc.600 investment professionals and allows them to deepen where necessary their understanding of investee
companies' ESG credentials.
For High Risk names, we require the portfolio managers and/or analysts to go through an "Enhanced Due
Diligence" (EDD). This is meant to supplement and go beyond the aforementioned "Executive Summaries".
This ESG focused investment case leverages other inputs such as: sell-side research, Bloomberg data, CSR
reports and also the outcomes of a potential engagement.
This process has been made systematic and applies to all our equity strategies. As such, the EDD is an
intrinsic part of our investment decision making process and an investment case can be rejected at this point if
ESG credentials are assessed to be a threat to the company's financial profitability or pricing going forward.
Since 2016, an EDD is also required for companies flagged for potential exposure to Financial Crime
Compliance (FCC) risk. This encompasses corruption, bribery, money laundering or contribution to financial
instability.

ESG incorporation in passively managed listed equities
LEI 11

Mandatory to Report Voluntary toDisclose

PublicDescriptive

PRI 1

Indicate if you manage passive listed equity funds that incorporate ESG factors in the index
construction methodology.

LEI 11.1
 Yes
 No

Outputs and outcomes
LEI 12

Voluntary

LEI 12.1

PublicDescriptive

PRI 1

Indicate how your ESG incorporation strategies have influenced the composition of your portfolio(s)or investment universe.

 Screening92Describe any reduction in your starting investment universe or other effects.
All companies with a proven involvement in banned weapons such as cluster munitions, antipersonnel mines,
biological and chemical weapons or non-detectible fragments are systematically screened out from all our
strategies.

Specify the percentage reduction (+/- 5%)%
2
 Thematic

Describe any alteration to your investment universe or other effects.
Our Equities ranges comprises 3 thematic strategies focusing on certain categories of companies and hence
sporting a reduced investment universe.


A global SRI strategy emphasizes names with an above average ESG rating, excludes names involved
in tobacco or weaponry and finally, names failing to comply with at the least one of the 10 UNGC
Principles. All in all, this fund reduces its investment universe by as much as 40%, compared to its
benchmark, the MSCI World. Thanks to an optimiser, it manages to deliver performances very much inline with that of the benchmark.



Then, two strategies emphasize climate change and subsequently reduce their investment universe: one
strives to minimize overall carbon intensity - cumulating Scope 1 and Scope 2 - and outperform the MSCI
world thanks to a combination of optimization techniques and exclusion of the worst carbon offenders.
The second one invests in European companies directly contributing to Energy Transition due to the very
nature of their activities: renewables, green mobility, green infrastructure, smart grid... This clear focus
leads the fund to be extremely selective and hence to have also a significantly reduced investment
universe.

 Integration of ESG factors

Select which of these effects followed your ESG integration.
 Reduce or prioritise the investment universe
 Overweight/underweight at sector level Overweight/underweight at stock level Buy/sell decisions
 Engagement / Voting Other; specify
 None of the above

LEI 12.2

Additional information.[Optional]

Our ESG process is framed around a set of tools:
ESG Roadmap: We have developed an ESG Roadmap to help investment teams "focus on what truly matters",
namely to research in depth financially material ESG criteria. Avoiding "one size fits all" we have strived to highlightwhat genuinely matters for each industry. For example, although carbon is an important theme overall, it's more93

crucial to Utilities than to almost any other sector. Waste management particularly relates to Materials andPackaging, while water scarcity is important to Food & Beverage, just to give a couple of examples.
To strengthen alignment further with both our equity and fixed income investment management processes weframed it around a bespoke 30 sector segmentation (derived from the GICS, Global Industry Classification
Standards). Its design was a thorough and collaborative process including systematic reviews, numerous inputs andcomments from all equity and fixed income teams.
Since Q3 2017, this is supplemented by a set of concise ESG key topic sheets - aka ESG sector checklists summarising most material ESG issues for each industry group and suggesting related engagement questions. In
2018, we built the first full set of 24 ESG Checklists and have entirely revised and updated these documents in 2019
which has contributed to enhance their accuracy. Within each sector checklist we have also highlighted thecorresponding SASB guidelines.
We have also initiated a thematic research program resulting in the publishing of in depth ESG reports. The firstone, issued in September 2017, dealt with water intensity in the commodities sector. The second one was publishedin June 2018 and focused on extreme working conditions in the supply chain of two very different industries:
technology hardware and retail/fast fashion. A third one dealing with Impact Investment - emphasising, among otherthings alignment with the SDGs, European Union Green Taxonomy, Green Bonds ... - was published in 2019 and a
new one is to be issued in 2020. It will deal with Anti Money Laundering and Anti Corruption policies in the banking
sector.
Third Party Research: We use third-party vendors (extra-financial rating agencies) to provide us with ESG
datapoints to build our own ESG rating. We also source from them a large number of company reports providing uswith a more specific and qualitative ESG vision we leverage when it comes to produce our own assessments.
The third-party vendors we use are:
- MSCI ESG Research: comprehensive ESG assessment and Financial Crime Compliance screening- Ethix SRI Advisors: Help us identifying issuers involved in the production and/or marketing of controversial
weapons like cluster munitions and landmines.
- Sustainalytics helps us assessing compliance with the UN Global Compact.
- Oekom: Government bonds' Environmental and Societal assessment- Trucost Research: Quantitative environmental data enabling us - among other things - to measure the carbon
footprint of our funds- RepRisk: Tracking companies' reputational risk and involvement in ESG-related controversies (implementation inprogress)
In House Rating System: We have built an in house rating system enabling us to score 15,000+ financial
instruments and to allocate them an ESG risk status. Leveraging monthly datafeeds coming from the providers
above, it helps us generate sector specific scores which we combine with an assessment of companies' compliancewith the 10 Principles of the UN Global Compact. The end ratings range from 0 to 10, we differentiate between
Emerging Markets and Developed Markets companies.
Our process puts particular emphasis on the companies which are assessed to be High Risk: typically those notcomplying with at the least one of the 10 UNGC Principles and/or with a very low aggregated ESG rating putting
them in the bottom 5 percentiles of the rated universe. Companies identified as "outliers" from a Financial Crime
Compliance prospective have also to go through this Enhanced Due Diligence.
Executive Summary and Low, Medium and High risk ranking: We capture these assessments in automaticallygenerated "Executive Summaries" which provide investment teams with a snapshot of each company's ESG
strengths and weaknesses. Indeed, brief ESG and UNGC related paragraphs sourced directly from the ESG third
parties illustrate and justify the calculated risk assessments. Building on this upgraded infrastructure we cangenerate new SRI universes and back-test them; design tailor-made portfolios or capture clients' own values in
portfolio construction.
These 15,000 risk assessments generated will be used to embed ESG further into our mainstream investment
practices. We have made the completion of an "Enhanced Due Diligence" for all high risk companies compulsory.
This major step to ESG integration is championed by our Global CIO and formally endorsed by all regional CIOs,
strategy CIOs and local CIOs.
Enhanced Due Diligence: For High Risk names, we require the portfolio manager and or analyst to go through an"Enhanced Due Diligence" which leverages inputs such as: sell-side research, Bloomberg data, CSR reports andalso the outcomes of a potential engagement. This process is systematic and applies to all our equity and corporate
fixed income strategies. As such, the "Enhanced Due Diligence" is an integral part of our investment process for
either Equities or Fixed income. Unless they pass this assessment, issuers ranked in the high risk category might berejected.
ESG as an investment factor: We continue to investigate how ESG ratings as an investment factor can beconsidered in products to reduce risk as well as to generate alpha.
94

As a conclusion, this comprehensive framework we have developed over the years first contributed to raising ESG
awareness within our organisation. It has subsequently led ESG to be genuinely taken on board as evidenced by thefact investment professionals are now starting to spontaneously screen out companies - despite their potential
financial attractiveness - on the grounds of their lack of ESG quality. Poor corporate governance is the main triggerof these "vetoes".

LEI 13

Voluntary

LEI 13.1

PublicDescriptive

PRI 1

Provide examples of ESG factors that affected your investment view and/or performance during thereporting year.

 ESG factor 1

ESG factor and explanation
Recent developments at an Indian bank, broadening its remit of pure Micro Finance Institution (MFI) to becomea fully-fledged universal bank have led us to reconsider our investment thesis. Although MFIs play a significant
social role supporting financial inclusion thanks to micro loans, they can lead some customers to get
overcharged and overleveraged. This creates a huge political risk of political backlash against such MFIs,
which up until now had prevented us to invest in such institutions.
But, its transformation from MFI to universal bank is, for us, a big structural positive. Becoming a bank means
higher regulatory and lower cost of funds which is helping them to lend at a lower rate than their pure MFIs
competitors.

ESG incorporation strategy applied
Integration
 Screening Thematic Integration

Impact on investment decision or performance
Despite its transformation into an universal bank, the company has retained the entirety of its social role while
negating at the least a part of the risk coming from the potential political backlash and now enjoys a morerobust business model. This combination of preserved social benefits and improved financials has led to invest
in this company and hence support its development and positive contribution to the Indian society.

 ESG factor 2

95

ESG factor and explanation
A combination of social and governance concerns has led our Hong Kong and Chinese Equities teams toreassess its investment in a major diversified conglomerate with a very significant market position in the Hong
Kong property market, being one of the most prominent retail landlords.
First, from a social stand point, and as a follow up to the social unrest which started in June 2019, retail sales,
especially discretionary have experienced huge pressure, retail tenants profitability was adversely affected andsome found themselves close to loss making. This has led the conglomerate/landlord to lower rents, at theleast temporarily. This measure has been applied selectively, on a case-by-case basis for a certain period oftime depending on the retail sales decline of tenants.

ESG incorporation strategy applied
Integration
 Screening Thematic Integration

Impact on investment decision or performance
We engaged with the company after the announcement. While this hurt its profitability in the near term, thecompany values the long-term relationship with tenants and sees these short-term relief measures for tenants
as appropriate and necessary. The company emphasized that the rental adjustment is on a case-by-case basiswith varying relief periods.
From our perspective, while short-term earnings would be adversely impacted, we believe the company's goodgesture will strengthen their relationship with tenants and achieve a more sustainable development in thelonger term, This has led us to confirm our interest in the company.

 ESG factor 3

96

ESG factor and explanation

We have also reassessed a low cost house builder operating in a number of large states in Brazil.
We have been a long term owner in the shares of this company due to its low valuation relative to its
profitability. The Brazilian low cost housing market has been in a structural deficit, and we were attracted to thedownside protection that the company enjoyed from participating in the Brazilian government's low cost housebuilding subsidization scheme (MCMV).
The company's core product fulfilled an important social need, and we felt the market undervalued thiscontribution to a major issue in Brazil.

ESG incorporation strategy applied
Integration
 Screening Thematic Integration

Impact on investment decision or performance
We engaged with the company's management on a number of occasions during early 2019 to understand theopportunity better. Through this process, we also recognised the company's efforts to lead on energy efficiency
in its housing, as this boosted the attractiveness of the product to younger buyers.
During the elapsed year, the company's shares re-rated substantially, particularly after April, whilst we began todevelop concerns that the MCMV scheme (standing for "Minha Casa Minha Vida" and aiming at promoting lowrent housing) could be slowed.
In July 2019, we decided to exit the position, as we felt that the market had caught up with our analysis of thecompany's prospects, and the impact of the subsidy cut could have materially affected the share price, despite
the company's undoubtable social benefits..

 ESG factor 4

97

ESG factor and explanation
We have also reconsidered our position in a Chinese consortium which core activities - industrial waste
treatment, waste heat power generation, municipal waste incineration and energy saving building materials have a strong environmental footprint and rather hazardous.
Such environmental services are key tenets of China's campaign to clean up the environment and, more
specifically, the commitment to the circular economy made in the five-year economic plan to 2021. Our
research, which began in 2017, concluded that the company's core businesses' alignment with theseenvironmental policy goals had not yet been factored into either the profitability forecasts or the valuation of thiscompany as investors were unduly focused on sluggish order growth.

ESG incorporation strategy applied
Integration
 Screening Thematic Integration

Impact on investment decision or performance
As part of our company analysis, we also conducted enhanced due diligence on ESG red flags raised by a third
party ESG rating agency. These highlighted deficient anti-corruption and bribery procedures. Whilesusceptibility to corruption is indeed possible, there seemed and still seems to be no evidence presented in thethird party's report that the company is any more susceptible than any other. Hence, this couldn't justify a selloff on this name and we have decided to keep our holdings in the stock.
Furthermore , during 2019, the company has demonstrated its technology leadership by signing on a major
new partner and order growth has been buoyant since. Whilst the market has started to re-rate this stock, we
continue to own the stock as there remains ample valuation and growth upside. Ultimately, companies like thisone deserve to trade at a premium to peers.

 ESG factor 5

98

ESG factor and explanation
As the carbon cost is becoming a major issue for the European cement sector as we approach 2021 - thestarting date of the phase 4 EU Emission Trading Scheme (2021-2030) - we have questioned what would be
the impact of this upcoming scheme on the financials of an Italian player.
Its CEO is worried on the Phase IV of EU ETS regulation. It will change the European cement industry
dynamics and productivity. The group is currently long in Italy and short in Germany with an overall longposition of 4-5mt allowances in credit. They could use the existing stock of CO2 quotas for the next 2-2,5 years.
When stocks won't be sufficient, they will have to buy CO2 credit. The results of the phase IV of EU ETS is
unclear and could be disruptive for the industry

ESG incorporation strategy applied
Integration
 Screening Thematic Integration

Impact on investment decision or performance
Our engagement with the company's CEO has provided some interesting insight as he considers the European
Union should think about protecting the EU industry applying specific tax as border carbon tariffs. Company's
management has also mentioned the need to invest to develop innovative project to reduce C02 emissions
leading to forecasts ~20-25m€ incremental capex requirements for the development of solutions for reducing,storing and converting C02.
We have subsequently done an analysis of the potential impact of incremental CO2 costs and capex on our FVtaking into account a flat CO2 cost at 30€. We have a FV=24,6€. Integrating incremental C02 quota costs
3€/share on our FV would drop to 21,6€. This is why we cautiously keep our holdings but might reconsider our
vision going forward.

LEI 13.2

Additional information.[Optional]

We have taken the freedom to add a sixth ESG Integration example we consider to be really illustrative.
We have indeed decided to reassess a major French Utilities company also affected by the recent carbon
prices trends.
Indeed, as one of the leading utilities in Europe, a French player is heavily exposed to merchant power generationand therefore to power price fluctuations. In 2015, the European Commission (EC) started a revision process of the
EU ETS, when the carbon price was low (~8€/tn) and therefore not effective as initially intended. Early 2018, theEuropean Commission adopted the final agreement on the reform of the EU ETS market which led to an important
rise in the CO2 price: from €8.25/tn at the start of 2018 to 25€/tn as of today, representing roughly a 200% increase.
From an ineffective tool, the EU ETS market transformed into one the main parameter of European power prices.
Given the increasingly significant impact of the carbon price on the Utilities' businesses, we have engaged with thecompany to better understand and capture this driver into our valuation model. As a result of our discussion with thecompany, we have used an average CO2 price of €25/tn for 2019, €30/tn in 2020 and slightly increasing thereafter.
The sensitivity of the company to a rise/decrease of €2/tn on the CO2 price represents a move of +/- €37 million on
pre-tax income.
These numbers might fluctuate in the near future as the company is growing quickly its renewables capacity(addition of 3GW per year targeted through 2018-21) while disposing some of its old coal generation plants (thecompany recently sold coal capacities in Thailand, Brazil, Germany, Netherlands…).
99

100

HSBC Global Asset Management

Reported Information
Public version
Direct - Listed Equity Active Ownership

PRI disclaimer
This document presents information reported directly by signatories. This information has not been audited by the PRISecretariat or any other party acting on their behalf. While this information is believed to be reliable, no representations or
warranties are made as to the accuracy of the information presented, and no responsibility or liability can be accepted forany error or omission.

101

Overview
LEA 01

Mandatory

PublicCore Assessed

PRI 2

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether your organisation has an active ownership policy (includes engagement and/or
voting).

