Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 346

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 346
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 climate scenario analysis’ on page 253 .

| Risk type                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Our approach                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |            |     |           |                                              |                 |           |                   |           |
| Wholesalecredit risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | We have metrics in place to monitor the exposure of our wholesale corporate lending portfolio to six high transition risk sectors, as shown in thebelow table. As at 31 December 2024, the overall exposure to the six high transition risk sectors was18% of total gross carrying amount ofwholesale loans and advances. These disclosures cover the whole of the value chain of the sector. The sector classifications are based oninternal HSBC definitions and can be judgemental in nature. We use publicly available data as well as internal data to determine the appropriatesector. The classification of our clients into sectors is performed with inputs from subject matter experts. The sector classifications are subjectto the remediation of ongoing data quality challenges and continuous improvement of our ongoing processes. The data will continue to beenhanced and refined in future years.Our relationship managers engage with our key wholesale customers, including those in higher transition risk sectors, through a transitionengagement questionnaire (‘TEQ’). In 2024, the TEQ was expanded to cover all geographies. The TEQ helps to gather information and assessour wholesale customers’ business model alignment to a net zero transition and their exposure to physical and transition risks. We use theresponses to the questionnaire to risk-assess our key wholesale customers.Our credit policies require that relationship managers comment on climate risk factors in credit applications for new money requests and annualcredit reviews. Our credit policies also require manual credit risk rating overrides if climate is deemed to have a material impact on credit riskunder 12 months if not already captured under the original credit risk rating.Key developments to our framework in 2024 included the expansion of the TEQ, as set out above, and additionally the development of climaterisk guidelines for relationship managers to further embed climate risk considerations into credit risk assessments.Key challenges for further embedding climate risk into credit risk management relate to the availability of adequate physical risk data to assessimpacts on our wholesale customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |            |     |           |                                              |                 |           |                   |           |
| Wholesale loan exposure to high transition