Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 349

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 349
---
 warming pathways that may unfold and their plausibility, and informs how we manage implications to credit risk and revenues. To meet our global regulatory needs, we produced several climate stress tests for regulators around the world, including the Hong Kong Monetary Authority (‘HKMA’). We continue to enhance our climate scenario analysis exercises so that we can have a more comprehensive understanding of climate headwinds, risks and opportunities to support our strategic planning, actions and risk management. Use of climate scenario outputs to support how we assess our climate resilience As we navigate the transition to net zero, climate scenario analysis is used to support core banking processes such as client-facing activities, finance activities and risk management. From a financial and capital planning perspective, we use climate scenario analysis to support the Group’s internal capital adequacy assessment process (‘ICAAP’) to understand the amount of capital the Group should hold to meet identified climate risks, including integration of climate impacts into the Group’s internal stress testing exercises. In addition, it informs strategic planning by providing insights on the size and timing of financial impacts, and IFRS 9 loss provisioning to ensure climate risks are adequately provisioned for in our balance sheet, such as expected credit losses (‘ECL’). Climate scenario analysis also supports portfolio steering frameworks set up to help shape our Global Businesses strategy to meet net zero ambitions. Portfolio steering has been developed to enable the Group to manage sector portfolios in line with its net zero by 2050 ambition, while managing risks and capturing commercial opportunities. This enables HSBC to manage financed emissions within our appetite at portfolio level. Climate scenario analysis supports the Group to assess the impact of our net zero ambitions on our revenue and profitability to help strengthen our understanding of business model risk, and supports building the organisation’s awareness of climate change risk, informing our climate risk appetite. Our climate scenarios Our 2024 scenarios considered the key regions in which we operate and were designed to assess the impact on our balance sheet across three distinct periods: short term up to 2026; medium term from 2027 to 2035; and long term from 2036 to 2050. Building on prior years, the 2024 climate scenario analysis exercise benefited from new scenarios, including: the introduction of a new Below 2 Degrees scenario that is aligned with the Paris Agreement goal of limiting global warming to below 2 degrees by the end of the century; and a bespoke near-term Severe Climate Stress scenario; and from updated climate scenario assumptions, which include increased sector and geographical granularity for all scenarios.