Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 240

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 240
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 net zero alignment risk and the risk of greenwashing as thematic risk issues related to climate risk. Physical risk may arise from the increased frequency and severity of extreme weather events, such as hurricanes and floods or chronic gradual shifts in weather pattens or rises in sea level. Transition risk may arise from the process of moving to a net zero economy including changes in government policy and legislation, technology, market demand and reputational implications triggered by a change in stakeholder expectations in relation to our action or inaction. Net zero alignment risk may arise from the risk of HSBC failing to meet its net zero ambition or failing to meet external expectations related to net zero. The risk of greenwashing may arise from the act of knowingly or unknowingly making inaccurate, unclear, misleading or unsubstantiated claims regarding sustainability to our stakeholders. We currently expect the following to be the most likely ways in which climate risk may materialise for the Group: – credit risk for our corporate customers may increase if climate- related regulatory, legislative or technological developments impact customers’ business models or if extreme weather events disrupt or interrupt customers’ operations, resulting in financial difficulty for customers and/or stranded assets and impacting their ability to repay their debts. Our customers may find that their business models fail to align to a net zero economy or face disruption to their operations or deterioration to their assets as a result of extreme weather; – trading losses if climate change results in changes to macroeconomic and financial variables which negatively impact our trading book exposures; – liquidity impacts in the form of deposit outflows due to changes in customer behaviours driven by impacts to profitability/wealth, or from reputational concerns relating to the progress we make towards our climate-related ambitions and targets; – real estate may be affected by changes to the climate, the increase in the frequency and severity of extreme weather events and chronic shifts in weather patterns, which could impact both property values and the ability of borrowers to afford their mortgage payments and lead to reduced availability or increased cost of insurance, including insurance that protects property pledged as collateral of HSBC mortgages; – operational risk may increase if extreme weather events impact critical operations and premises; – regulatory compliance risk may result from the increasing pace, breadth and depth of climate-related regulatory expectations, including on the management of climate risk, and variations in climate-related reporting standards, requiring implementation in short timeframes across multiple jurisdictions; – conduct risk could develop in association with the increasing demand for "green" or "sustainable" products where there are differing and developing standards or taxonomies; – reputational risks may arise from how we decide