Use of Technology by HSBC Holdings in CSR Efforts - Assignment Example

Use of technology by HSBC Holdings in CSR efforts Table of Contents Executive summary……………………………………………………….… Page 3 Introduction……………………………………………………………………Page 4 HSBC and CSR model of Equator Principles…………………………………Pages 5- 6 Technology and CSR………………………………………………………….Pages 7-8 One HSBC…………………………………………………………….Pages 7-8 first direct mobile banking for iPhone……………………………… Page 8 Use of technology for social development……………………………………Pages 8-9 Use of technology for environmental promotion……………………………..Pages 9-12 Wind energy development……………………………………………Page 10 Partnerships for Renewables…………………………………………Page 11 Solar technology in Malta……………………………………………Page 11 Duel fuel cars in Brazil………………………………………………Page 12 Use of technology for improving CSR efforts………………………………Pages 12-14 Promoting tele-presence & video-conferencing……………………..Pages 12-13 Project paper…………………………………………………………Page 13 Data collection……………………………………………………….Page 13 Donating through ATMs……………………………………………..Page 13-14 Recommendations……………………………………………………………Pages 14-15 Conclusion……………………………………………………………………Page 15-16 Reference……………………………………………………………………..Page 16-17 Executive Summary The report aims to highlight on the use of technology by HSBC Holdings in its corporate social responsibility (CSR) efforts. The HSBC Group has been known worldwide for its various social and developmental works. The Group spends millions of dollars each year in its various developmental programs. Further, the financial organisation being a forerunner in providing technologically advanced services to its customers, has leveraged similar technology or invested into newer technologies to promote its CSR activities as well. The report would focus on the various ongoing and completed CSR projects, wherein the organisation implemented various technologies. It would also analyse the efficacy of these technologies in furthering the CSR projects. However, in order to understand these projects, I would first and foremost provide an overview on the HSBC Group and discuss its CSR model of Equator Principles. Thereafter, the report would analyse various CSR projects undertaken by HSBC wherein it leveraged its technological know-how or promoted the use of advanced technology. This section would also critically analyse the impact of the projects. Further, the report would also provide comprehensive recommendations based on the critical analysis of the various CSR projects undertaken by HSBC. Introduction The HSBC Group, established in 1865, is named after the Hongkong and Shanghai Banking Corporation Limited – the founding member – to facilitate trade between Europe & China. Headquartered in London’s Canary Wharf and with more than 8,000 offices in 88 countries, it is one of the biggest financial services and banking organisations in the world. It has branches in Asia-Pacific, the Middle East, the American continent, Africa and Europe. HSBC provides financial services through its personal financial services, commercial banking, global banking & markets and private banking offerings. It is listed in all the major stock exchanges in the world namely, New York, London, Paris, Hong Kong and Bermuda. The organisation boosts of more than 220,000 shareholders (About HSBC 2010). In the fiscal year ending December 2009, HSBC earned revenue of around US$ 2430 million. It employed around 325,000 people by 2008. The company is headed by Mr. Stephen K. Green, Group Chairman. Mr. Michael F. Geoghegan is the CEO and Director and Chairman, Hongkong and Shanghai Banking, while Mr. Douglas J. Flint is the CFO, Executive Director Risk and Regulation and Chairman of HSBC (Source: Yahoo Finance). The organisation provides comprehensive financial services through an international system that is being connected through highly developed technology such as e-commerce. HSBC and CSR model of Equator Principles (HSBC implements the Equator Principles as their CSR theory, as suggested by its webpage http://www.hsbc.com/1/2/sustainability/sustainable-finance/equator-principles. Please specify any other theory that you might want to incorporate) HSBC believes in the need to value environmental limits and invest in the progress of the community, provide value to all its stakeholders, environment as well as society, and diminish risks associated with globalisation and climate change. In order to set its standards for providing financing to its environmentally and socially responsible projects, the organisation implemented the corporate social responsibility (CSR) theory of Equator Principles. HSBC introduced this principle in the year 2007 and since have been providing financial aid based on this theory. Presently, the organisation is preparing to set up governance regulations for this principle (Equator Principles 2010). The organisation executes this theory in majority of its transactions. These transactions are divided into the following three categories: Category A: These are diverse projects which may have considerable negative impact on the environment or society. Category B: These are mostly local projects that may have limited negative impact on the environment or society. Category C: These are projects that do not have much environmental or social impact. It has been seen that the organisation has mostly devoted its fund towards the Category A and Category B projects. However, the organisation also believes in fulfilling its corporate social responsibilities through various technological development and innovation (Equator Principles 2010). Some of its recently completed CSR projects (2008 HSBC Holdings plc Sustainability Report) that involved using technology