LEA 01.1
 Yes

LEA 01.2

Attach or provide a URL to your active ownership policy.

 Attachment provided:
 URL provided:

URL
https://www.assetmanagement.hsbc.co.uk/-/media/files/attachments/common/responsible-investmentpolicy-may-2017.pdf

LEA 01.3

Indicate what your active engagement policy covers:

General approach to Active Ownership Conflicts of interest
 Alignment with national stewardship code requirements
 Assets/funds covered by active ownership policy Expectations and objectives
 Engagement approach

Engagement
 ESG issues
 Prioritisation of engagement Methods of engagement
 Transparency of engagement activities
 Due diligence and monitoring process Insider information
 Escalation strategies
 Service Provider specific criteria Other; (specify) (Proxy) voting approach

102

Voting ESG issues
 Prioritisation and scope of voting activities Methods of voting
 Transparency of voting activities
 Regional voting practice approaches Filing or co-filing resolutions
 Company dialogue pre/post-vote Decision-making processes Securities lending processes Other; (specify) Other None of the above
 No

LEA 01.4

Do you outsource any of your active ownership activities to service providers?

 Yes
 No

LEA 01.6

Additional information [optional]

Our approach to active ownership is set out on the Responsible investing page on our website:
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investingThis page includes several attachments, which include all the elements of our approach.
The Responsible Investment Policy, which is linked to at LEA 01.2 above has over-arching details.
Specific approaches to engagement and voting are in the relevant attachments to the same website page:
Engagement Policy:
https://www.global.assetmanagement.hsbc.com/-/media/files/attachments/common/resourcedocuments/engagement-policy-en.pdf
Voting Guidelines:
https://www.global.assetmanagement.hsbc.com/-/media/files/attachments/common/resource-documents/globalvoting-guidelines-en.pdf
Whilst our Stewardship Code statement on the same page has greater details on both engagement and voting:https://www.assetmanagement.hsbc.co.uk/-/media/files/attachments/uk/common/uk-stewardship.pdf

Engagement
LEA 02

Mandatory

LEA 02.1

PublicCore Assessed

Indicate the method of engagement, giving reasons for the interaction.

103

PRI 1,2,3

Type of engagement

Reason for interaction

Individual / Internal staff
engagements

 To influence corporate practice (or identify the need to influence it) on ESG
issues To encourage improved/increased ESG disclosure To gain an understanding of ESG strategy and/or management
 We do not engage via internal staff

Collaborative engagements

 To influence corporate practice (or identify the need to influence it) on ESG
issues To encourage improved/increased ESG disclosure To gain an understanding of ESG strategy and/or management
 We do not engage via collaborative engagements

Service provider engagements

 To influence corporate practice (or identify the need to influence it) on ESG
issues To encourage improved/increased ESG disclosure To gain an understanding of ESG strategy and/or management
 We do not engage via service providers

LEA 02.4

Additional information. [Optional]

Active ownership is part of our investment philosophy, beliefs and processes and drives our practices as responsible
institutional investors. Engagement plays a fundamental part of our stewardship activities and is guided by principles
1, 2 and 3 of the PRI, as well as principles 3, 4 and 5 of the UK Stewardship Code. As shareholders we engage toimprove our understanding of companies, raise any concerns we may have, encourage good practice and reducethe investment risk for our clients.
For our active portfolios, fund managers exercise close oversight of investee companies, meeting them regularly tomonitor performance as well as undertaking voting and associated engagement. Our equity fund managers andanalysts had more than 3,000 interactions with companies in 2019; they raised ESG issues in more than 2,300 ofthese.
The stewardship of all holdings is overseen by our ESG team, which sits within our investment function. This teamleads engagement on holdings in passive portfolios, thematic engagement and our participation in collaborative
engagements, with activity undertaken by team members based in London, Paris and Hong Kong, together withfund managers where appropriate. At the beginning of the year we determine our engagement plan in consultation
with investment teams and senior management. The priorities are set based on our research and analysis of ESG
issues, which identifies risks and opportunities to raise with companies, as well as an assessment of our overall
portfolio exposure to different ESG risks. We identify the companies to engage with in a number of ways including
where there are serious concerns, where the company is rated poorly on our internal ESG scoring system, where
we have a significant holding - either by value or proportionately - and to inform our investment theses.
Our engagement activities are not restricted to this engagement plan but are also informed by emerging events andcollaborative investor initiatives throughout the year. We record all engagement activities in a central database tomonitor and track progress. Information relating to our engagements can be accessed by all investment colleagues
globally to ensure a coordinated approach between offices, asset classes and teams. We typically engage withhundreds of companies each year with the aim of improving shareholder returns through improved corporate
practice. The issues we raise with investee companies include strategy, risk - including environmental & social risks
such as labour standards, climate change, deforestation, water stewardship and child labour where relevant - culture
and capital structure.
We are members of a number of industry initiatives in order to learn from others, offer support and use combined
influence to affect change. These industry initiatives include: CDP, Global Institutional Governance Network, Asian
Corporate Governance Association, Investment Association, International Corporate Governance Network, Investor
Forum, Investors Network on Climate Risk, Institutional Investors Group on Climate Change, PRI and UKSIF. We
participate in various groups within these organisations such as market specific and issue specific investor working
104

groups, advisory committees and the boards. In 2018 we participated in a number of collective engagement
initiatives initiated by some of these groups.
We do not delegate engagement to service providers as we believe the oversight of companies in which we haveinvested on behalf of clients is a key component of our responsibility as well as being important for our investment
processes.

LEA 03

Mandatory

PublicCore Assessed

PRI 2

New selection options have been added to this indicator. Please review your prefilled responses carefully.

LEA 03.1

Indicate whether your organisation has a formal process for identifying and prioritisingengagements.

 Yes

LEA 03.2

Indicate the criteria used to identify and prioritise engagements for each type of engagement.

105

Type of engagement

Criteria used to identify/prioritise engagements

Individual / Internal staff
engagements

Individual / Internal staff engagements
 Geography/market of the companies Materiality of the ESG factors
 Exposure (size of holdings)
 Responses to ESG impacts that have already occurred Responses to divestment pressure Consultation with clients/beneficiaries
 Consultation with other stakeholders (e.g. NGOs, trade unions, etc.)
 Follow-up from a voting decision
 Client request
 Breaches of international norms
 Other; (specify)
 We do not outline engagement criteria for our individual engagements

Collaborative engagements
Collaborative engagements
 Potential to enhance knowledge of ESG issues through other investors Ability to have greater impact on ESG issues
 Ability to add value to the collaboration
 Geography/market of the companies targeted by the collaboration
 Materiality of the ESG factors addressed by the collaboration
 Exposure (size of holdings) to companies targeted by the collaboration
 Responses to ESG impacts addressed by the collaboration that have alreadyoccurred Responses to divestment pressure Follow-up from a voting decision Alleviate the resource burden of engagement
 Consultation with clients/beneficiaries
 Consultation with other stakeholders (e.g. NGOs, trade unions, etc.)
 Other; (specify)
 We do not outline engagement criteria for our collaborative engagement
providers
 No
LEA 04

Mandatory

PublicCore Assessed

PRI 2

New selection options have been added to this indicator. Please review your prefilled responses carefully.

106

LEA 04.1

Indicate whether you define specific objectives for your organisation’s engagement activities.

Individual / Internal staff
engagements All engagement activities
 Majority of engagement activities
 Minority of engagement activities
 We do not define specific objectives for engagement activities carried out byinternal staff

Collaborative engagements All engagement activities
 Majority of engagement activities
 Minority of engagement activities
 We do not define specific objectives for engagement activities carried out
through collaboration

LEA 05Mandatory

LEA 05.1

PublicCore Assessed

PRI 2

Indicate whether you monitor and/or review engagement outcomes.

Individual / Internal staff
engagements

 Yes, in all cases
 Yes, in a majority of cases
 Yes, in a minority of cases We do not monitor, or review engagement outcomes when the engagement iscarried out by our internal staff.

Collaborative engagements

 Yes, in all cases
 Yes, in a majority of cases
 Yes, in a minority of cases We do not monitor, or review engagement outcomes when the engagement iscarried out through collaboration.

LEA 05.2

Indicate whether you do any of the following to monitor and/or review the progress of engagement
activities.

107

Individual / Internal staff
engagements

 Define timelines/milestones for your objectives
 Track and/or monitor progress against defined objectives and/or KPIs
 Track and/or monitor the progress of action taken when original objectives
are not met
 Revisit and, if necessary, revise objectives on a continuous basis
 Other; specify

Collaborative engagements

 Define timelines/milestones for your objectives
 Track and/or monitor progress against defined objectives and/or KPIs
 Track and/or monitor the progress of action taken when original objectives
are not met
 Revisit and, if necessary, revise objectives on a continuous basis
 Other; specify

LEA 06

Mandatory

LEA 06.1

PublicAdditional Assessed

PRI 2,4

Indicate whether your organisation has an escalation strategy when engagements are
unsuccessful.

 Yes

Indicate the escalation strategies used at your organisation following unsuccessful
engagements.

LEA 06.2

 Collaborating with other investors
 Issuing a public statement
 Filing/submitting a shareholder resolution
 Voting against the re-election of the relevant directors
 Voting against the board of directors or the annual financial report Submitting nominations for election to the board Seeking legal remedy / litigation
 Reducing exposure (size of holdings)
 Divestment
 Other; specify
 No
LEA 07

Voluntary

LEA 07.1

PublicAdditional Assessed

PRI 1,2

Indicate whether insights gained from your organisation`s engagements are shared with investment
decision-makers.

108Type of engagement

Insights shared Yes, systematically

Individual / Internal staff engagements

 Yes, occasionally No Yes, systematically

Collaborative engagements

 Yes, occasionally No

LEA 07.2

Indicate the practices used to ensure that information and insights gained through engagements
are shared with investment decision-makers.

 Involving investment decision-makers when developing an engagement programme Holding investment team meetings and/or presentations
 Using IT platforms/systems that enable data sharing Internal process that requires portfolio managers to re-balance holdings based on interaction and outcome
levels Other; specify
 None

LEA 07.3

Indicate whether insights gained from your organisation’s engagements are shared with yourclients/beneficiaries.

Type of engagement

Insights shared Yes, systematically

Individual/Internal staff engagements

 Yes, occasionally No Yes, systematically

Collaborative engagements

 Yes, occasionally No

LEA 07.4

Additional information. [Optional]

Investment team members are consulted in the development of our engagement plan. They are involved in /consulted on engagements with specific companies, and receive updates on the progress of engagements.
We record all engagement activities in a bespoke central database to monitor and track progress. Information
relating to our engagements can be accessed by all investment colleagues globally to ensure a coordinatedapproach between offices, asset classes and teams.

LEA 08Mandatory

LEA 08.1

PublicGateway

Indicate whether you track the number of your engagement activities.

109

PRI 2

Type of engagement

Tracking engagements
 Yes, we track the number of our engagements in full

Individual/Internal staff engagements

 Yes, we partially track the number of our engagements
 We do not track Yes, we track the number of collaborative engagements in full

Collaborative engagements

 Yes, we partially track the number of our collaborative engagements
 We do not track

LEA 08.2

Additional information. [Optional]

We track all contacts with investee companies globally irrespective of who undertook the engagement and whether
the interactions relate to ESG issues. Analysis, learning points and outcomes from engagements are shared with allcolleagues in our investment function globally to ensure a coordinated approach between offices, asset classes andteams. This system allows our Fund Managers to be aware of / raise issues previously raised by one of our ESG
Analysts.

Outputs and outcomes
LEA 09Mandatory to Report Voluntary toDisclose

LEA 09.1

PublicCore Assessed

PRI 2

Indicate the proportion of companies in your listed equities portfolio with which your organisation
engaged during the reporting year.

We did not complete any
engagements in thereporting year.

Number ofcompanies engaged



1410

28



15

4

(avoid double
counting, see
explanatory notes)

Proportion of companies
engaged with, out of total
listed equities portfolio

Individual / Internal
staff engagements

Collaborative
engagements

LEA 09.2

Indicate the breakdown of engagements conducted within the reporting year by the number ofinteractions (including interactions made on your behalf).

110No. of interactions with a company% of engagements
 >76%One interaction

 51-75%
 11-50%
 1-10% None >76%

2 to 3 interactions

 51-75%
 11-50%
 1-10% None >76%

More than 3 interactions

 51-75%
 11-50%
 1-10% None

Total
100%

LEA 09.3

Indicate the percentage of your collaborative engagements in which you were the leadingorganisation during the reporting year.

Type of engagement% leading role

Collaborative engagements  >50%
 10-50%
 <10%
 None

LEA 09.5

Additional information. [Optional]

We have recently published our 2020 Responsible Investment Review providing with an overview of our stewardship
activity during 2019, available online under the following URL:
https://www.assetmanagement.hsbc.co.uk/en/institutional-investor/about-us/responsible-investing
During 2019, we voted on more than 78,000 resolutions at over 7,400 company meetings globally. Our engagementwith 1,410 equity issuers on environmental, social or governance (ESG) covered 39 markets. And we supported
1,726 shareholder resolutions, including more than 170 on environmental and social issues, declaring our support
publicly in advance where we felt this was appropriate.
Engagement activity is reported as a percentage of the value of assets under management - total equity issuers
engaged 1410 companies, representing 54 per cent of value of assets under management.

111

LEA 10

Voluntary

LEA 10.1

PublicAdditional Assessed

PRI 2

Indicate which of the following your engagement involved.

 Letters and emails to companies
 In a minority of cases
 In a majority of cases
 In all cases
 Meetings and/or calls with board/senior management
 In a minority of cases
 In a majority of cases
 In all cases
 Meetings and/or calls with the CSR, IR or other management
 In a minority of cases
 In a majority of cases
 In all cases
 Visits to operations
 In a minority of cases
 In a majority of cases
 In all cases
 Visits to supplier(s) in supplier(s) from the company’s supply chain In a minority of cases
 In a majority of cases
 In all cases Participation in roadshows In a minority of cases
 In a majority of cases
 In all cases
 Other(specify)
Attendance at AGMs
 In a minority of cases
 In a majority of cases
 In all cases

LEA 10.2

Additional information. [Optional]

We regard active stewardship as integral to our long-term approach to responsible investment and ultimately indelivering value to our clients. Our voting and engagement activity is focused on protecting and enhancing ourinvestments and as such we seek to use all the tools at our disposition.
Our engagements with investee companies may take the form of correspondence or meetings; these could be withsenior management from relevant divisions or indeed board members. We often meet with the same company on
more than one occasion and may also visit production sites, talk to their suppliers, service providers and competitors
to inform our views.
112Occasionally we may decide to make our engagements more public. So for example in 2019 we publicly declared
our intention to support some shareholder resolutions in an effort to encourage the companies concerned and otherinvestors to act, we were signatory to a statement along with other investors that was read out at a company's AGM,
we read out our own statement at another company's AGM and we co-filed a shareholder resolution to be tabled ata third company's AGM (for 2019).

LEA 11

Voluntary

LEA 11.1

PublicDescriptive

PRI 2

Provide examples of the engagements that your organisation or your service provider carried out
during the reporting year.

 Add Example 1

113

ESG Topic

Human rights, Health and Safety, Labour practices and supply chain management
 Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Other governance Plastics
 Other

Conducted
byObjectives

 Individual / Internal
 Collaborative
In 2016 we began engaging with eight US companies as part of a collective engagement
initiative coordinated by the PRI. This was a 3 year engagement initiative ending in 2019 during
which time we have had numerous meetings with the companies to encourage the following:
1.
2.
3.
4.
5.

