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55 (150) 2022

Interviews

Commitment to net zero remains our top priority

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Michael Dembinski talks to Dariusz Kucharski, CEO and Country Head of CMB of HSBC in Poland.

We are entering a period of volatility – war just across our border with Ukraine, soaring inflation, first signs of an approaching recession; worries about energy security this winter – CEOs and CFOs are facing troubled times. What is your take on how the Polish, EU and global economies will fare in the coming year? What would be HSBC's advice for corporate leaders?

Indeed, the global energy crisis, supply chain disruptions, the rising cost of living and ongoing geopolitical strains are influencing economies all around the world. The coming years will see the slowdown of economic growth due to concerns of inflation and tightening in financial markets. It’s a huge challenge for corporate leaders who have to manage businesses in the new reality of economic uncertainty. During unstable times, many people tend to focus on short-term goals and investments, as it is difficult to predict how the markets will act. However, my advice would be to focus on sustainable solutions and strategies that will have a positive impact on the business in the long term. Various global events might influence businesses in unpredictable ways, but sustainable development should remain at the core of any forward-looking business. For example, a few years ago here at HSBC we have made a long-term commitment to prioritise financing and investment that supports the transition to a net zero global economy. Despite the drastic change in the economic circumstances and new challenges faced by the world, these ambitious goals remain the top priority in our business operations.

The race to abandon fossil fuels has taken a more urgent turn now with the Russian invasion of Ukraine – the West needs to move quickly to net-zero for geopolitical as well as environmental reasons. How is HSBC supporting green finance? What are your goals in this respect – and have they become more ambitious?

HSBC has always been focused on supporting the transition towards the net-zero economy. We have set an ambitious goal to reduce carbon emissions from our overall portfolio of customers to net zero by 2050 or sooner. Our global plan assumes that by 2030 we will support our customers with between $750 billion to $1 trillion of finance and investment to help them in switching to more sustainable ways of doing business. By the end of June 2022, our cumulative total amount allocated for sustainable finance and investment since 2019 was more than $170.8bn. Earlier this year, we published dedicated sector policies for oil and gas, and power and utilities with proposed interim targets for on-balance sheet financed emissions. We also aim to publish a bank-wide climate transition plan in 2023 including our revised financing and investment policies critical to net zero with a planned phase-down of fossil fuel financing. We are mobilising finance to support our customers’ transitions to net zero, accelerating innovation to help scale up climate change solutions and building global partnerships to ensure investment is swiftly channelled towards truly sustainable projects. We use our expertise in ESG solutions to support our clients in developing strategies focused on sustainable growth and provide financing essential to implement these practices. We are constantly seeking new ways and new areas to further lessen our environmental impact over the coming decade.

We focus on the 'E' and 'S' of ESG often at the expense of the 'G' for 'governance' – what do you see as the biggest governance challenges currently facing corporate CEO/CFOs today?

I believe that holding the balance between the financial goals and responsibility the company has towards the society and environment is one of the main challenges faced today by the business leaders. Socially responsible companies are more successful in the long-term but in tough economic conditions, some companies may find it hard to make the necessary investments. Tough global economic situation affects the investment plans and financial security of many companies around the world. It is of course important to consider financial profits and risks, but it is equally important to focus operations on serving customers and the wider communities in which the companies operate. In order to achieve high standards of corporate governance, a range of policies and systems have to be in place to ensure that the company is well-managed, with effective oversight and control. Some practical examples of a financial institution’s approach towards establishing proper governance include an obligation to use the company’s technology responsibly, helping employees develop their skills and providing them with appropriate trainings e.g., anti-corruption, promoting speak-up culture including whistleblowing and implementing enhanced client- and transaction  screening to identify signs of financial crime. A well-structured approach to corporate governance delivers sustainable values and prioritises responsibilities towards the shareholders, which often go beyond the financial goals.

Trade finance presents a mixed picture – on the one hand, Polish export and import have both rebounded dramatically in the past 12 months, and yet there are clouds on the horizon – disrupted supply chains, lower consumer confidence and geo-political uncertainty. What are you seeing in the market? Polish export of goods to the UK has just had a record quarter and record half-year – is this likely to continue?

Poland is one of the key exporters in Europe. Despite the disruptions caused by the recent geopolitical events, Polish export remains at its highest level and is constantly growing. This is due mainly to the country’s central position within Europe in terms of its geography and the huge export potential of Polish entrepreneurs. Disruptions in supply chains and the challenges faced by some Asian suppliers due to the pandemic may have a positive effect on Polish export, as importers from the EU will search for suppliers nearby to replace those from more distant locations. Polish producers of goods with high export competitiveness and characterised by strong differentiation in terms of technical sophistication may also try to increase their presence on markets outside Europe. Polish export has already shown resilience, and therefore I believe that the positive growth trend should continue. HSBC in Poland is actively supporting its clients in their export activities and business operations abroad. We believe that Polish companies have a lot of potential in terms of international expansion, and we constantly expand our offer with tailored financial products aimed at supporting our clients’ global growth.  

Suneeta Shetty, head of HSBC Service Delivery (Polska) Sp. z o.o.,  kindly agreed to answer the question below.

HSBC Service Delivery (Polska) – the bank's shared-services centre in Kraków – has grown tremendously since it was opened in 2010. It now supports HSBC in 27 countries, in 11 languages, and rolls out ever-more sophisticated services. Two questions – how were operations affected by the pandemic, and what plans are there for further expansion?
 

Covid-19 impacted the HSBC centre in Krakow, and the entire HSBC Group, like other businesses worldwide. The working model has changed dramatically during the pandemic. Within a few days of the first lockdown, we asked almost the entire team at the centre to work from home. The change required a redefinition of some processes which our colleagues could adapt to remote working requirements, thanks to the specific nature of the centre's operations where 99% of processes are digitised.
 
We are currently working in a hybrid model, a natural consequence of changes in procedures and the approach to business risk. The hybrid model, in which employees decide how much and when they work from the office, continues to give employees the flexibility they have become used to over the past two years. It also brings some challenges in office space management, ensuring the appropriate IT infrastructure and implementing modern, ‘virtual’ team management methodologies. It is not an easy process, but like any change, it drives development.
 
The hybrid work model seems to be the most appropriate now, both for the employee and the bank – it is a compromise between the flexibility desired by employees and the need to guarantee the stability of banking processes and the appropriate level of security for our clients.

HSBC centre in Krakow is constantly growing and expanding our scope. We have far-reaching plans for the centre's development in the coming years. The relations with our business partners and the trust we have earned in the last 12 years of the centre's operation are crucial here. The centre’s excellent reputation within the HSBC Group allows the team to develop more advanced competencies. We are a fully-fledged partner supporting the bank's operations and transformation strategy globally in improving and optimising numerous banking processes.
 
Our business partners are changing their operating models to reflect the growing role of Krakow, because this is where they want to locate their processes. The availability of the desired competencies on the market, where more and more attention is paid to technical, analytical and highly professional skills, also supports our competitive position. At the same time, our activities are closely related to supporting the implementation of the HSBC Group's strategy, which underlines a key focus on implementing sustainable development goals.
 
Looking ahead, we are investing in data management and implementing new technologies to improve existing processes. We also make every effort to ensure that the centre in Krakow is the employer of choice. The Great Place to Work certification and also a place among the 300 best employers in Poland according to Forbes confirms that this is the right direction.

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