are as follows: Key CSR projects & progress Project Progress Comments Installation of solar photovoltaic panels on the roof of HSBC’s headquarter Completed By May 2008, solar photovoltaic panels of around 617 square metres were installed Implementation of new desk- and room-based video conferencing equipments Completed Increased use of group-wide video-conferencing and tele-presence, which decreased the use of paper-based communication Group-wide video-conferencing usage was 78,512 hours in 2008 Installation of Power-down software to enable around 300,000 computers to be switched off automatically by the end of the day Completed HSBC helped in reducing 4,950,000 kwh and saving 1,915 tonnes of CO2 emissions Launch of credit card with green rewards (HSBC Unveils Green Credit Card 2008) Completed Enable customers who spend around US$ 3,000 through HSBC’s ecosmart MasterCard to redeem points by giving charitable donations. These donations would be given to organisations involved in the HSBC Climate Partnership Technology and CSR HSBC has been involved in more than 10,000 CSR initiatives globally and provides various community initiatives to encourage development. However, it has also been a keen user of technology not only in its day-to-day activities but even in promoting various CSR projects. The organisation believes in investing in new Internet-based technology as well as communication technology to benefit its stakeholders. It is a big promoter of e-commerce to provide Internet banking to its customers. This has not only helped HSBC to cut its operational costs, but has also helped in achieving their aim to save paper and the environment (Footprint management 2010). Some of the recently introduced programmes by HSBC to promote Internet banking are as follows: One HSBC One HSBC is a four-year long program integrated in 2008 globally. The main aim of the program is to develop technology for making banking processes easier for customers. This program not only helped in providing round-the-clock services to the customers but also helped HSBC to promote its project, Paperknife, that aims to decrease the use of paper while opening an account and providing other services. Further, the use of online communication also improved customer satisfaction and decreased the dependability on natural resources. The service has been immensely popular as Internet banking is used by around 23 million personal finance customers and around 1 million commercial customers of HSBC (Footprint management 2010). However, this program also has its share of problems. Although, Internet penetration through out the world has increased manifold, the penetration is still very low in many countries such as India, various African and Latin American countries. Therefore, the success of the program solely depends on the Internet connectivity and the speed of the connection. Thus, the program was majorly successful in the developed countries such as the US and the UK. – disadvantage of this particular program first direct mobile banking for iPhone HSBC has recently developed a mobile banking application for the latest mobile sensations Apple iPhone called first direct. This application allows customers to access their balance, make payments and apply for new products. Further it permits customers to add first direct icon on iPhone or iPod Touch home screen. In the first year of its integration, i.e. in 2008, the application has seen a huge growth of around 600 per cent in users. It can also be integrated with G1 mobile phone of Google. The application just like the HSBC One program helped in providing not only seamless services to the customer but also in saving natural resources like paper (first direct's venture into iPhone 2009). However, the application is available only to iPhone and iPod Touch users. This has restricted the application’s reach to other cell phone users and therefore, the impact of the technology could only be felt in countries such as the US and the UK, which have a considerable amount of iPhone users. Again, such a technology is not able to create any major stir among Asian, Latin American and African countries. – disadvantage of this particular program Use of technology for social development HSBC aims to encourage social and economic growth by implementing various community investment activities. Most of these community investments are focused on two major areas-education and environmental development. In fact, the organisation spends as much as 75 per cent of its total community investment donations in these two areas. It spent around US$ 102.4 million in various community development programs in 2008 (Investing in communities 2010). The organisation provides educational support to disadvantaged children. It also promotes business and financial literacy among youth as well as environmental education in various parts of the world. Some of its noteworthy educational projects are Future First and JA More than Money. However, the use of technology is very minimal in these programs. At most, some multimedia applications such as television and computer are used in these programs (Investing in communities 2010). – disadvantage of this particular program HSBC has an advantage of technology know-how for tele-presence and video-conferencing. It should leverage these technologies to further promote these programs. With the use of tele-conferencing, students can ask questions to experts sitting in various parts of the world. Further, tele-presence would help various student groups to link with each other on a real time basis to discuss various issues. The educational programs launched by HSBC are unique but its reach and impact has