Scope and
Process

Supplier code of conduct
GovernanceTraceability and risk assessment
Monitoring and corrective action
Target setting and disclosureOver the period of this initiative we have engaged with the companies numerous times for inperson meetings and in correspondence. We have seen improvements to practice anddisclosure at all eight companies, highlights include:
Walmart

Enhanced commitment to human rights



Improved communication of expectations with direct and sub-suppliersCollaboration with peers on systemic issues

Annual reporting on progress

Tyson


Appointment of a Chief Sustainability Officer who reports into the board114



Enhanced supplier code of conductApplication of supplier code beyond first tier to include labour brokers and agentsIntroduce process for mapping supply chain beyond first tier

Established process for monitoring suppliers and disclosing audit findings

CostcoOutcomes

Enhanced commitment to human rights in supply chainTraining and capacity building for suppliers

Mechanism for reporting grievances in supply chain established and details provided

Joined multi-stakeholder initiative to address systemic issues

Annual reporting against goals

 Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
 Ongoing Voting Other Add Example 2

115

ESG Topic

Company leadership issues, Other governance Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Other governance Plastics
 Other

Conducted
byObjectives

Scope and
Process

Outcomes

 Individual / Internal
 Collaborative
The company Chairman had eight other directorships raising the concern that he was'overboarded' and had insufficient time to dedicate to his SSP plc Chairmanship. We sought toencourage the Chairman to address these concerns by reducing his external commitments.

We met with the company to share our concerns. We later voted against the Chairman's
reelection when we did not receive the assurances we required. At the AGM in February 201936% of shareholders voted against his re-election. We met with the Chairman and Senior
Independent Director (SID) to repeat our concern and communicate our view that a delay inaddressing it created unnecessary risk for the business. During our meeting the Chair and SID
acknowledged the issue and committed to address it by the next AGM. In November 2019 theCompany announced the appointment of a new Chair with immediate effect.

 Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company

116 Ongoing Voting Other Add Example 3

117

ESG Topic

Climate Change Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Other governance Plastics
 Other

Conducted
byObjectives

Scope and
Process

 Individual / Internal
 Collaborative
We act as co-lead investor for European and international companies targeted within the
Climate Action 100+ initiative. This is a 5-year long engagement programme whose objective isto have boards and senior management of companies to:Implement a strong governance framework, based on board accountability and oversightfor climate change-related risks and opportunities;

Take action to reduce GHG emission across the whole value chain (scope 1,2 &3) in linewith the Paris Agreement

Provide enhanced corporate disclosure through the implementation of the TCFD
recommendation.

In 2019 we co-lead the engagement with Equinor (formerly Statoil). We met with the company
regularly in 2019 to discuss our expectations. This resulted in a joint statement between HSBC
Global Asset Management, UBS Asset Management and Equinor in May 2019 setting out thefollowing commitments:
6. Business strategy alignment with Paris Climate Agreement
7. Upgrade of emission reduction targets
8. Upgrade of remuneration with climate targets
9. Scope 3 emissions disclosure
10. Global review of lobbying on climate change118

We were pleased that in February 2020 they announced the following commitments:

Outcomes

50% reduction carbon intensity including Scope 3 emissions by 2050



Carbon neutral global operations by 2030



40% reduction of absolute emissions in Norway by 2030 and 100% in 2050

 Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
 Ongoing Voting Other Add Example 4

119

ESG Topic

Climate Change, Deforestation, Other Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Other governance Plastics
 Other

Conducted
byObjectives

 Individual / Internal
 Collaborative
Following up on earlier work on sustainable fisheries, in 2019 we focused on meat production.
As long-term investors we question the sustainability of the growth trajectory of global meatproduction and consumption. The emissions associated with pre- and postproduction activities
in the global food system are estimated to represent 21-37% of total net GHG emissions.
We approached key restaurant stocks in our portfolio to raise questions with them

Scope and
Process

We met with four restaurant brands to get a better understanding of the link between revenue
and animal protein consumption, strategy, consumer changes, governance and climate change.
All of the companies recognised the issue and have begun to increase their offering of plantbased foods. While for some, these new products are starting to generate positive returns, todate this has not impacted their meat offering.

Outcomes Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
120 Ongoing Voting Other Add Example 5

121

ESG Topic

Executive Remuneration, Other governance Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Other governance Plastics
 Other

Conducted
byObjectives

 Individual / Internal
 Collaborative
As endorsers of the Investor Stewardship Group, we identified share pledging (the practice ofusing companies' shares and / or options as collateral for loans or margin accounts) andhedging as a concern for a number of our US holdings.
We requested companies introduce policies to prohibit these practices and to regularly monitor
and gradually reduce the volumes of shares pledged and or hedged by executives and directors.

Scope and
Process

We identified share pledging and hedging as a material issue for our US-based holdings since it
can undermine the alignment between management and shareholders
Following on from a similar exercise in 2018, in 2019 we reviewed our US holdings andidentified 33 companies with shares hedged or pledged and without policies to prohibit thesepractices.
We wrote to all 33 companies to raise our concerns and request they introduce a policy toprohibit hedging and pledging, to remove any waivers and gradually phase out outstanding
positions. We had follow up meetings with a number of companies. Two companies committed
to review their policies with a view to limiting the capacity of executives to hedge or pledge theirshares.

Outcomes Company changed practice Company committed to change Disclosure / report published122 Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
 Ongoing Voting Other Add Example 6123

ESG Topic

Executive Remuneration, Other governance Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Other governance Plastics
 Other

Conducted
byObjectives

 Individual / Internal
 Collaborative
We had concerns regarding the company's structure and disclosure of their executive
remuneration and its impact on shareholder value. There is no upper limit to share awards
made as part of the long term incentive plan and the criteria for granting and vesting of awards
is poor.
The objective of this engagement was to seek company assurance they would address ourconcerns.

Scope and
Process

During the meeting the chairman acknowledged our concerns and committed to improve thetransparency of their practices.
Following our meeting the company did improve their disclosure and we voted for the
remuneration report at the AGM. We are considering how to encourage further improved
practice at the company.

Outcomes Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome

124 Increased understanding / information
 Invested in company
 Ongoing Voting Other Add Example 7
 Add Example 8

125

ESG Topic

Human rights, Sustainability reporting, Other governance Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Other governance Plastics
 Other

Conducted
byObjectives

 Individual / Internal
 Collaborative
Since 2017 French companies have been required by law to identify and prevent risks to humanrights and the environment that could occur as a result of their business activities. Thisrequirement goes beyond that of UK Modern Slavery Act and the California Transparency inSupply Chains Act, by requiring companies to implement a 'vigilance plan'. In July 2019 a global
union federation and French NGO sent legal notification to the company challenging thecompany's compliance with the law.
The objective of the engagement was to understand how the company planned to address thislegal challenge.

Scope and
Process

Outcomes

We met with the Deputy CEO of the company to discuss these concerns as well as labour
standards. In September 2019 the company published an updated Vigilance Plan addressing
some of the concerns raised. The company has a large global workforce (approx. 300,000) withthe majority in countries without human rights legislation. We will continue to monitor reports andengage with the company on labour standards.

 Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome

126 Increased understanding / information
 Invested in company
 Ongoing Voting Other Add Example 9127

ESG Topic

Other governance Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Other governance Plastics
 Other

Conducted
byObjectives

Scope and
Process

 Individual / Internal
 Collaborative
We have been engaging with social media companies on the issue of live-streaming anddistribution of content that promotes or supports, or tends to promote or support, acts of torture,
terrorism or the infliction of extreme violence or extreme cruelty.

Following the transmission of the violent attacks in New Zealand we joined a collective
engagement initiative with Facebook, Alphabet and Twitter to encourage the companies toestablish robust policies and procedures to manage these risks. We were signatory to letters
raising our concerns to the companies.
Subsequent meetings with Facebook and Twitter have provided greater clarity on the different
company approaches although it is not clear whether changes implemented are proportional to
the scale of the issue and risk. Alphabet have not replied to investor engagement and declined
questions at a recent meeting.

Outcomes Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
128 Ongoing Voting Other Add Example 10129

ESG Topic

Climate Change Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Other governance Plastics
 Other

Conducted by Individual / Internal
 Collaborative

Objectives
Scope and Process

Outcomes Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
 Ongoing Voting Other(Proxy) voting and shareholder resolutions
130

LEA 12Mandatory

LEA 12.1

PublicDescriptive

PRI 2

Indicate how you typically make your (proxy) voting decisions.

Approach We use our own research or voting team and make voting decisions without the use of service providers.
 We hire service providers who make voting recommendations and/or provide research that we use to guideour voting decisions.

Based on
 The service-provider voting policy we sign off on Our own voting policy Our clients` requests or policies
 Other (explain) We hire service providers who make voting decisions on our behalf, except in some pre-defined scenarios
where we review and make voting decisions.
 We hire service providers who make voting decisions on our behalf.

LEA 12.2

Provide an overview of how you ensure that your agreed-upon voting policy is adhered to, giving
details of your approach when exceptions to the policy are made.

As set out below, we review voting policy recommendations for all active holdings.
This enables us both to ensure that ISS has applied our policy correctly and to determine whether there arecompany-specific reasons to depart from the policy.
We often provide feedback to ISS on their application of the policy - either to amend the recommendation for aparticular meeting or for future meetings.
A decision to depart from a policy recommendation is made by the fund manager and / or a member or thegovernance team. This could result from an investment insight into the company concerned that goes beyond the
ISS analysis or from an engagement with the company which indicates that the governance concern is misplaced orwill be addressed. Reasons for departures from policy are recorded and reviewed subsequently by a governanceoversight group.
Policy recommendations on passive holdings are reviewed on an ad hoc basis and can also result in feedback to
ISS to amend the recommendation concern and / or future recommendations.

LEA 12.3

Additional information.[Optional]

We exercise our voting rights as an expression of stewardship for client assets. We have global voting guidelines.
These protect investor interests and foster good practice, highlighting independent directors, remuneration linked toperformance, limits on dilution of existing shareholders and opposition to poison pills.
In 2019, we voted on more than 78,000 resolutions at more than 7,400 company meetings across 74 markets.
Whether shares are voted in 18 markets affected by burdensome barriers to voting, such as share blocking or
unusual power of attorney requirements, will depend upon how custodians operate voting for the meeting
concerned.
Our policy is applied at three levels: market-specific criteria for developed Europe; global 'good practice' standards
for other developed markets; more flexible application for emerging and frontier markets.
We use Institutional Shareholder Services (ISS) to assist with the application of our voting guidelines. ISS provides'custom' HSBC recommendations highlighting resolutions which contravene our guidelines.

131For active holdings, these are endorsed or amended by fund managers prior to voting. Fund managers' instructions
are also applied where active holdings overlap stocks held through passive strategies.
Other passive holdings may be reviewed by our ESG Analysts and / or are voted in line with HSBC
recommendations.

LEA 14

Voluntary

LEA 14.1

PublicAdditional Assessed

PRI 2

Does your organisation have a securities lending programme?

 Yes
 No

Describe why your organisation does not lend securities.

LEA 14.2

We ended our involvement in securities lending as we believed that there were conflicts of interest between
running our own securities lending programme and acting as a fiduciary for clients.

LEA 14.4

Additional information. [Optional]

We do not conduct securities lending on our fund ranges.

LEA 15Mandatory

LEA 15.1

PublicDescriptive

Indicate the proportion of votes participated in within the reporting year in which where you or theservice providers acting on your behalf raised concerns with companies ahead of voting.

 100%
 99-75%
 74-50%
 49-25%
 24-1%
 Neither we nor our service provider(s) raise concerns with companies ahead of voting

LEA 15.2

PRI 2

Indicate the reasons for raising your concerns with these companies ahead of voting.

 Vote(s) concerned selected markets
 Vote(s) concerned selected sectors
 Vote(s) concerned certain ESG issues
 Vote(s) concerned companies exposed to controversy on specific ESG issues
 Vote(s) concerned significant shareholdings Client request
 Other132

LEA 15.3

Additional information. [Optional]

In the UK, we write in advance to any company - 138 in total - where we intend to vote against or abstain, explaining
our reasons and giving them the opportunity to respond before we cast our vote. Issues discussed included
compensation (46%), director elections (40%), capitalisation (7%), routine matters (4%) and transactions (3%). For 7
companies in 2019, new information or a change of approach from the company allowed us to change our vote.
In Japan in 2019, we contacted a number of companies in the TOPIX100 which did not have at least one third
independent directors that we expected large companies such as these with many international investors to meetthis international standard for board independence and to warn them that we would vote against non-independent
directors, including executives other than the CEO, President and/or founder.
Across all markets:
We also communicate in advance of voting on companies in energy-intensive sectors with poor disclosure on
emissions and / or climate change risk management; where we have engaged over several years and the company
has not improved its disclosure, we contact the company concerned in advance to warn that we will normally voteagainst the re-election of their chairman.
We might also communicate our voting intention in advance on other matters as part of our regular engagement, or
if we were already engaging with the company on a related matter.
We may also pre-declare our votes on some climate-related shareholder resolutions.

LEA 16

Mandatory

LEA 16.1

PublicCore Assessed

PRI 2

Indicate the proportion of votes where you, and/or the service provider(s) acting on your behalf,
communicated the rationale to companies for abstaining or voting against management
recommendations. Indicate this as a percentage out of all eligible votes.

 100%
 99-75%
 74-50%
 49-25%
 24-1%
 We do not communicate the rationale to companies
 Not applicable because we and/or our service providers did not abstain or vote against management
recommendations

LEA 16.2

Indicate the reasons why your organisation would communicate to companies, the rationale forabstaining or voting against management recommendations.

 Vote(s) concern selected markets
 Vote(s) concern selected sectors
 Vote(s) concern certain ESG issues
 Vote(s) concern companies exposed to controversy on specific ESG issues
 Vote(s) concern significant shareholdings Client request
 Other

133

LEA 16.3

In cases where your organisation does communicate the rationale for abstaining or voting against
management recommendations, indicate whether this rationale is made public.

 Yes
 No

LEA 16.4

Additional information. [Optional]

In addition to the systematic communication of votes in advance for the UK and elsewhere explained above, we
explained the rationale for our votes against management at around 150 or our largest holdings by value. The shareof our global equity assets under management for which we communicated our voting rationale was just over 20 per
cent. Issues raised outside the UK were: compensation (40%) director elections (21%) governance-relatedshareholder resolutions (20%), environmental or social shareholder resolutions (18%), capitalisation and routine
matters (1%). Fund managers and analysts also communicate our voting to companies in their portfolios on an ad
hoc basis.

LEA 17

Mandatory

LEA 17.1

PublicCore Assessed

PRI 2

For listed equities in which you or your service provider have the mandate to issue (proxy) voting
instructions, indicate the percentage of votes cast during the reporting year.

 We do track or collect this information

Votes cast (to the nearest 1%)%
96

Specify the basis on which this percentage is calculated Of the total number of ballot items on which you could have issued instructions
 Of the total number of company meetings at which you could have voted
 Of the total value of your listed equity holdings on which you could have voted
 We do not track or collect this information

134

LEA 17.2

Explain your reason(s) for not voting on certain holdings

 Shares were blocked Notice, ballots or materials not received on time Missed deadline
 Geographical restrictions (non-home market)
 Cost Conflicts of interest
 Holdings deemed too small Administrative impediments (e.g., power of attorney requirements, ineligibility due to participation in shareplacement) Client request
 Other (explain)

LEA 17.3

Additional information. [Optional]

As we manage retail funds which receive daily in- and out-flows which are typically applied across all holdings, weare not able to vote ballots where holdings would be blocked.
Ballots not voted due to late receipt of voting materials typically account for less than one ballot in every thousand.
We do not typically vote in markets with burdensome power of attorney requirements, though in some markets wehave powers of attorney in place and / or we use them for important meetings.

LEA 18Voluntary

LEA 18.1

PublicAdditional Assessed

PRI 2

Indicate whether you track the voting instructions that you or your service provider on your behalf
have issued.

 Yes, we track this information

LEA 18.2

Of the voting instructions that you and/or third parties on your behalf have issued, indicate theproportion of ballot items that were:135

Voting instructions

Breakdown as percentage of votes castFor (supporting) management
recommendations%
90

Against (opposing) management
recommendations%
10

Abstentions%
0100%
 No, we do not track this information

LEA 18.3

In cases where your organisation voted against management recommendations, indicate thepercentage of companies which you have engaged.

