Focus on sustainability sparks innovation

The Hong Kong and Shanghai Banking Corporation (HSBC) has set a goal to provide between $750 billion and $1 trillion in financing and investment globally in the next decade to support its clients to lower carbon emissions and achieve sustainable growth.

"HSBC is going to provide its clients the access to the fund to encourage them to turn their production facilities green in order to guide them towards net zero emission," said Amanda Murphy, head of commercial banking of the bank for South and Southeast Asia.

In recent years, the London-headquartered but Asia-focused lender has stepped up its green lending in Bangladesh as well.

HSBC Bangladesh has structured tailored sustainable finance solutions of more than $300 million in the last two years. It also introduced the first-ever sustainability linked loan, which is connected to environmental, social and governance performance targets, for Square Group in 2020.

"We will continue to assist clients to achieve their sustainability goals. As part of that commitment, HSBC Bangladesh has taken the leading position in Bangladesh to drive sustainable financing," Murphy said in an interview with The Daily Star in Dhaka.

"We also believe, as a global bank, it is our duty to take a pole position in terms of tackling the climate challenge."

Murphy was in the capital last month to celebrate the silver jubilee of the international bank in the country.

The British multinational lender opened its first office in Dhaka in 1996.

Today, it accounts for 10.5 per cent of the market share in trade financing and facilitation as it offers a full range of banking services to customers through wholesale banking and wealth and personal banking. 

HSBC has a presence in all of the eight export processing zones to facilitate international trade.

During her stay, Murphy visited several factories financed by HSBC, one of the world's largest banking and financial services organisations.

"One of the things that really impresses me so much for Bangladesh's customers is that all of them are talking about their commitment to climate change. They are talking about their commitment to social goals," she said.

This was her third visit to the country.

She joined HSBC in 1994 and now oversees 13 markets, including Australia, Bangladesh, India, Indonesia, Malaysia, New Zealand and Singapore.

Murphy said there have been many changes in Bangladesh in the last 10 years.

"Leading factories are being built here. They are committed to sustainable principles and are working closely to be internationally recognised."

She thinks making factories green would benefit entrepreneurs.

Big buyers in the US and Europe want to source goods from the factories that have the right certified standards.

"So, we are seeing that shift," she said.

"Years ago, we did not necessarily have an understanding perhaps. Now all the western companies, the big buyers have expectations of what they want to see in the labour conditions."

The top official of HSBC shared the bank's focus on digitalisation.

"Technology is important for speed, price and convenience for customers. It is very important to us. Change is all around and it is getting faster and faster."

"And, we strongly believe that future is a combination of having very good technology and really great people," she said, adding that the partnership between technology and people makes difference for customers.

Speaking about the readiness of customers, Murphy says many customers were not ready to use automated teller machines during the initial days.

"Sometimes, it is push and pull."

"You need to build the technology. You need to help companies understand how it brings value to their business. You need to make it easy to use."

"You also need to give customers a reason to use it. That reason might be price and might be easier and secure for their companies."

HSBC has introduced a trade transaction tracker in Bangladesh, enabling businesses to track the whereabouts of goods.

The bank, which has fully automated 96 per cent of its payments, has digitalised Unilever Bangladesh's supply chain finance, making doing business easier for customers as well as suppliers.

Murphy says supply chains account for 80 per cent of the planet's carbon emissions, so developing a sustainable production network is one of the most important levers for banks and businesses on the net-zero transition.

"HSBC wants to encourage companies throughout the supply chain to focus on sustainability, as we have seen how this sparks innovation and generates value."

HSBC has kept investing in digitalising trade to support its clients with faster, safer and easier transactions.

"We would like to play the leading role in the digital transformation that the country's financial services are experiencing."

Murphy is upbeat about Bangladesh's economic advancement and calls the country a very important market for the bank.

"We know there is a fast-growing, stable market, and there is an abundance of entrepreneurial spirit. Those entrepreneurs are some of the biggest established names but there are also a number of smaller companies coming up. They will be the big names tomorrow."

"I think it is a good place to do business."

Bangladesh's large population, now nearly 17 crore, and the growing purchasing power are making the country attractive to international companies.

As the local economy continues to grow, the bank anticipates an increased international movement of people in and out of Bangladesh, where payments processing are becoming more digitalised, more wealth is being created, and domestic consumption is growing.

"Bangladesh is becoming increasingly integrated into the global economy as import, export and remittances increase. I think that's a good sign for Bangladesh," said Murphy.

The multinational bank looks to continue financing sectors such as infrastructure, construction, consumer electronics, e-commerce, IT, and digital.

Consumer goods and consumer durables are expected to become more prominent as the middle class expands. And Murphy describes the change in healthcare as interesting.

"As people have a little more money in their pocket, they can afford healthcare. I don't think we can underestimate e-commerce and technology. Digital will become even more part of our life."

HSBC supported the launch of Bangladesh's first communications satellite, Bangabandhu Satellite-1, in 2018. The following year, it financed Bangladesh's largest urea fertiliser manufacturing plant.

In the aftermath of business losses caused by the coronavirus pandemic, the bank provided a 90-day extension of import liability for delays in shipments.

It extended short-term loans to help clients pay wages and overheads, particularly for the clients in the textile and apparel sector, during the period.

Since her first visit to Dhaka nearly a decade ago, banks in Bangladesh have improved significantly, Murphy says.

"The regulations have improved. The understanding of how to regulate the financial sector has improved."

"We all understand banks have a role to play, in partnership with the government and the private sector, to help bring prosperity. That is why I think the longevity of a bank in a country is important."