not been far-reaching due to the lack of use of advanced technology. Use of technology for environmental promotion HSBC invests around 33 per cent of its total community investment donations in environment. Environmental promotion and protection is also its biggest segment for technology implementation. In fact, HSBC has decided to reduce its energy use by 8 per cent, CO2 emissions by 6 per cent, water use by 11 per cent and waste by 10 per cent by 2011. For achieving this, it launched the Global Environmental Efficiency Programme, which aimed to introduce environmental innovation technologies in its offices globally. It plans to invest US$ 90 million during 2007-11 that will help in promoting technology-based and innovative initiatives to save the environment. The organisation has already invested more than US$ 60 million so far (Community Investment at HSBC 2009). It installed solar panels in Mexico, Brazil, Malta, the UK, the US, Hong Kong and Argentina in 2008. However, majority of its environmental promotional programs are focused on investing into clean technology and renewable energy innovations. Some of these projects include: Wind energy development Wind energy is considered to be the most feasible source of renewable energy in the UK. Therefore, HSBC has been financing various wind energy projects in the UK such as the Paul’s Hill wind farm. The project, financed by HSBC, provides electricity to 115,000 homes annually. These projects are financed by HSBC under its carbon finance strategy, which aims to help companies to create low carbon technologies (Winds of change 2010). Although, HSBC is helping in promoting low carbon economy through financing wind energy projects, it remains to be seen how feasible these project would be. As investing into renewable energy is very expensive, HSBC might have to wait for a longer period to get any returns on their investments. Further, such renewable projects are often not profitable and might just turn into a community service. – disadvantage of this particular program Partnerships for Renewables Further, the organisation is also partnering with the UK government for its Partnerships for Renewables (PfR) program to develop 500 megawatt renewable projects across the country. Through its 49 per cent stake of PfR, the HSBC Environmental Infrastructure Fund will provide funds to the tune of US$ 49 million to develop various renewable energy projects. It also hopes to generate electricity for around 230,000 homes (Working with government 2010). With the company acquiring stake in the project, the risks associated with the project has also become high for HSBC. Also, because the project is a public-private initiative, HSBC needs to constantly partner with the UK government for the progress of the project. This might hamper the progress due to the usual bureaucratic regulations. – disadvantage of this particular program Solar technology in Malta HSBC is conducting trial for a photo voltaic system in Malta. It would be the first such system to be linked with electricity grid in the country. The system has in fact generated 747 kilowatt hours (kwh) of green electricity in first two months of its trial itself. Further, it saved CO2 emissions of 3.7 tonnes annually. The organisation has also partnered with the University of Malta to measure the performance of the system by collecting the data and monitoring the weather conditions (Solar technology in Malta 2010) Although, it is a ground breaking technological advancement for a small country like Malta, HSBC might face problems to maintain and rely on the infrastructure of Malta. Also, the success of the project is considerably dependent on the local government to provide security and other services. – disadvantage of this particular program Duel fuel cars in Brazil In order to provide support to Brazil’s policy to transfer to low carbon economy, HSBC has changed its petrol cars to duel fuel cars in the country. Around 85 per cent of its petrol cars have been changed to duel fuel cars by the end of 2008. These cars have the capability to use gasoline and ethanol separately or even together. HSBC predicts that duel fuel cars will help it in cutting carbon dioxide emissions by around 50 per cent (Dual Fuel Cars in Brazil 2010). Although being a novel project, the success of this project is solely dependent on the availability of ethanol fuel at major gas stations. Simply switching to duel fuel cars would not help, HSBC would also have to ensure that the cars are actually running on alternative fuel rather than petrol. HSBC can achieve this by financing gas stations supplying ethanol fuel. – disadvantage of this particular program Use of technology for improving CSR efforts HSBC believes in using technology to improve its CSR efforts as well. It actively uses technology in the following CSR efforts: Promoting tele-presence & video-conferencing In order to reduce its carbon footprints and emissions from business travel, HSBC has actively promoted the use of tele-presence and video conferencing. This helped in reducing the business air travel of the executives. It saved the company not only money required to finance these tours but also helped in contributing towards reducing carbon dioxide emission. In fact, HSBC was able to reduce 10 per cent carbon dioxide per FTE from business air travel in 2009 (Community Investment at HSBC 2009). Project paper To reduce paper use in its offices globally, HSBC issued a paper purchasing policy in 2009. It further incorporated year-on-year paper usage reduction targets from 2010 onwards. However, HSBC should also look at incorporating this policy with promoting Internet banking (Community Investment