20

LEA 18.4

Additional information. [Optional]

As above, the proportion of companies we which we engaged is based on equity assets under management

LEA 19Mandatory

LEA 19.1

PublicCore Assessed

PRI 2

Indicate whether your organisation has a formal escalation strategy following unsuccessful voting.

 Yes
 No

LEA 19.2

Indicate the escalation strategies used at your organisation following abstentions and/or votes
against management.

 Contacting the company’s board
 Contacting the company’s senior management Issuing a public statement explaining the rationale Initiating individual/collaborative engagement
 Directing service providers to engage
 Reducing exposure (holdings) / divestment
 Other

136

LEA 20

Voluntary

LEA 20.1

PublicDescriptive

PRI 2

Indicate whether your organisation, directly or through a service provider, filed or co-filed any ESG
shareholder resolutions during the reporting year.

 Yes

LEA 20.2

Indicate the number of ESG shareholder resolutions you filed or co-filed.

Total number2
 No

LEA 20.3

Indicate what percentage of these ESG shareholder resolutions resulted in the following:

Went to vote%50
Were withdrawn due to changes at the company
and/or negotiations with the company%
0Were withdrawn for other reasons%0
Were rejected/not acknowledged by thecompany

%
50

Total
100%

LEA 20.4

Of the ESG shareholder resolutions that you filed or co-filed and that were put to a vote (i.e., notwithdrawn), indicate the percentage that received approval:

>50%
100

137

LEA 20.5

Describe the ESG shareholder resolutions that you filed or co-filed, and the outcomes achieved.

In 2019, we co-filed two resolutions in our role as support investors for the Climate Action 100+ engagements withthe companies below. At BP, we were amongst the early co-filers of a resolution that was embraced bymanagement as an expression of their commitment to a marked improvement in management of climate risk. The
resolution was supported by a very large proportion of shareholders. In that same role for the Climate Action 100+ at
ExxonMobil, we were amongst the co-filers of a resolution which called for improved climate reporting and targets
for emission reductions, including Scope 3 emissions. No action was taken on this resolution, however we arecontinuing our engagement with them.

LEA 20.6

Describe whether your organisation reviews ESG shareholder resolutions filed by other investors.

We track shareholder resolutions on a number of themes in advance.
We typically support shareholder resolutions on ESG issues where these are in line with the principles of good
governance outlined in our voting guidelines or where we consider the issue to be material and the proposal to be in
the best long-term interest of clients.
This means we support greater disclosure and the introduction of appropriate policies (provided the proposal is notoverly prescriptive).
In 2019, we voted for 1,702 shareholder resolutions. This represented around 67 per cent on those on which we
voted.
Among these, we voted for more than 170 shareholder resolutions on environment and social issues.
On climate change, we typically support resolutions asking for the adoption of climate change policies, two-degreetransition plans and/or quantitative greenhouse gas emission reduction targets, and resolutions asking for annual
assessments of portfolio resilience.

LEA 21

Voluntary

LEA 21.1

PublicDescriptive

PRI 2

Provide examples of the (proxy) voting activities that your organisation and/or service provider
carried out during the reporting year.

 Add Example 1

138

ESG Topic

Climate Change, Sustainability reporting Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Political spending / lobbying Other governance Plastics
 Other

Conducted
byObjectives

Scope and
Process

 Individual/Internal
 Service provider
To ensure that our engagement on climate-related disclosure is reflected in our voting activity.

We have participated for a number of years in the Carbon Disclosure Project's (CDP) investor
campaign to encourage companies to disclose their greenhouse gas emissions and climate risk
management.
Whilst more companies respond to the CDP every year and in greater depth, a number ofcompanies have never responded despite many of these being in energy intensive industries.
In our engagement, we encourage companies to disclose their carbon emissions and climaterelated risks in line with the recommendations of the Task Force on Climate-related Financial
Disclosure (TCFD).
Ahead of 2109, we amended our voting policy to generally vote against the Chair's re-election
for companies we have previously engaged in energy intensive sectors that persistently failed
to disclose their carbon emissions and climate risk governance.
We voted against the Chairs of 10 such companies in 2019; the Chairs of some othercompanies did not face re-election in 2019 or had appointed new Chairs.
We engaged with a further 20 companies which had made progress but which did not meet
expected disclosure standards.
Of those we identified in our initial assessment of companies not responding to CDP despite
our earlier engagement, a number have subsequently improved disclosure or intend to reportunder TCFD.

139

Outcomes

 Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
 Ongoing Voting Other Add Example 2

140

ESG Topic

Executive Remuneration, Other governance Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Political spending / lobbying Other governance Plastics
 Other

Conducted by Individual/Internal
 Service provider

Objectives

To ensure that UK companies have the opportunity to explain any issues of non-compliancewith corporate governance / remuneration best practice before we cast a vote against
management.
To communicate our reasons for all votes against management with the aim of influencing
corporate behaviour, encouraging good practice.

Scope and
Process

We have a long record of voting and engagement with UK companies. We contact in advanceof our vote every company where we intend to vote against or abstain on a resolution.
We engaged with 138 companies for this reason in 2019.
As reported above, we were able to change our intended vote at 7 companies following our
engagement, either because the company committed to address the issue we had raised orprovided new information.

Outcomes Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome141 Increased understanding / information
 Invested in company
 Ongoing Voting Other Add Example 3

142

ESG Topic

General ESG, Sustainability reporting Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Political spending / lobbying Other governance Plastics
 Other

Conducted
byObjectives

Scope and
Process

 Individual/Internal
 Service provider
To improve US corporate behaviour and transparency around ESG issues by supporting
shareholder resolutions calling for transparency & improvement.

ESG issues come onto the agenda of company meetings in the United States and a small
number of other markets through resolutions proposed by shareholders. Although bound byrules of what topics can be raised and often only advisory, these can be an effective mechanism
for focusing management attention on sustainability and the rights of shareholders.
We have a long record of support for resolutions which call for more information on companies'
handling of ESG issues - transparency ensures that an issue is more likely to be prioritised andenables shareholder to hold management to account.
In some cases, our support for particular shareholder resolutions follows engagement with thecompany concerned.
In 2019, we supported some 170 shareholder resolutions related to environmental and social
issues.
In total, we supported some 1,702 shareholder resolutions in 2019.
We also co-filed two shareholder resolutions on ESG issues, one of which was supported bymanagement and received significant shareholder support.

Outcomes Company changed practice143 Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
 Ongoing Voting Other Add Example 4

144

ESG Topic

Executive Remuneration
 Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Political spending / lobbying Other governance Plastics
 Other

Conducted
byObjectives

Scope and
Process

 Individual/Internal
 Service provider
To limit the extent to which executive remuneration is not linked to company performance, isexcessively dilutive of shareholders, or leaves scope for rewards for failure.

We voted on some 6,600 management resolutions on remuneration issues in 2019.
We voted against management on more than 2,150 of these, some 33 per cent.
We are concerned that executive remuneration at many companies is not aligned with theinterest of shareholders. Our votes against are intended to limit new remuneration schemesthat do not meet this test and to send a strong signal on advisory votes.

Outcomes Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
145 Ongoing Voting Other Add Example 5

146

ESG Topic

Shareholder rights, Other governance Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Political spending / lobbying Other governance Plastics
 Other

Conducted by  Individual/Internal
 Service provider
Objectives

Scope and
Process

To protect the rights of existing shareholders by ensuring that companies respect pre-emptive
rights and seek shareholder approval for events requiring large issuance of new shares.

We vote against resolutions that would authorise new share issuance without pre-emption
rights that exceed 15 per cent of share capital.
We also vote against resolutions that would authorise new share issuance with pre-emption
rights that exceed 35 per cent of share capital (except in very few markets where a weakermarket standard is the norm, which we respect).
In 2019, we voted against some 1,050 capitalisation-related resolutions, representing some 12
per cent of all capitalisation-related resolutions.

Outcomes Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
147 Ongoing Voting Other Add Example 6

148

ESG Topic

Company leadership issues, Other governance Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Political spending / lobbying Other governance Plastics
 Other

Conducted
byObjectives

Scope and
Process

 Individual/Internal
 Service provider
To ensure that there is an appropriate level of independent representation on the boards ofinvestee companies.

The right to elect directors is one of the key rights held by shareholders.
In our voting, we vote against non-independent non-executive directors and candidates where
less than one third of the board is independent or where the balance of independent directors
on audit or remuneration committees is below a half - we apply higher standards in certain
markets.
2019 was the first year in which we had applied this standard to emerging & frontier markets previously we had required at least one independent director. We voted against almost 150
directors in emerging and developed markets as a result.
Overall, we voted against some 2,400 director re-election resolutions in 2919 - some 6 per centof the total.

Outcomes Company changed practice Company committed to change Disclosure / report published Divestment

149

 Failed/no outcome
 Increased understanding / information
 Invested in company
 Ongoing Voting Other Add Example 7

150

ESG Topic Executive Remuneration
 Climate Change Human rights
 Company leadership issues
 Pollution
 General ESG
 Diversity
 Shareholder rights
 Health and Safety
 Sustainability reporting Water risks
 Labour practices and supply chain management
 Anti-bribery and corruption
 Deforestation
 Aggressive tax planning Cyber security
 Political spending / lobbying Other governance Plastics
 Other

Conducted
byObjectives

Scope and
Process

 Individual/Internal
 Service provider
To encourage greater gender diversity on the boards of developed market companies.

Boards need diversity of outlook and experience to exercise good judgement. It can be hard forshareholders to form a view on board diversity but one clear criterion on which we can assessboards is gender diversity. Whilst we recognise that gender diversity at board level is partly
influenced by societal and sectoral norms, companies with no female directors may not have an
open and meritocratic approach to board recruitment.
in 2019, we amended our voting guidelines to vote against the chairs of nomination committees
for boards of developed market companies with no female representation. This resulted in votes
against committee chairs at 78 companies.

Outcomes Company changed practice Company committed to change Disclosure / report published Divestment
 Failed/no outcome
 Increased understanding / information
 Invested in company
 Ongoing151 Voting Other Add Example 8
 Add Example 9
 Add Example 10152

HSBC Global Asset Management

Reported Information
Public version
Direct - Fixed Income

PRI disclaimer
This document presents information reported directly by signatories. This information has not been audited by the PRISecretariat or any other party acting on their behalf. While this information is believed to be reliable, no representations or
warranties are made as to the accuracy of the information presented, and no responsibility or liability can be accepted forany error or omission.

153

ESG incorporation in actively managed fixed income

Implementation processes
FI 01

Mandatory

FI 01.1

PublicGateway

PRI 1

Indicate (1) Which ESG incorporation strategy and/or combination of strategies you apply to youractively managed fixed income investments; and (2) The proportion (+/- 5%) of your total actively
managed fixed income investments each strategy applies to.

154

SSA
Screening alone0

Thematic alone
0

Integration alone
100

Screening + integration strategies
0

Thematic + integration strategies
0

Screening + thematic strategies
0

All three strategies combined0

No incorporation strategies applied
0100%
Corporate (financial)
Screening alone0

Thematic alone
0

Integration alone
98

Screening + integration strategies
0155Thematic + integration strategies
0

Screening + thematic strategies
0

All three strategies combined
2

No incorporation strategies applied
0
100%

156

Corporate (nonfinancial)

Screening alone0

Thematic alone
0

Integration alone
98

Screening + integration strategies
0

Thematic + integration strategies
0

Screening + thematic strategies
0

All three strategies combined
2

No incorporation strategies applied
0100%
Securitised
Screening alone0

Thematic alone
0

Integration alone
100

Screening + integration strategies
0157

Thematic + integration strategies
0

Screening + thematic strategies
0

All three strategies combined0

No incorporation strategies applied
0100%

FI 01.2

Describe your reasons for choosing a particular ESG incorporation strategy and how
combinations of strategies are used.

Our principal strategy for fixed income is ESG integration which is applied systematically to all our actively
managed funds.
Additionally we run thematic strategies such as low-carbon corporate bond strategy designed to capture
investment opportunities globally from quantifiable trades-offs between carbon reduction and impact to credit
quality of issuers.

FI 01.3

Additional information [Optional].

ESG analysis in this asset class is a question of risk before being a question of opportunity. We believe thatcompanies and governments that do not strive today to converge toward ESG best practices face a number oflooming dangers. They can be affected at multiple levels, from their reputation to their profitability, risk profile,credit rating, refinancing costs and, ultimately for bond investors, the value of the bond. This is why we believethat integrating ESG in the research process can enhance the ability of credit analysts to capture industry trends
and challenges, as well as changing market conditions, thus uncovering new opportunities.
The negative impacts of ESG issues on a company's credit quality and rating can derive from an increase inoperating costs, changes in the company's environment and loss of competitive advantages, and/or reputational
damages, all of which can ultimately weigh on the company's expected profitability and funding costs. As a result,they are likely to affect investors' risk adjusted returns as well. It is worth highlighting that the materiality of
individual ESG issues will vary dramatically from one industry to the next.
For example, environmental risk management, policies and processes are of paramount importance for extractive
industries and utilities, as well as for other sectors such as autos and airlines.
Other industries are more sensitive to resources use. For instance, the food and beverage sectors accounts formore than 50% of global water consumption, and is thus highly sensitive to water stress, or pressure on thequantity and quality of water resources.
In contrast, social considerations are the most significant for sectors such as health, tech or retail. Healthcarecompanies have a major role to play in improving human health. Tech and retail industries typically outsource partof their supply chains to emerging countries, which can expose them to the risk of participating in child or forced
labour. Governance issues from accounting standards to transparency, risk management or director
independence tend to be more universal and to affect all industries, but with a disproportionate impact on thefinancial sector due to these firms' reliance on intangible assets.
The effect of governance practices good or bad on bond investors can be grasped intuitively: well governed
companies tend to be aligned with bondholder interests, and are generally better at managing their long termrisks.
158

More on the thematic side, we have customized dedicated strategy combining our ESG and green bond approachwith emerging markets with the aim to allow investors to achieve ESG and climate change objectives by investingin green and sustainable bonds focused on the real economy. Indeed, the UN sponsored Sustainable
Development Goals (SDGs) and Paris Climate Agreement set a long term transformational framework for the
global economy with meaningful investor consequences if they fail to deliver. Emerging markets have an urgent
need to attract investment to tackle climate change mitigation and adaptation to meet these goals. However,these markets are more likely to suffer the cost of climate change whilst being less able to self-finance solutions.
This means that investors are exposed directly and indirectly to climate and sustainability risks across thefinancial system and in emerging markets in particular.
HSBC Global Asset Management, together with leading Development Finance Institutions, have created an
innovative investment solution to these challenges. The proposed fund solution will seek to invest in emerging
market corporate, sovereign and sub sovereign green bond issuers, to deliver real economy impact in primarily
lower Gross National Income countries and enable investors to achieve long term, sustainable returns, whilstdelivering on broader climate and environmental objectives in line with the SDGs and Paris Climate Agreement.
By supporting and building the market for green and sustainable bonds, we can also promote and develop
sustainable finance and investment in global emerging markets.

We are also in the process of finalizing our own internal credit rating integrating ESG factors. Sustainability risks,
especially corporate governance, have long been incorporated in our traditional credit rating methodology. As
such, integrating more ESG factors in our internal credit rating doesn't change the fundamentals of our credit
methodology. But it adds transparency around ESG factors that makes the difference to our internal rating as wellas capturing ESG considerations with material credit impact. This internal credit rating methodology have been
produced by the HSGAM Credit Research teams worldwide and with the help of our Fixed Income Quantitative
team. It applies to all asset classes from non-financials corporates to financials ones. At the industry level, we
defined industry-specific key ESG risks factors by reviewing 22 sectors and identifying 225 ESG factors; each ofthem being affected a weight that contributed to the overall internal rating.
We are also expanding our ESG integration in several other asset classes such as private debt and in assetbacked securities (ABS) or securitized products. Compared to other asset classes (Fixed Income or Equities)
where ESG is well progressed and for which there are ESG ratings provided by third-party providers, private debt
and securitized products are far lagging. Even, credit rating agencies do not really provide with a strong ESG
analysis or ESG effectiveness in securitized products for instance. As such, at HSBC Global Asset Management,
we worked at developing ESG in securitized products and private debt assets for the same reason that ESG isbeing integrated into our other mainstream asset classes. Thus for both of them, we defined dedicated ESG
issues per sector. The ESG data set for each sector is also been affected a weight that contributes to the overall
internal scoring. (Perhaps Tina to develop more on Loans).

FI 02

Mandatory to Report Voluntary toDiscloseFI 02.1

PublicCore Assessed

PRI 1

Indicate which ESG factors you systematically research as part of your analysis on issuers.

Select all that apply

SSA

Corporate (financial)

Corporate (non-financial)

Securitised

























Environmental data

Social data

Governance data159

FI 02.2

Indicate what format your ESG information comes in and where you typically source it Raw ESG company data

Indicate who provides this information
 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – FI analyst, PM or risk team
 Other, specify
 ESG factor specific analysis

Indicate who provides this information
 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – FI analyst, PM or risk team
 Other, specify
 Issuer-level ESG analysis

Indicate who provides this information
 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – FI analyst, PM or risk team
 Other, specify
 Sector-level ESG analysis

Indicate who provides this information
 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – FI analyst, PM or risk team
 Other, specify
 Country-level ESG analysis

Indicate who provides this information
 ESG research provider
 Sell-side In-house – specialised ESG analyst or team
 In-house – FI analyst, PM or risk team
 Other, specify160

FI 02.3

Provide a brief description of the ESG information used, highlighting any differences in sourcesof information across your ESG incorporation strategies.

ESG helps assessing the relevance of each investment case.
This explains why all corporate issuers receive an in-house ESG rating relying on third party data - sourced
essentially from MSCI and Sustainalytics - which are then combined to form aggregated ratings under aproprietary methodology. These aggregated ratings enable us to allocate a level of ESG risk (low, medium andhigh) to each issuer. All high risk issuers held or buy-listed have to go through an enhanced due diligence.
Regarding countries, although we primarily use external inputs coming from third parties like Oekom, ourEmerging Markets debt team is experiencing a proprietary Sovereign issuers ESG rating.
In addition, for some specialised strategies, the ESG integration overlay is supplemented by a more thematiccomponent. For instance, for a French-domiciled SRI strategy, ESG integration is combined with a best in classmethodology focused on sector ESG rankings.
For some environmental strategies, emphasis is put on carbon intensity, with the most carbon intensive names
being screened. Then, Green Bonds are also used as a means to diversify mainstream portfolios and are eventhe sole focus of an Emerging Markets "Real Economy Green Investment Opportunity" about to be launched.

FI 02.4

Additional information. [Optional]

.

FI 03

Mandatory

FI 03.1

PublicAdditional Assessed

PRI 1

Indicate how you ensure that your ESG research process is robust: Comprehensive ESG research is undertaken internally to determine companies’ activities; and products
and/or services
 Issuers are given the opportunity by you or your research provider to review ESG research on them andcorrect inaccuracies
 Issuer information and/or ESG ratings are updated regularly to ensure ESG research is accurate
 Internal audits and regular reviews of ESG research are undertaken in a systematic way.
 A materiality/sustainability framework is created and regularly updated that includes all the key ESG risks
and opportunities for each sector/country.
 Other, specify
 None of the above

FI 03.2

Describe how your ESG information or analysis is shared among your investment team.

 ESG information is held within a centralised database and is accessible to all investment staff
 ESG information is displayed on front office research platforms
 ESG information is a standard item on all individual issuer summaries, research notes, ‘tear sheets’, orsimilar documents
 Investment staff are required to discuss ESG information on issuers as a standard item during investmentcommittee meetings
 Records capture how ESG information and research was incorporated into investment decisions
 Other, specify
A sector expert credit analyst undertakes detailed analysis of each issuer including ESG /carbon data andwill share the research outcomes with all investment professionals.
161 None of the above(A) Implementation: Screening
FI 04

Mandatory

FI 04.1

PublicGateway

PRI 1

Indicate the type of screening you conduct.

Select all that apply

Corporate (financial)

Corporate (non-financial)













Negative/exclusionary screening

Positive/best-in-class screening

Norms-based screening

FI 04.2

Describe your approach to screening for internally managed active fixed income

Our thematic strategies utilise various approaches to screening including positive best in class (ESG score ranked
on a sector basis) and exclusion (worse performing carbon intensity) in addition to our usual ESG data
integration.
Our SRI strategy now also excludes companies failing to comply with at the least one of the 10 principles of theUnited Nations Global compact (UNGC) which explains why we have also ticked Norms-based screening. We
have an internal Green Bond Investment Policy and all investments need to be formerly approved and ratified.
This Policy refers to HSBC Global Asset Management's investment in labelled green bonds. It is owned by the
Fixed Income ESG Committee, which review and amend the Policy in light of any significant market
developments.
Also, our thematic strategy looking at Emerging Markets Green bonds emphasises "the use of proceeds": eachpotential investment is subject to a "deep dive" analysis which ensures that, the projects to be financed have an
undoubtedly "green" purpose as well as ensures that the company strategy is in line with the green purpose. The
sustainability assessment, performed as part of the investment analysis, is designed to ensure that we invest incompanies that provide with ESG sustainability policies.

FI 04.3

Additional information. [Optional]

Our assessment of green bonds relies on a bottom-up approach to make sure that the bond finances projects thatprovide clear environmental benefits. This includes making sure that the green bond framework follows the Green
Bond Principles but also that the projects to be financed are eligible under the Climate Bonds Initiative (CBI)
taxonomy. In addition, to screen and control that green bonds are environmentally sound and support thetransition to a post-carbon economy, we appreciate that the stated aims of the green funding projects should betransparent, well disclosed and reported. It is not the case, then we will send an engagement letter to issuer thatis issuing a green bond with a lack of details regarding the use of proceeds, the existence of a second party
opinion to assess the sustainability purposes of the bond, and the commitment for sustainability reporting. We
definitely believe that Green bonds transparency through disclosure of the proceeds and second party opinion
would support greater commitment by investors. Additionally, disclosed information that is easily accessible would
help us make the most adequate decisions and enhance investors' trust.

162

FI 05

Voluntary

PublicAdditional Assessed

PRI 1

Provide examples of how ESG factors are included in your screening criteria.

FI 05.1
 Example 1

Type of fixed income
 Corporate (financial) Corporate (non-financial)

ESG factors
 Environmental
 Social
 Governance

Screening Negative/ exclusionary Positive/ best-in-class Norms-based

Description of how ESG factors are used as the screening criteria
Lower Carbon bond fund: invested in corporate bonds - corporate and on corporate - + screening is basedon carbon intensity; worst offenders and most carbon intensive sectors get excluded whilst Green Bonds get
positively selected.

 Example 2163

Type of fixed income
 Corporate (financial) Corporate (non-financial)

ESG factors
 Environmental
 Social
 Governance

Screening Negative/ exclusionary Positive/ best-in-class Norms-based

Description of how ESG factors are used as the screening criteria

Thematic strategy looking at Emerging Markets Green bonds: We will avoid investing in bonds of companies
involved in business activity with the potential to cause or result in risk of adverse impacts on Indigenous or
impacts on the environment, community health and safety, biodiversity. Also, we will not invest in the bondsof issuers where there are credible allegations of serious breaches of UN Global Compact principles -withrespect to the ten principles relating to human rights, labour standards, environment and anti-corruption. And
finally, we will not invest in bonds where we are aware that the issuer derives significant revenue (over 30%)
from the following activities: defense/weapons, alcohol, gambling, adult entertainment, tobacco.

 Example 3
 Example 4
 Example 5
FI 06

Mandatory

FI 06.1

PublicCore Assessed

PRI 1

Indicate which systems your organisation has to ensure that fund screening criteria are notbreached in fixed income investments.

164

Type of screening

Checks Analysis is performed to ensure that issuers meet screening criteria

Negative/exclusionary
screening We ensure that data used for the screening criteria is updated at least once ayear.
 Automated IT systems prevent our portfolio managers from investing in
excluded issuers or bonds that do not meet screening criteria
 Audits of fund holdings are undertaken yearly by internal audit or compliancefunctions Other, specify
 None of the above Analysis is performed to ensure that issuers meet screening criteria

Positive/best-in-classscreening We ensure that data used for the screening criteria is updated at least once ayear.
 Automated IT systems prevent our portfolio managers from investing in
excluded issuers or bonds that do not meet screening criteria
 Audits of fund holdings are undertaken yearly by internal audit or compliancefunctions Other, specify
 None of the above Analysis is performed to ensure that issuers meet screening criteria

Norms-based screening We ensure that data used for the screening criteria is updated at least once ayear.
 Automated IT systems prevent our portfolio managers from investing in
excluded issuers or bonds that do not meet screening criteria
 Audits of fund holdings are undertaken yearly by internal audit or compliancefunctions Other, specify
 None of the above(B) Implementation: Thematic
FI 07

Mandatory to Report Voluntary toDisclose

FI 07.1

PublicDescriptive

Indicate what proportion of your thematic investments are (totalling up to 100%):

 Green/SDG bonds linked to environmental goals%
14
 Social/SDG bonds linked to social goals
 Sustainability/SDG bonds (combination of green and social linked to multiple SDG categories) Other

165

PRI 1

FI 07.2

Describe your organisation’s approach to thematic fixed income investing- Lower Carbon Bond approach: we recognise that the world needs to move to a lower-carbon economy to tackle
climate-related risks. This is the driving force behind our Lower Carbon Bond strategy, designed to provide
potential long-term gains without giving up near-term performance. The reality of climate change poses a threat toboth the global economy and companies, making it a key risk for investors. By investing in the transition to an
economy with lower CO2 emissions (a "lower carbon" economy), investors can help reduce risk . This transition
will also create investment opportunities. As new technologies emerge to tackle climate change, and as the costof existing clean technology falls, the companies that adopt them stand to gain.
Our lower-carbon approach takes advantage of our fixed income franchise, built 15 years ago to capitalise on
investment opportunities wherever they are. Same performance targets as traditional portfolios while reducing the
average carbon intensity by 40% or more versus the reference benchmark. Our international team of fixed income
specialists are supported by our global research platform (+45 analysts globally), our analysis of issuer carbon
impact and green bonds to understand footprints, and finally our engagement with issuers to encourage carbon
reduction when necessary.
- Green bond investment approach: Green bonds play an important role in transitioning to a lower carbon
economy and increase the robustness of the overall portfolio. Our approach is to invest in labelled green bondsthat satisfy both our bottom up and top down requirements below:
1) A bottom-up approach to make sure that the bond finances projects that provide clear environmental benefits.
This includes making sure that the green bond framework follows the Green Bond Principles but also that the
projects to be financed are eligible under the Climate Bonds Initiative (CBI) taxonomy.
2) A more granular top-down green-assessment at the issuer level to make sure that green bond issue is theresult of a broader Group's environment strategy. So green bonds and their issuers are to be assessed bycorporate credit analysts within the context of the issuer's overarching objectives, strategy, policy and/or
processes relating to environmental sustainability.
3) A top-down approach: At HSBC we have 46 credit analysts globally who have significant experience ofaccessing the long term credit quality of issuers suitable for a buy and maintain fund. These credit analysts
together with the Portfolio Managers will assess the issuer's overarching objectives, strategy, policy and/or
processes relating to environmental sustainability. Such an assessment should enable us to identify 3 categories
of issuers:- Green companies of which most activities provide clear environmental benefits. Credit analysis ensurescompany strategy includes climate change management which is also demonstrated in company reporting and an
acknowledgement of climate change at board level. This category of company will be moving towards TCFD
aligned reporting and will have a carbon emissions reduction plan and often a lower carbon intensity compared topeers.
- Companies exposed to substantial environmental risks (eg Utilities with coal plants) but that have a clear
strategy to reduce this exposure. For Utilities with coal generation assets it could be by replacing the existing coalplants with renewables financed by a green issue. For other companies it may be financing energy efficiency
investments. Green bonds issued by this category of issuers will need to be carefully analysed to ensurecompliance to the GBP and green proceeds which fit within the CBI taxonomy as well as funding projects that candemonstrate a net GHG emissions reduction.
- Companies exposed to substantial environmental risks and without any clear strategy to reduce this exposure or
manage the associated climate risk. Green bonds issued by this category of companies will not be successful inthe credit analysis review process for a long term buy and maintain investment portfolio.
We would therefore exclude green bonds from this last category of issuers.
- Emerging Markets Green bonds approach:
we customized dedicated strategy combining our ESG and green bond approach with emerging markets with theaim to allow investors to achieve ESG and climate change objectives by investing in green and sustainable bonds
focused on the real economy. Indeed, the UN sponsored Sustainable Development Goals (SDGs) and Paris
Climate Agreement set a long term transformational framework for the global economy with meaningful investor
consequences if they fail to deliver. Emerging markets have an urgent need to attract investment to tackle climatechange mitigation and adaptation to meet these goals. However, these markets are more likely to suffer the costof climate change whilst being less able to self-finance solutions. This means that investors are exposed directly
and indirectly to climate and sustainability risks across the financial system and in emerging markets in particular.
HSBC Global Asset Management, together with leading Development Finance Institutions, have created an
innovative investment solution to these challenges. The proposed fund solution will seek to invest in emerging
market corporate, sovereign and sub sovereign green bond issuers, to deliver real economy impact in primarily
lower Gross National Income countries and enable investors to achieve long term, sustainable returns, whilstdelivering on broader climate and environmental objectives in line with the SDGs and Paris Climate Agreement.
166

By supporting and building the market for green and sustainable bonds, we can also promote and develop
sustainable finance and investment in global emerging markets.

FI 08

Mandatory

FI 08.1

PublicCore Assessed

PRI 1

Indicate whether you encourage transparency and disclosure relating to the issuance of themedbonds as per the Green Bonds Principles, Social Bond Principles, or Sustainability Bond
Guidelines..

 We require that themed bond proceeds are only allocated to environmentally or socially beneficial projects
 We require the issuer (or 3rd party assurer) to demonstrate a process which determines the eligibility of
projects to which themed bond proceeds are allocated We require issuers to demonstrate a systematic and transparent process of disbursing themed bondproceeds to eligible projects until all funds are allocated We require issuers to report at least once per year on the projects to which proceeds have been allocatedincluding a description of those projects
 Other, specify
 None of the above

FI 08.2

Describe the actions you take when issuers do not disburse bond proceeds as described in theoffering documents.

As mentioned in FI 07.2, we have set up an investment committee which oversees and assesses green bondeligibility. We pay great attention to whether proceeds are indeed allocated to green projects and monitor post
issuance reporting on an annual basis. Our preference is for this reporting to be independently audited.
Any green bond that does not comply with our green bond eligibility requirements will not be held as a greenbond, but can be held as a mainstream corporate / sovereign bond subject to normal credit and relative value
assessment.

FI 08.3

Additional information. [Optional]

We utilise a group of green bond experts to keep us informed on the developments in the green bond market andthese include HSBC Group Fixed Income Research and other experts. It's worth noting that our colleagues in
HSBC Group sit on the ICMA Green Bond Principles Executive Committee.

FI 09

Mandatory

FI 09.1

PublicAdditional Assessed

PRI 1

Indicate how you assess the environmental or social impact of your thematic investments.

 We require issuers to report at least once per year on specific environmental or social impacts resulting fromour themed investments
 We ensure independent audits are conducted on the environmental or social impact of our investments
 We have a proprietary system to measure environmental and social impact
 We measure the impact of our themed bond investments on specific ESG factors such as carbon emissions
or human rights
 Other, specify
 None of the above

167

(C) Implementation: Integration
FI 10

Mandatory

FI 10.1

PublicDescriptive

PRI 1

Describe your approach to integrating ESG into traditional financial analysis.