at HSBC 2009) Data collection HSBC collects its water, waste, energy and carbon dioxide emissions data from 37 countries using a group-wide online system. This ensures reducing paper usage and storage problems. Further, data analysis could also be done faster and in real-time through such an online system (Community Investment at HSBC 2009). However, HSBC needs to have a good virus protection and anti-hacking system installed to protect the data. Donating through ATMs HSBC helped customers to donate through ATMs and online banking in Mexico and the UK. These donations were used to help regional social organisations working for children and aged. In Mexico, around US$8.7 million were collected by December 2008, while in the UK, over £250,000 were raised between 2006 and 2008 (Community Investment at HSBC 2009). However, HSBC should also think about providing details about the donation to the donors. They should be made aware about how their money was donated and to which organisation. This would help in creating trust among the donors and they may donate more money for other causes. – disadvantage of this particular program Recommendations – this entire section is a critical analysis of the various programmes of HSBC HSBC spends around 43 per cent of its total community investment donations in education (Investing in communities 2010). However, it is still imparting education through traditional classroom methods. It can leverage its video conferencing and tele-presence technologies to provide advanced educational support to disadvantaged children. These technologies would also help the students in getting across experts across the world to solve their queries. Further, they can even get in touch with other student groups to discuss various issues. Leveraging their already existing technologies would not just ensure a better coverage for their educational programs but would also mean saving money on the development of the program. It can also leverage its communications technology advancement to provide instant CSR related information to the media and its stakeholders. This would also help the company in increasing its brand equity and therefore the stock prices as well. Further, such a technology would help NGOs and other social organisations to track progress of the projects at real time. In case of any problem, these organisations can offer instant help and solution. HSBC may also facilitate two-way communication between social organisations, stakeholders, consumers and the company through blogs, social networking sites etc. Social networking has been overpowering even the mainstream media. Therefore, HSBC should also invest in providing a platform wherein the customers are also able to offer suggestions or opinions about their CSR activities. This would help in gauging the success of the program from the ground level. HSBC should also focus on investing into various infrastructural development projects as well. This will ensure the success of all its projects. For instance, merely investing into duel fuel cars is not sufficient; the organisation should also ensure that the cars regularly receive alternative fuels. Thus, it should also promote setting up of alternative fuel stations by investing into them. The organisation also needs to provide transparency in all its CSR programs, and especially those that involves contributions from the customers. Most customers after giving donations would also like to track where the money went and how that particular project progressed. HSBC should provide a transparent review of such projects. It can also leverage its Internet banking facility and allow customers to track their donations through their Internet banking id. Conclusion HSBC has a strong CSR model and is increasingly developing it by leveraging various technological advancements such as e-commerce, Internet banking, tele-presence and video conferencing. In the past few years, the organisation has also been able to considerably reduce its carbon footprints and emissions. In fact, HSBC was able to reduce 10 per cent carbon dioxide per FTE from business air travel in 2009 by promoting video conferencing and tele-presence technologies in its offices world wide. It has also promoted the development of various renewable energy projects and technological innovations in this sector. Further, the organsiation has been able to integrate the society in its CSR efforts through the use of technology. References: 2008 HSBC Holdings plc Sustainability Report 2008, HSBC Global site, viewed 2 March 2010, . About HSBC 2010, HSBC Global site, viewed on 2 March 2010, . Community Investment at HSBC 2009, HSBC Global site, viewed 2 March 2010, . Dual Fuel Cars in Brazil 2010, HSBC Global site, viewed 2 March 2010, . Equator Principles 2010, HSBC Global site, viewed 2 March 2010, < http://www.hsbc.com/1/2/sustainability/sustainable-finance/equator-principles>. first direct's venture into iPhone technology pays off 20 February 2009, first direct, viewed 2 March 2010, . Footprint management 2010, HSBC Global site, viewed 2 March 2010, . HSBC Holdings plc Company Profile 2010, Yahoo! Finance, viewed 2 March 2010, . HSBC Unveils Green Credit Card 29 May 2008, Environmental Leader, viewed 2 March 2010, . Investing in communities 2010, HSBC Global site, viewed 2 March 2010, < http://www.hsbc.com/1/2/sustainability/investing-in-communities>. Our Approach 2010, HSBC Global site, viewed 2 March 2010, . Solar technology in Malta 2010, HSBC Global site, viewed 2 March 2010, . Winds of change, Paul's Hill, Scotland 2010, HSBC Global site, viewed 2 March 2010, . Working with government 2010, HSBC Global site, viewed 2 March 2010, . Read More