As for Equities, our principal strategy is integration as we believe that ESG factors can impact investment
performance over time. We regard the breadth and depth of our coverage as innovative, as well as the extent towhich it has been delivered to 'mainstream' investment professionals across all markets, including emerging andfrontier.
Investment teams access an ESG Intranet combining a comprehensive third party research library with in-houseratings covering 11,000+ financial instruments. For each issuer the system generates an Executive Summary. All
these inputs allow Investment Teams to undertake enhanced due diligence (EDD). With deeper analysis than theexisting ESG "Executive Summary" and previous "checklists", this document assesses ESG risk associated withissuers flagged for a poor ESG rating. Although mainly a risk assessment tool, the process could result inengagement with the issuer, an intended purchase being blocked or the divestment of an existing holding.
ESG is considered in all fundamental credit research specifically within the issuer's business profile detailingcomponents of management, governance and strategy and liabilities (legal, social and environmental). This
analysis highlights potential negative impacts on the operating profile of the company as well as financial metrics.
This analysis is supplemented with issuer meetings undertaken by the credit research team where ESG questions
are raised where material.
We have also indicated screening as we exclude bonds with exposure to Land Mines, Cluster Munitions,Biological and Chemical weapons across all strategies. Such an exclusion is a requirement under Luxembourg
law, where our flagship SICAV is domiciled, and which we have also extended to all our active and passive
strategies wherever they are domiciled.
To further support the implementation of this ESG integration initiative by our investment teams, we added in2017 two new sets of tools: ESG key topic sheets and thematic reports. The ESG key topic sheets summarise themost relevant ESG issues - those with the highest degree of potential financial materiality - and suggest therelated engagement questions, to be asked while meeting a company's management.
The main purpose of the thematic reports is to further educate investment teams and help them embedding somecross sector themes in their investment thinking. To date, two such reports have been published, one with a clear
environmental bias, the second one with a firm social angle. The first explores the impact of water intensity on thebusiness model and financial returns of companies belonging to commodities industries like mining and metals,
pulp and paper or chemicals. More than a static assessment, these reports analyse related internationalframework evolutions and furthermore which companies are likely to optimally adapt their strategy and businessmodel accordingly.
Following the same philosophy, the second report explores "extreme" working conditions in two very different
industries: technology and "fast fashion". Extreme working conditions encompass sub-themes such as childlabour, forced labour, de-unionisation and absence of rights to collective bargaining. As the related legal
framework combining overarching global principles - defined by bodies like the UN or the ILO (International
Labour Organisation) - is ever tightening, the lack of compliance with such principles is set to trigger litigations.
Subsequently, understanding which companies include this dimension in their business model and more
specifically into the management of their supply chain will help identifying which names may have placed theirbrand image at risk, could face loss of margin and/or production disruptions.
Then, on the thematic products side, we launched in September 2017 we launched a Lower Carbon Bonds
strategy and are currently working on various strategies specialising in Green Bonds, issued in both developedand emerging markets.

FI 10.2

Describe how your ESG integration approach is adapted to each of the different types of fixedincome you invest in.

168

SSA
For SSAs we initiated last year the development of an upgraded scoring process in which ESG criteria, sourced
from specialised third parties like MSCI and Oekom, are to contribute to the overall risk assessments.
The initial analysis using historic data has been performed by our Quantitative Research team and thissuggests that ESG criteria is financially material in some sovereign bond markets, especially in emerging
markets and in sectors where there is a largest credit dispersion In addition to the exclusions of certain
sovereign due to government sanctions we are considering excluding issuers with a very low ESG score aspart of our portfolio risk mitigation.
The Global EMD team has worked with the quantitative team to validate the integration of social andgovernance data into the broader Sovereign risk model (EMCR). This work has now been back tested toensure the relevance of the data set and we will now include this data on a going-forward basis in our country
analysis.
Additionally, we are at early stages of considering the impact from climate change on sovereign risk whether
this is a factor of climate vulnerable countries or as a "fossil fuel rent factor" that impacts government budgets.

Corporate (financial)
The approach we apply to Corporate - Financials and non-Financials - is similar. For each sub-group we startby identifying for each industry which are the most relevant/financially material ESG issues. These are thenanalysed by credit research teams alongside the regular assessment of issuers' credit quality.
It's worth mentioning this task is completely embedded into the credit scoring process, performed by the credit
analysis who include ESG observations into their overall financial assessment which is captured in internal
recommendation documents.
Regarding the ESG criteria considered and factored in our credit research process, emphasis is put on
Governance - including risk monitoring, audits and controls, corruption and bribery, contribution to financial
instability - which we view as the most material factor in the overall ESG assessment.
This means ESG plays a central role in the assessment of corporate bonds' investment case. If following thecredit analysis due diligence a bond issue is deemed ineligible, it is screened out from the investment universeof all funds.

Corporate (non-financial)
The approach we apply to Corporates - Financials and non-Financials - is similar. For each sub-group we startby identifying for each industry which are the most relevant/financially material ESG issues. These are thenanalysed by credit research teams alongside the regular assessment of issuers' credit quality.
In terms of the ESG process, the only difference between the methodology applied to Corporate Financials and
Non Financials revolves around the nature of the issues we factor in and the way we weight them, according to
the nature of the company's business model. For instance, if Governance dominates Financials' assessments,
for companies in extractive industries, emphasis will be more on direct environmental impacts - greenhousegases emissions for instance - and for healthcare and pharmaceutical, the focus will be more on social
dimensions such as access to medicines, prevention and control of medicines' potential misuse. This illustrates
that rather than a "one size fits all" our ESG inclusive credit analysis focuses on the relevant issues to a
specific industry.
This task is completely embedded into the credit scoring process, performed by the credit analysis who include
their ESG observations into their overall financial assessment which is captured in internal recommendation
documents.
This means ESG plays a central role in the assessment of corporate bonds' investment case. If following thecredit analysis due diligence a bond issue is deemed ineligible, it is screened out from the investment universeof all funds.

169Securitised
Securitised credit is lagging other asset classes benefiting from various ESG ratings or scores provided bythird-party providers. While there is no standardisation around the ESG analysis yet, ESG subject is gathering
the momentum and the Structured Finance Association (SFA) hosted its inaugural ESG Symposium bringing
market participants for a discussion on promoting ESG principles within the structured finance market.
In terms of our process for securitised credit, ESG factors are part of the investment process and consideredwhen identifying potential investment risks.
The approach is broadly similar to corporates - for each securitised credit sector we identify ESG issues most
relevant to credit and assign the weightings according to the nature of issues and the nature of securitised
credit sector. Similar to Corporate (financial), our ESG risk assessment is heavily focused on Governance,
including originator's/sponsor's corporate governance, internal controls, disclosure, management experienceand strategy, compliance with the applicable Code of Conduct, counterparty risk and other. In addition to the
ESG data provided by the originator/sponsor, where there is an in-house ESG score available for an
originator/sponsor, provided by the internal ESG research team as described earlier in the document, it will beconsidered in the ESG risk assessment for a securitised credit transaction.
ESG factors are considered qualitatively focusing on conducting thorough due diligence of transaction parties
such as the originator/ servicer/issuer of the securities, and of the underlying assets. Quantifying ESG issues insecuritised credit is currently very limited with no industry wide methodology to assess those issues or thirdparty ESG scores. Rating Agencies do not comment on ESG compliance or effectiveness of ESG disclosure insecuritised credit transactions but Fitch Ratings do make a note in their rating agency reports of the relevanceof ESG factor(s) in credit ratings and apply a 5 tier ESG relevance score.
ESG risk assessment enhances our credit process. Credit impact of ESG factors is captured by the credit
analysts who conduct an ESG Risk assessment and include their commentary on the ESG impact on credit in
the overall assessment. If following credit analysis and the ESG risk assessment a transaction is deemed
ineligible, an investment proposal will not be submitted to Investment Forum for consideration.

FI 10.3

Additional information [OPTIONAL]

In line with the focus on carbon intensity data that we are using for the Lower Carbon global bond fund, we haveintegrated this metric into the ESG intranet and we are exploring how we consider carbon intensity in heavily
carbon exposed sectors. This integration work has involved some scenario analysis around future carbon pricing
and the impact on the balance sheet, debt coverage ratios and hence credit quality.
However, carbon data has significant gaps in the market, specifically in credits without a listed equity, government
owned entities and beyond Europe/North America.

FI 11

Mandatory

FI 11.1

PublicCore Assessed

Indicate how ESG information is typically used as part of your investment process.

Select all that apply

170

PRI 1

SSA

Corporate(financial)

Corporate(nonfinancial)

Securitised













































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

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



















ESG analysis is integrated into fundamental analysis

ESG analysis is used to adjust the internal credit
assessments of issuers.

ESG analysis is used to adjust forecasted financials andfuture cash flow estimates.

ESG analysis impacts the ranking of an issuer relative toa chosen peer group.

An issuer`s ESG bond spreads and its relative value
versus its sector peers are analysed to find out if all risks
are priced in.

The impact of ESG analysis on bonds of an issuer withdifferent durations/maturities are analysed.

Sensitivity analysis and scenario analysis are applied tovaluation models to compare the difference between
base-case and ESG-integrated security valuation.

ESG analysis is integrated into portfolio weighting
decisions.

Companies, sectors, countries and currency andmonitored for changes in ESG exposure and forbreaches of risk limits.

The ESG profile of portfolios is examined for securities
with high ESG risks and assessed relative to the ESG
profile of a benchmark.

Other, specify in Additional Information
FI 12

Mandatory

FI 12.1

PublicAdditional Assessed

Indicate the extent to which ESG issues are reviewed in your integration process.

171

PRI 1

Environment

SSA

Environmental

Corporate(financial)

Corporate(nonfinancial)

Securitised

FI 12.2

SocialSocialGovernance

Governance Systematically Systematically Systematically Occasionally Occasionally Occasionally Not at all Not at all Not at all

Environmental

SocialGovernance Systematically Systematically Systematically Occasionally Occasionally Occasionally Not at all Not at all Not at all

Environmental

SocialGovernance Systematically Systematically Systematically Occasionally Occasionally Occasionally Not at all Not at all Not at all

Environmental

SocialGovernance Systematically Systematically Systematically Occasionally Occasionally Occasionally Not at all Not at all Not at all

Please provide more detail on how you review E, S and/or G factors in your integration process.

SSA
Developed countries' ESG assessment, which we source from third party research provider Oekom, forms partof our overall qualitative appraisal of sovereign and bonds' credit quality.
For emerging countries, we have recently developed a quantitative model leveraging data from other ESG third
parties. Looking back up to 8 years in the past, we have tested the net positive contribution of the various E, S
and G factors to a model portfolio's financial performance. Results have proved convincing as they evidenced asignificant net positive financial contribution for countries outperforming peers in terms of overall Governance("G") quality.
For SOEs (state owned enterprises), agencies, pfandbriefe and development banks our approach is systematic
ESG integration and the implementation a scoring methodology similar to that which we use for Equities. Thismeans all issuers have "E", "S" and "G" ratings sourced from third party research providers, which are given
equal weight. All issuers are ranked based on this rating and are allocated with an ESG risk signal: High Risk,
Medium Risk or Low Risk.
High Risk names, these belonging to the bottom 5th percentile of the rated population are then systematicallyreviewed by the credit analyst and have to go through an enhanced due diligence process. This is to assess
whether the alleged level of ESG risk is genuine and to what extent it may influence or hinder the investmentcase. Then, the covering analyst produces a recommendation document stating if the names should continue
to be held, approved for the buy list, or excluded from investment (where ESG issues are assessed as
sufficiently detrimental to the financial strength and/or credit quality of the issuer). This recommendation has tobe checked and approved by the Global Head of Credit Research.

172

Corporate (financial)
For Corporate Financial issuers we have chosen to apply systematic ESG integration, as for SOEs andagencies as described above. This means that for all issuers under coverage we generate an overall ESG
rating from which we derive a risk status. Then, names identified as high risk under this relative approach haveto go through enhanced due diligence, concluded by an ESG inclusive investment recommendation requiring
the final review and signoff of the Global Head of Credit research.
If the due diligence concludes in stating that, for instance, alleged ESG risks are real, material and could leadto a deterioration of the company's financials, this can translate into a sell recommendation.
Compared to SOEs the only amendments to our process are:1/ the weights we allocate to the individual "E", "S" and "G" ratings which we source from research third parties.
Here, they are not equally weighted for SOEs and agencies but reflect the predominant importance of thegovernance agenda compared to environment and social aspects.
2/ the ratings per se, framing our "relative approach", are supplemented by an "absolute approach" based on
the measurement of the degree of compliance with the 10 principles of the United Nations Global Compact.
The latter is assessed by another third party research provider attributing, on a principle by principle basis Red(proven breach); Amber (alleged breach) and Green (no breach) flags. A single Red flag, meaning alleged
noncompliance with at the least one of the 10 principles equates to an overall High Risk status, as does an
Amber rating on at least 2 principles.

Corporate (non-financial)
Corporate Non-Financial issuers also go through the systematic process described above based on acomprehensive ESG risk assessment combining an "absolute" and a "relative" approach.
The absolute approach is the same as that for Corporate Financial issuers, while the relative approachdifferentiates due to the varied nature and materiality of the ESG issues affecting the various sectors/industries.
This is reflected in the weights we allocate to the "E", "S" and "G" pillar weights when generating ouraggregated "in house" ESG rating.
For example, Food & Beverage and Oil & Gas have a significant environmental footprint. Food & Beverage isconfronted with water management, land use, issues related to fertilizers and pesticides while Oil & Gas isconfronted with greenhouse gas emissions, pollution prevention and control.
Although the nature of these environmental issues affecting the two industry groups differs substantially, to us,
their potential financial impact is of a comparable magnitude which explains why they have been weighted at50%. In some other industries, like Software or Pharmaceuticals, the emphasis will be more on social issues.
As an industry concerned with non-physical assets, Software has hardly any direct environmental impact but
has certainly to address Social issues like "retaining best people" and use of data; staff retention would also be
a key issue in the Pharmaceutical sector, and to an even greater extent for biotech, who have to build theirsuccess on developing innovative products pipelines.
We apply this approach to all sectors in order to really focus on "what genuinely" matters through highlighting
the most financially material ESG issues which we have all logged in our ESG Roadmap. Then, as describedabove, their relative importance - intra sector - helps us calibrating the individual pillar weights X, Y and Z we
use in our aggregated ESG rating which happens to be a result of the following formula:
ESG = (X% x E) + (Y% x S) + (Z% x G)
In doing so, we believe that we can focus our attention on the issues mat pertinent to a particular sector or
issuer and hence to add value to our Credit Analysis process. The aim is to make better informed and more
successful investment decisions.

173

Securitised
For Securitised Credit, ESG factors are assessed with respect to their relevance to credit risk (as opposed toconsidering ESG opportunities). Each transaction under review will be scored with a resultant 'Low', 'Medium'or 'High' impact on credit.
Each of the E, S and G factors are evaluated by a credit analyst based on the information provided by the
Originator/Sponsor of the transaction or the sell side. In absence of any third party ESG research for
Securitised Credit, proprietary weights are used to assess the relevance of each factor.
Similar to Corporate (financial), Governance is typically allocated a substantial weighting in all securitised credit
transactions, however, each asset class within securitised credit may have a different skew towards
Environmental or Social factor due to the importance of these aspects to the respective asset class.
Securities backed by auto loans will have a skew towards environmental factors due to environmental risks ofcertain engine types, their impact on residual values as well as impact of fines and remediation costs following
the emissions testing failings. Consumer loan backed transactions will have a higher weighting allocated to theSocial factor to reflect the risks of discriminatory or aggressive lending and servicing practices. In residential
mortgage backed securities as well as single family rental transactions, Social factor will also be assessed withrespect to accessibility to affordable housing. For commercial mortgage backed securities, focus on
Environmental factors will capture any "green" credentials of the buildings as well as consider any flags related
to the tenants.
For collateralised loan obligations, the CLO manager's ESG policy resulting in portfolio selection and industry
allocation will be central to transaction's ESG risk assessment.
Any transaction with 'High' impact on credit will require mitigating factors to be thoroughly documented,
however, if no such mitigating factors can be identified and transaction will be deemed ineligible, it will not be
submitted to the Investment Forum for review.

ESG incorporation in passively managed fixed income
FI 13

Voluntary

FI 13.1

PublicDescriptive

PRI 1

Describe your RI approach for passively managed fixed income assets.

We have very recently launched passive fixed income strategies where we use an optimisation model to replicate
the index. In line with our policy across the business we exclude issuers with exposure to banned weapons.
We are currently reviewing the engagement strategy for those Issuers were we do not hold active positions
elsewhere in fixed income.
Early discussions on the ability to exclude issuers below a pre-defined threshold of ESG/Carbon scores and then,targeting aggregate portfolio scores using optimisation technics are taking place. This stems from the fact we thinkthat having a holistic ESG approach will allow us to design/manage/monitor a broad range of ESG solutions acrosssovereign, corporate and aggregate fixed income indices, while satisfying business initiative for all fund wrappers,
including ETFs.

Fixed income - Engagement
FI 14

Mandatory to Report Voluntary toDisclose

FI 14.1

PublicCore Assessed

PRI 2

Indicate the proportion of your fixed income assets on which you engage. Please exclude any
engagements carried out solely in your capacity as a shareholder.

174

Category

Proportion of assets
 >50%

SSA

 26-50%
 5-25%
 More than 0%, less than 5%

FI 14.2

Indicate your motivations for conducting engagement (SSA fixed income
assets).

 To gain an understanding of ESG strategy and/or management
 To encourage improved/increased ESG disclosure To influence issuer practice (or identify the need to influence) on ESG issue
 >50%
Corporate (financial) 26-50%
 5-25%
 More than 0%, less than 5%

FI 14.2

Indicate your motivations for conducting engagement (Corporate,
Financial fixed income assets)

 To gain an understanding of ESG strategy and/or management
 To encourage improved/increased ESG disclosure To influence issuer practice (or identify the need to influence) on ESG issue
 >50%
Corporate (nonfinancial) 26-50%
 5-25%
 More than 0%, less than 5%

FI 14.2

Indicate your motivations for conducting engagement (Corporate, nonfinancial fixed income assets)

 To gain an understanding of ESG strategy and/or management
 To encourage improved/increased ESG disclosure To influence issuer practice (or identify the need to influence) on ESG issue
 >50%
Securitised

 26-50%
 5-25%
 More than 0%, less than 5%

FI 14.2

Indicate your motivations for conducting engagement (Securitised fixedincome assets).

 To gain an understanding of ESG strategy and/or management
 To encourage improved/increased ESG disclosure175 To influence issuer practice (or identify the need to influence) on ESG issue

FI 14.3

Additional information.[OPTIONAL]

Our credit analysts routinely meet with companies, where they raise relevant ESG issues. Last year, ESG issues
featured in 35% of fixed income meetings: out of just over 1,000 interactions with fixed income issuers, ourinvestment teams raised ESG issues in over 300 meetings, including over 15 instances of discussions on green
bond issuance. Our data suggests that Governance remains the most common ESG pillar discussed, withEnvironmental (such as low carbon transition, renewable energy and green bond issuance) also very common.
Social issues are also, for example in approximately 20% of meetings in Q4.
In 2019 we increased the level of engagement on ESG topics leveraging the sector level ESG checklists withissuers and increase the impact from these issuer discussions have on investment decisions. Additionally, weleveraged our new engagement reporting tool - STAR - launched in January 2019 which will allow us moregranularity in our analysis on which topics within ESG pillars have been raised in company engagement meetings.
In the last 12 months, our credit analysts engaged with issuers globally, with European Issuers most frequent,followed by Americas. Over the last 12 months we attended 2,099 issuer engagements, of which 81% (1699
engagements) had an ESG element. Also, our engagement capture tool enables us to drill further into engagement
data. As already noticed over the year, within the Environmental pillar, renewables and clean technologies, closely
followed by climate change, were the most frequent, demonstrating the materiality of those issues and more broadly
the importance of climate transition. In one specific Indian company engagement, we stressed the importance oftimely availability of the sustainability report for green bonds, further to our previous engagement with the same
issuer on transparent reporting standards.
Also, we found interesting to highlight that we attended a first workshop in France that has seen investors and credit
rating agencies engaging with representatives of the treasury/corporate finance and IR departments of debt issuersat the same time. It is the first attempt to broaden the dialogue that investors and credit rating agencies have been
having over the past three years, thanks to the PRI ESG in Credit Risk and Ratings Initiative. The collaboration with
the Societé Française des Analystes Financiers (SFAF) was instrumental to bring sector expert credit analysts at thetable. The discussion was more focused on where are the communication gaps, with attempts to obtain some more
technic
Finally, our colleagues in HSBC Group engage with issuers to encourage them to issue Green Bonds. The benefit
for this issuance is two-fold - to facilitate and highlight green projects that are being developed by the issuer and toenhance the reputation to issuers, as well as to gain potential discounts in the cost of financing over other types ofbond issues.

FI 15

Mandatory to Report Voluntary toDisclose

PublicAdditional Assessed

PRI 1,2New selection options have been added to this indicator. Please review your prefilled responses carefully.

FI 15.1

Indicate how you typically engage with issuers as a fixed income investor, or as both a fixedincome and listed equity investor. (Please do not include engagements where you are both abondholder and shareholder but engage as a listed equity investor only.)Select all that apply

176

Type of engagement

SSA

Corporate (financial)

Corporate (non-financial)

Securitised

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Individual/Internal staff engagements

Collaborative engagements

Service provider engagements

FI 15.2

Indicate how your organisation prioritises engagements with issuers.

Select all that apply

SSA

Corporate(financial)

Corporate (nonfinancial)

Securitised



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Size of holdings

Credit quality of the issuer

Duration of holdings

Quality of transparency on ESG

Specific markets and/or sectors

Specific ESG themes

Issuers in the lowest ranks of ESG benchmarks

Issuers in the highest ranks of ESG benchmarks

Specific issues considered priorities for the investor
based on input from clients and beneficiaries

Other

FI 15.3

Indicate when your organisation conducts engagements with issuers.

Select all that apply

177

SSA

Corporate(financial)

Corporate (nonfinancial)

Securitised

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We engage pre-investment.

We engage post-investment.

We engage proactively in anticipation of specific
ESG risks and/or opportunities.

We engage in reaction to ESG issues that havealready affected the issuer.

We engage prior to ESG-related divestments.

Other, describe

FI 15.4

Indicate what your organisation conducts engagements with issuers on.

Select all that apply

SSA

Corporate(financial)

Corporate (nonfinancial)

Securitised

































We engage on ESG risks and opportunities affecting a
specific bond issuer or its issuer.

We engage on ESG risks and opportunities affecting
the entire industry or region that the issuer belongs to.

We engage on specific ESG themes across issuers
and industries (e.g., human rights).

Other, describe

FI 15.5

Indicate how your organisation ensures that information and insights collected through engagement
can feed into the investment decision-making process.

Select all that apply

178

SSA

Corporate(financial)

Corporate(non-financial)

Securitised









































































Ensuring regular cross-team meetings andpresentations.

Sharing engagement data across platforms that isaccessible to ESG and investment teams.

Encouraging ESG and investment teams to join
engagement meetings and roadshows.

Delegating some engagement dialogue to portfolio
managers/credit analysts.

Involving portfolio managers when defining an
engagement programme and developing engagement
decisions.

Establishing mechanisms to rebalance portfolio holdings
based on levels of interaction and outcomes ofengagements.

Considering active ownership as a mechanism to assess
potential future investments.

Other, describe

We do not ensure that information and insights collected
through engagement can feed into the investment
decision-making process.

FI 15.6

Additional information.[OPTIONAL]

2 things we would like to highlight:
1/ In 2018, we started to publish a quarterly fixed income ESG integration report summarizing engagement activities
and case studies. Its aim is to raise awareness, share best practices and even more broadly increase
communication within the Fixed Income team.
2/ Please note that in question FI 15-2 above, for Securitised Credit we have intentionally left blank the below points
although 'N/A' would have been a more appropriate response due to absence of benchmark for Securitised Credit.
- Issuers in the lowest ranks of ESG benchmarks - N/A- Issuers in the highest ranks of ESG benchmarks - N/A

FI 16

Mandatory to Report Voluntary toDisclose

Public179

Additional Assessed

PRI 1,2

Indicate if your publicly available policy documents explicitly refer to fixed income engagement
separately from engagements in relation to other asset classes.

FI 16.1
 Yes

FI 16.2

Please attach or provide a URL to your fixed income engagement policy document. [Optional]

URL
http://www.assetmanagement.hsbc.co.uk/-/media/files/attachments/uk/common/responsible-investmentpolicy-may-2017.pdf

Attach document

 No

Additional information [OPTIONAL]

FI 16.3

Our RI policy states that "where possible we extend our engagement activities to bonds".

Outputs and outcomes
FI 17

Mandatory to Report Voluntary toDisclose

FI 17.1

PublicAdditional Assessed

GeneralIndicate whether your organisation measures how your incorporation of ESG analysis in fixedincome has affected investment outcomes and/or performance.

Select all that apply

SSA

Corporate(financial)

Corporate (nonfinancial)

Securitised

































We measure whether incorporating ESG impacts
portfolio risk.

We measure whether incorporating ESG impacts
portfolio returns.

We measure the ESG performance/profile ofportfolios (relative to the benchmark).

None of the above

180

Additional information.[OPTIONAL]

FI 17.3

Securitised Credit does not have a benchmark hence we are unable to measure ESG performance relative to abenchmark.

FI 18

Voluntary

FI 18.1

PublicDescriptive

PRI 1,2

Provide examples of how your incorporation of ESG analysis and/or your engagement of issuers
has affected your fixed income investment outcomes during the reporting year.

 Example 1

181

Type of fixed income
 SSA
 Corporate (financial) Corporate (non-financial) Securitised

ESG issue and explanation
A major Australian financial institution was accused of systemically breaching money-laundering and counterterrorism laws, and failing to report several billion Australian Dollar in international transfers, Australia's
financial crimes agency (AUSTRAC) said in a court filing on 20th November 2019. Since the release of the
AUSTRAC allegation, the company has announced changes in management and board together (CEO would
step down and current CFO would become acting CEO until a global search process for a new CEO
completed), with a response plan (closing products responsible for the relevant ingoing and outgoing funds
transfers, improvement of internal standards). These announcements helped to stabilize market sentiment tosome extent.
During FY19 results call in November, the company announced it was raising capital and saying it wanted tocreate flexibility for "potential litigation or regulatory action". In this context, the new AUSTRAC allegations were
not entirely unexpected.

RI strategy applied Screening Thematic Integration
 Engagement
 ESG incorporation in passively managed funds

Impact on investment decision or performance
We have noted that Australia's financial regulators have previously outlined significant cultural and operational
failures at Australia's largest banks. Some of these banks were asked to maintain higher capital requirements
and improved their internal controls. This does raise our concern over governance practices of the Australianbanks. This raised our concern over governance practices of Australian banks and as early as June 2018, welowered our sector's internal liquidity rating on the company from A* to A in June 2018.
Then, the day of the news, we changed our fundamental view on the company to "negative" from "neutral" until
we get more details on provisioned amount and the size of potential fines. We have been following thedevelopment closely. And in response to the news and after our internal assessment, we have 1) reduced our
global liquidity limit to zero on the day of the news; 2) updated our research in our internal Research platform
tool, changing our fundamental view on the company, on December 2019, to "Do Not Add" recommendation
until we have a further clarity on those allegations.

 Example 2

182

Type of fixed income
 SSA
 Corporate (financial) Corporate (non-financial) Securitised

ESG issue and explanation

A global US conglomerate company is under pressure since several quarters due to serious corporate
governance concerns which in our view is part of the reason in company's challenging operating performance.
The company is facing investigation from the SEC important financial concerns mainly related to several
accounting issues, including revenue losses and a massively underfunded pension plan. The company bonds
have heavily underperformed. But after the weak position reached by year end 2018, company's bonds have
kept tightening gradually but consistently during the past few months, which is in part due to a more transparent
stance, and by some advances towards its goal to turn the company around; however, it can also be mostly areflection of the improvement of the market in general.
The reasons for the company's dramatic drop are complex but, in our view, partly explained by ESG concerns
and mainly governance concerns. Indeed, the company We closely monitored and investigated to evaluate thecredit impact of this and how the company tried to manage those severe material credit impact. Board's very
limited reaction to the long and steep decline of group's operating performance raised our concerns as early as
2017...

RI strategy applied Screening Thematic Integration
 Engagement
 ESG incorporation in passively managed funds

Impact on investment decision or performance
We definitely believed that the structure and process of company board were poorly adapted to effectively
supervise, mainly for two reasons in our view. First, the board was too big with 18 board members comparedwith an average size of 11 members for US companies. Smaller are correlated with better company
performance. Second, the lack of vigilance of the audit committee. A better should have been done in inoverseeing the funding of its retirement plan as well as recognizing company's quarterly revenues that finallylead to the SEC investigation. Also, it should have been alerted by the more than a century of relationshipbetween the company and its auditor.
Over the last quarters several governance changes occurred within the company. However, and despite
several senior management and board changes, downsizing of the board, revamping executive'scompensation, replacing its century-long relationship with the same auditor, and strengthening internal
accounting controls, the long-term outlook remains uncertain and challenging.
As such and in the absence of material, sustainable improvement in company's financial profile, we removed
the company from our liquidity funds, downgraded our internal corporate rating, and we maintained ourUnderweight recommendation reducing our investment exposure on the name since end 2017.

 Example 3
183

Type of fixed income
 SSA
 Corporate (financial) Corporate (non-financial) Securitised

ESG issue and explanation
We have initiated coverage of a British high-yield rated retail company principally acting in food retail but also
funeral care. This was supported by an internal positive ESG view as per coverage initiation despite a difficult
Brexit context. The company enjoys positive fundamental outlook thanks to a store format exposure
corresponding to consumer trends was supported by numerous positive ESG considerations we identified as
this company is engaged in various environmental and social commitments.
From a social perspective, company members help the red cross to run campaigns on loneliness and isolationof elderly people and they also donate parts of revenues to support local UK communities socially, among
others. Throughout our investment horizon, our positive "S" view was affirmed and internally reiterated. We
particularly seen as a proactive Social initiative the fact that the company, increased wages a year ahead of the
new minimum UK wage law paying more than the minimum to their staff in a highly competitive UK food retail
environment.

RI strategy applied Screening Thematic Integration
 Engagement
 ESG incorporation in passively managed funds

Impact on investment decision or performance
We also have a positive environmental appreciation as the company is UK's number one in fair trade, sources
locally, and sources organic packaging to an extent of 80%. In 2019 our positive ESG score was definitely
confirmed as the company was UK's first British retailer to issue a Sustainable Bond and the framework
embedded further social goals and commitments such as treating people fairly, improve community wellbeingor responsible sourcing.
We think the company does a good job turning around its business following problems that arose from theirbanking activity. It revised its corporate governance and is now on track to concentrate on their remaining corebusinesses food retail and funeral services. We like it social commitments through its historical company
structure and we think the group operating activity will benefit from its good ESG practices put in place.

 Example 4

184

Type of fixed income
 SSA
 Corporate (financial) Corporate (non-financial) Securitised

ESG issue and explanation
A medium-sized Chinese property developer tried to access the USD bond market for the first time. Its
business profile, scale, leverage and liquidity positions were consistent with other similarly-rated issuers in thesame sector. However, we were not comfortable with its ESG practices, in particular its corporate governance.
Its social and environmental disclosures were also quite limited. When we analysed the details, we notedmaterial related party transactions, including asset injection by the Chairman and largest shareholder who also
owns a competing business. The Chairman owns about 70% of the company.

RI strategy applied Screening Thematic Integration
 Engagement
 ESG incorporation in passively managed funds

Impact on investment decision or performance
We decided to avoid investing in the company even if its bond yield was quite attractive at the time and its
fundamental credit profile is fair. We placed a strong emphasis on corporate governance and such weakpractices could make the company vulnerable to its shareholders' behavior and his self-interests. Such a risk ishard to quantify or monitor as an investor.
Then four months after the bond issuance, the market found out that the Chairman has pledged his stake in thecompany for his own borrowings. A margin call on the personal loan resulted in a sharp decline in thecompany's share price. This raised concerns over the non-payment of his loan which could trigger the changeof control clause of the bond. As a result, there were significant anxiety over the financial health of thecompany. The bond was downgraded by two notches and fell 20 points around that time.
The Chairman ultimately repaid his loan and things seemed to have recovered from the trough. However, we
continued to avoid this name as the Chairman remained the single largest shareholder and we do not see any
material improvement in its overall governance practices.

 Example 5185

HSBC Global Asset Management

Reported Information
Public version
Direct - Hedge Funds

PRI disclaimer
This document presents information reported directly by signatories. This information has not been audited by the PRISecretariat or any other party acting on their behalf. While this information is believed to be reliable, no representations or
warranties are made as to the accuracy of the information presented, and no responsibility or liability can be accepted forany error or omission.

186

Policy
HF 01

Mandatory

PublicDescriptive

GeneralWhat is your rationale for adopting a policy to incorporate RI into the investment decision- making
process? Please select all options that apply to your organisation.

HF 01.1

 To provide a framework and ESG applicability to security selection (the strategy) and decision-making in
Hedge Funds (e.g. breaking the strategy into different components and focus on risk/return).
 To provide a framework of the fund governance structure.
 Because ESG incorporation is perceived as a competitive advantage in the industry.
 Growing momentum of sustainable investing in Hedge Funds in the financial community.
 Other None of the above (we don’t have a policy addressing RI incorporation into Hedge Funds).
HF 02

Voluntary

PublicDescriptive

4,5

To which normative codes and initiatives are you a signatory to, or a voluntary adherent?

HF 02.1

 AOI Hedge Funds Principles 2014
 Standards Board for Alternative Investments (SBAI) Alternative Investment Management Association (AIMA)
 International Organisation of Securities Commissions (IOSCO) CFA`s Asset Manager Code of Professional Conduct Other None of the above

Governance
HF 03

Mandatory

HF 03.1

PublicDescriptive

GeneralIndicate whether and how your organisation has organised RI implementation and/or oversight
responsibilities.

 We have dedicated internal staff with RI oversight responsibility for Hedge Funds (CEO, CIO, PM, etc.)

Specify
The Global CIO, Fixed Income, Private Debt ＆Alternatives has ultimate oversight on Hedge Funds capabilities
and is deeply involved in defining ESG integration methodologies.
 We have dedicated internal staff with RI implementation responsibility for Hedge Funds (CEO, CIO, PM, etc.).

Specify
ESG champions dedicated to the asset class187

 We use external consultants that have oversight and/or RI implementation responsibilities.
 Other We do not have staff dedicated to RI oversight and implementation.
HF 04

Mandatory

HF 04.1

PublicDescriptive

GeneralPlease indicate whether you implemented any RI training program regarding hedge funds
investments for your staff during the reporting year.

 Yes, we have a formal RI training/educational program covering hedge funds.
 Yes, we have a RI training program to educate staff regarding our hedge funds policies.
 Yes, we regularly train our staff on code of ethics/compliance manuals covering hedge funds investments.
 Other No, we don’t have a RI training program.

HF 04.2

Explain how the RI training program is conducted?

The RI training program is delivered through online training modules and in person training sessions throughout the
year.

HF 05

Voluntary

HF 05.1

PublicDescriptive

1

In incorporating RI into Hedge Funds, what is(are) the main consideration(s) your organisation
follows? Please select all applicable to your organisation.

 To achieve a robust governance structure for our Hedge Funds investments.
 To attain relevant/existing ESG data.
 To clearly identify/manage the ESG opportunities associated with each strategies.
 To clearly identify each strategy and associated financial risks.
 Other None of the above

HF 05.2

Does the annual employee(s) performance review or remuneration metrics reflect any component
for the inclusion of RI into Hedge Funds?

 Yes

If yes, please select and describe all that applies to your organisation (at least one KPI should
be linked to the variable pay).

188

KPI

Variable
pay linked

Explanation

 Riskmanagement

 Yes

the consistent and effective implementation of the investment process which
includes the assessment of responsible investment factors as part of the due
diligence reviews is a KPI that is tracked via the ongoing performanceassessments for hedge fund staff.

 Financial
performance Yes Other

 Yes

 No

 No

 No
 No

Investment process
HF 06

Mandatory

HF 06.1

PublicDescriptive

GeneralPlease describe the ESG resources and tools used in your investment decision-making process.

Category of ESG

Reason for use

 ESG data (proprietary, 3rd party, etc.)

Investment screening for hedge funds

 ESG research (broker, etc.)

Leverage industry expertise for industry
developments and trends.

 Consultants
 Other resources/tools/practices

External databases, industry specialists andresearch providers are used to supplement theoverall investment process. .

Specify
Assist with overall ESG assessment and screening

HF 06.2

Select and explain how these resources are incorporated into the investment and risk management
process?

189

Category of ESG

Investment/risk management process

Additional text (optional)

ESG data (proprietary, 3rd party, etc.)  Investment origination
 Investment analysis
 Portfolio construction
 Trade management
 Risk management
ESG research (broker, etc.)

 Investment origination
 Investment analysis
 Portfolio construction
 Trade management
 Risk management

Other resources/tools/practices

 Investment origination
 Investment analysis
 Portfolio construction
 Trade management
 Risk management

HF 07

Mandatory

HF 07.1

PublicDescriptive

Does your organisation uses quantitative analysis?

 Yes
 We don’t use quantitative analysis.

HF 07.2

Does your organisation uses fundamental analysis?

 Yes

Please indicate at which level ESG is incorporated into the analysis.

190

1,2

Fundamental
approach

ESG incorporation

Outcomes andassessment/review

 Top-down

 At a micro level - ESG factors are integrated into
financial models (DCF, multiples, etc.)

Overweight / Underweight Bottom-up

 Financial ratios with embedded ESG factors.
 At a macro level - ESG factors are embedded witheconomic indicators (GDP, inflation, etc.)
 Other

Please specify
Embedded in due diligence process We don’t use fundamental analysis.

HF 07.3

Additional information [OPTIONAL]

ESG factors are an integral part of the due diligence process when assessing an underlying hedge fund. The ESG
factors are part of the overall qualitative assessment of the fund and weigh upon the overall outcome of the due
diligence process. The outcome of the process at this level is binary, therefore any proposed investment that isdeemed to be insufficient with regards to these factors is removed from the process at this point.

HF 08

Mandatory

HF 08.1

PublicDescriptive

1,6

Could you please indicate whether there have been any changes to your RI incorporation process
over the past 12 months (e.g. additional resources, information sources)?

 Yes
 No

HF 08.3

If not, please explain.

We initiated our HF ESG integration in January 2019. It hasn't changed significantly since then.
HF 09

Mandatory

HF 09.1

PublicDescriptive

1,2

Please select and explain how active ownership practices are integrated into investment decisions.

 (Proxy) Voting
We expect our external funds' managers to have a structured approach in terms of proxy voting andengagement. We consider this item to form an intrinsic part of our pre-investment due diligence. In addition,
HSBC Alternative Investments Ltd (HAIL) has a structured approach in terms of proxy voting and engagementwith regards to its fund investments.
 Engagement
We systematically engage with our approved assets managers in order to make sure their social andgovernance policies are in alignment with our practices and policies.

191 Shareholder resolution
 None of the above Not applicable (N/A)
HF 10

Mandatory

HF 10.1

PublicDescriptive

1,2

Please provide examples of where ESG risks and opportunities were incorporated into theinvestment decisions over the past 12 months.

 Add Example 1
 Add Example 2
 Add Example 3
 Add Example 4
 Add Example 5
 Add Example 6
 Add Example 7
 Add Example 8
 Add Example 9
 Add Example 10 We are not able to provide examples

HF 10.2

Based on your example(s) provided above, please specify whether the incorporation of ESG
factors affected the risk-adjusted returns of your hedge funds.

 The incorporation of ESG risks positively affected the risk adjusted returns of the hedge funds
 The incorporation of ESG risks negatively affected the risk adjusted returns of the hedge funds
 The incorporation of ESG risks had an overall neutral effect on the risk adjusted returns of the hedge funds
 No impact, or we do not track this information.
HF 11

Mandatory

HF 11.1

PublicDescriptive

GeneralDo you use derivatives instruments as part of your hedge funds strategies and/or Funds of Hedge
Funds?

 Yes
 No

Monitoring and reporting
HF 12

Mandatory

HF 12.1

PublicDescriptive

1,2

Could you indicate whether you report separately on your funds’ long/short/net exposures?

 Yes
 No

192

Please explain
We invest in third party funds and as such do not directly manage any long short exposure that we may or may
not be exposed to at any point in time. We do however monitor the long short exposure of our underlying
investments. This reporting is currently not part of the reporting package to the fund of funds investors.
 Not Applicable
HF 13

Mandatory

HF 13.1

PublicDescriptive

1,2

Please describe what metrics/initiatives (internal and/or external) your organisation uses tomeasure its progress in incorporating RI into the investment process.

 Add Example 1

193

Hedge Funds Strategy

Fund of Hedge Funds
 Global macro Equity Hedge
 Event driven
 Relative value
 Fund of Hedge Funds
 Risk parity
 Blockchain

Metrics/Initiatives
Metrics

Initiatives

 RI policy implementation

 Transparency

 RI Recommendation changes

 Integration of ESG data

 ESG Alpha Education

 ESG Beta

 Other GHG Emissions
Internal/external

 Internal
 External

Metrics/Initiatives
definition

As part of our investment team we have
setup a working group to screen the ESG
hedge fund opportunities and to track the
ESG peer group performance metrics

Assessment/outcomes

The successful screening and on boarding of
top quartile performing ESG focusedmanagers

 Add Example 2
 Add Example 3
 Add Example 4
 Add Example 5
 Add Example 6
 Add Example 7
 Add Example 8
 Add Example 9
 Add Example 10 We are not able to provide examples

HF 13.2

Additional information [OPTIONAL]

We have set up a dedicated working group on ESG made of PMs and Analysts. Their target is to map the universe,
understand the ESG HF strategies and come up with investment solutions.
HF 14

Voluntary

Public194

Descriptive

GeneralHF 14.1

Does your organisation assess the funds’ exposure to climate-related risks, measure and monitor
the carbon footprint of its investment portfolio?

 Yes
 No

HF 14.3

If no in HF 14.1, please explain why.

The hedge funds that we invest with currently do not provide transparency on these metrics.
HF 15

Mandatory

HF 15.1

PublicDescriptive

2,6

How often and in what format (e.g. meetings, written reports) does your organisation report to its
investors on ESG activities risks assessments? Please provide reporting examples.

 Add Example 1
 Add Example 2
 Add Example 3
 Add Example 4
 Add Example 5
 Add Example 6
 Add Example 7
 Add Example 8
 Add Example 9
 Add Example 10 We are not able to provide examples

195

HSBC Global Asset Management

Reported Information
Public version
Confidence building measures

PRI disclaimer
This document presents information reported directly by signatories. This information has not been audited by the PRISecretariat or any other party acting on their behalf. While this information is believed to be reliable, no representations or
warranties are made as to the accuracy of the information presented, and no responsibility or liability can be accepted forany error or omission.

196

Confidence building measures
CM1 01

Mandatory

CM1 01.1

PublicAdditional Assessed

GeneralIndicate whether the reported information you have provided for your PRI Transparency Report thisyear has undergone: Third party assurance over selected responses from this year’s PRI Transparency Report Third party assurance over data points from other sources that have subsequently been used in your PRI
responses this year Third party assurance or audit of the correct implementation of RI processes (that have been reported to the
PRI this year) Internal audit of the correct implementation of RI processes and/or accuracy of RI data (that have beenreported to the PRI this year) Internal verification of responses before submission to the PRI (e.g. by the CEO or the board) Whole PRI Transparency Report has been internally verified
 Selected data has been internally verified Other, specify
 None of the above

CM1 01.2

Additional information [OPTIONAL]

While applying for the French Government SRI label, 3 of our funds' investment processes got reviewed by EY.
Our TEEC strategy - Transition Energetique Ecologique et Climatique - has been reviewed by official reviewer
Novethic.
Finally, our overall ESG approach - combining Integration, SRI and Stewardship dimensions - as it is disclosed in
HSBC France annual report has been reviewed by PWC with whom we are also working on a much broader
assurance of our PRI survey. First output of this collaboration so far has been a "gap analysis" aiming at helping usaligning our various ESG processes with industry's best practices..
All our ESG thematic and SRI strategies have been approved by HSBC Group's Sustainable Investment Experts
Group (SIEG) which is independent from the asset management business line.
Most of the inputs included in our LEA section have also been officially reviewed as they are used within HSBC
Group's annual Sustainable Finance report, a publicly available official document.
CM1 02

Mandatory

CM1 02.1

PublicDescriptive

GeneralWe undertook third party assurance on last year’s PRI Transparency Report Whole PRI Transparency Report was assured last year Selected data was assured in last year’s PRI Transparency Report We did not assure last year`s PRI Transparency report None of the above, we were in our preparation year and did not report last year.
CM1 03

Mandatory

Public197

Descriptive

GeneralWe undertake confidence building measures that are unspecific to the data contained in our PRI
Transparency Report:

CM1 03.1

 We adhere to an RI certification or labelling scheme

CM1 03.2

Which scheme?

 National SRI label based on the EUROSIF Transparency guidelines% of total AUM the scheme applies
 < 25%
 25-50 % 50-70 % >75 %
 B-corporation
 UK Stewardship code

% of total AUM the scheme applies
 < 25%
 25-50 % 50-70 % >75 %
 GRESB
 Commodity type label (e.g. BCI) Social label
 Climate label
 RIAA Other

Specify
French Government's Greenfin and SRI labels.
Belgian label Febelfin for some of our strategies.

All our RI strategies have to go through an internal certification process owned by HSBC Group's
Sustainable Investment Expert Group.

198

% of total AUM the scheme applies
 < 25%
 25-50 % 50-70 % >75 %
 We carry out independent/third party assurance over a whole public report (such as a sustainability report)
extracts of which are included in this year’s PRI Transparency Report

Provide a link to the public report (such as a sustainability report that you carry out third party
assurance over and for which you have used extracts of in this year’s PRI Transparency
Report. Also include a link to the external assurance provider `s report.

CM1 03.3

Link to sustainability, RI, or integrated report [URL]
https://www.hsbc.com/our-approach/measuring-our-impact

Link to external assurance provider`s report [URL]
https://www.hsbc.com/-/files/hsbc/investors/hsbc-results/2018/annual/hsbc-holdings-plc/190219-annualreport-and-accounts-2018.pdf?download=1
 ESG audit of holdings
 Other, specify
 None of the above
CM1 04

Mandatory

CM1 04.1

PublicDescriptive

GeneralDo you plan to conduct third party assurance of this year`s PRI Transparency report?

 Whole PRI Transparency Report will be assured
 Selected data will be assured
 We do not plan to assure this year`s PRI Transparency report

CM1 04.3

Additional information [OPTIONAL]

Nevertheless we are working with PWC on a broad assurance of our PRI survey. First output of this collaboration so
far has been a "gap analysis" aiming at helping us aligning our various ESG processes with industry's bestpractices.
CM1 07

Mandatory

CM1 07.1

PublicDescriptive

GeneralIndicate who has reviewed/verified internally the whole - or selected data of the - PRI Transparency
Report . and if this applies to selected data please specify what data was reviewed

Who has conducted the verification
 CEO or other Chief-Level staff
199

Sign-off or review of responses
 Sign-off
 Review of responses
 The Board Investment Committee

Sign-off or review of responses
 Sign-off
 Review of responses
 Compliance Function
 RI/ESG Team Investment Teams
 Legal Department
 Other (specify)200