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The Value of Our Sustainability

2009 Sustainability Report HSBC Latin America

HSBC Latin AmericaCorporate SustainabilityAv. Paseo de la Reforma 347 Mexico City, 06500

The Hexagon

The Group HSBC hexagonal symbol was introduced as part of its corporate identity in 1983. The basis for the hexagon

was the flag of the Scottish Navy, which, together with other groups, founded the Hong Kong and Shanghai Banking Cor-

poration in 1865. The symbol consists of a rectangle divided diagonally to form the shape of a red hourglass on a white

background. The original design was inspired by the cross of St. Andrew, the patron saint of Scotland. Two red triangles

were subsequently added at each end to form the current HSBC symbol.

HSBC serves approximately 100,000,000 individual and commercial clients worldwide. Around 300,000 people work at HSBC at 8,000 offices in 88 countries and territories.

HSBC started in 1865 as The Hong Kong and Shanghai Banking Corporation, with offices in Hong Kong and Shanghai. Its current headquarters are in London and it does business throughout Europe, Asia Pacific, North America, Latin America and the Middle East.

HSBC has voluntarily agreed to abide by a number of external codes of conduct, some of which are listed here:• UNGlobalCompact• UNUniversalDeclarationonHumanRights• UNEnvironmentalProgrammeFinanceIniciative• EquatorPrinciples• TheClimatePrinciples

HSBC CEO’s IN LATIN AMERICA

ARGENTINAAntonio M. Losada

BRAZILConrado Engel

CHILEGustavo Costa

COSTA RICAFrancisco Coccaro

COLOMBIAHans Theikul

EL SALVADORGerardo Siman

GUATEMALAPaul Stickland

HONDURASJonathan P. Hartley

MEXICOLuis Peña

NICARAGUAClaudia de la Ossa

PANAMAErnesto Fernades

PARAGUAYDiego Ramallo

PERULuiz Felipe Mauger

URUGUAYVirginia Suárez

VENEZUELACarlos F. Solorzano

INDEX

About the Corporate Sustainability Report 1

Letter from the HSBC Group Managing Director and CEO for LAM

and the Caribbean 2

Letter from the Regional Head of Corporate Sustainability

in Latin America 4

HSBC LAM in summary 6

Vision and Mission 12

Corporate Governance 16

Stakeholders 20

Our Economic Value 24

Our Environmental Value 28

Our Social Value 36

HSBC Latin America in Figures 48

Awards and Acknowledgments 49

GRI Index 50

Contact:

María Eugenia Brizuela de Ávila

Regional Head of Corporate Sustainability

in Latin America

Centro Financiero HSBC

Avenida Olímpica No. 3550

San Salvador, El Salvador

Telephone: (503) 2214-2722

Facsimile: (503) 2214-2751

Email: [email protected]

A pdf version of this report is available at

www.hsbc.com/sustainability

© Copyright HSBC Holdings plc 2010

All rights reserved

No part of this publication may be

reproduced, stored in a retrieval

system, or transmitted, in any form or

by any means, electronic, mechanical,

photocopying, recording, or otherwise,

without the prior written permission of

HSBC Holdings plc.

Published by Group Corporate

Sustainability, HSBC Holdings plc, London

2.1, 3.12 3.4

ABOUT THE CORPORATE SUSTAINABILITY REPORT 1

About the Corporate Sustainability Report

2.4, 2.9, 3.1, 3.2, 3.3, 3.5, 3.6, 3.7, 3.8

Aware of the importance of keeping key stakeholders systematically informed of progress and the challenges it faces from year-to-year, HSBC in Latin America is commit-ted to periodically publishing matters related to Corporate Sustainability in the Latin American Region (HSBC LAM). Its first Report on Corporate Responsibility was issued on the 2009 period, based on the guidelines of the Global Reporting Initiative (GRI), and on the guidelines of HSBC Holdings plc and the strategies of the LAM Region.

According to its self-evaluation, the HSBC LAM Corporate Sustainability Report is rated at the C level of application of the GRI principles.

This report shows HSBC LAM performance with respect to Corporate Sustainability policies, actions and results in 2009. In certain aspects, prior years’ data are included in order to provide for better analysis and full appreciation of the progress achieved in the Group’s economic, social and environmental areas. In this first year of the report, we are building the baseline for performance indicators in the LAM region and opening up regional channels of com-munication with our key stakeholders.

The contents of this document are based on an all-inclu-sive feedback process from the countries of Latin America where HSBC operates, which identifies relevant topics pertaining to economic, environmental and social aspects, as well as the expectations of stakeholders related to the Group. The foregoing included an analysis of internal and external materiality which comprised a strategic review of HSBC worldwide, as well as pertinent topics for each country in Latin America and matters pertaining to the sector on a global basis.

The information provided in this report consists of infor-mation on the principal HSBC operations in Latin America corresponding to HSBC México S.A. (HSBC México), Ban-co HSBC Brasil S.A. Banco Múltiplo (HSBC Banco Brasil), HSBC Bank Argentina S.A.(Banco Argentina) and HSBC Banco Panamá S.A.

It also includes information on Banco HSBC Panamá with its subsidiaries in Costa Rica, Honduras, Colombia, El Sal-vador and Nicaragua, as well as HSBC representations in Chile, Guatemala, Peru, Paraguay, Uruguay and Venezuela.

A representation office was opened in Guatemala in the last quarter of 2009, which is why few topics concerning that location had been dealt with here.

It should be pointed out that HSBC LAM also has opera-tions in the British Virgin Islands, the Bahamas, and the Cayman Islands, although no information on those offices is contained herein.

In the specific case of the HSBC LAM Sustainability Re-port, information and indicators were included for all the affiliates in the region. For the section on “Our Environ-mental Values”, information and data for HSBC’s Group-wide environmental reporting system was used, while information reported in the “HSBC Holdings plc 2009 Sus-tainability Report” was used for certain indicators. Unless otherwise indicated, all the information contained herein has been taken from consolidated information for the 15 LAM countries.

In certain sections, the scope of the information can vary from the scope specified above, as specified on a case-by-case basis.

Letter from the HSBC Group Managing Director and CEO for LAM and the Caribbean

THE VALUE OF OUR SUSTAINABILITY 2009 Sustainability Report HSBC Latin America2

LETTER FROM THE HSBC GROUP MANAGING DIRECTOR AND CEO FOR LAM AND THE CARIBBEAN 3

The HSBC sustainability strategy is based on maintaining long-term relationships with clients and suppliers, on sustai-nable management based on highly committed employees, on generating profits for our shareholders and on steady support for the development of the communities in which we operate. We thus seek to exert a positive influence on social and environmental matters by creating new business opportunities for our clients and suppliers and keeping our environmental impact to a minimum. Our strategy has evol-ved over time, and in order for it to be a really sustainable business, we must all be involved. This first HSBC 2009 Sustainability Report for Latin America and the Caribbean (LAM) will strengthen communications with the main stake-holders, our clients, the communities in which we operate, the government, our employees, and shareholders.

The financial sector has played a fundamental role in social and economic development by providing financing to com-panies and individuals. Likewise, it has created many jobs, provided returns to its investors and cooperated with the government by paying taxes.

At HSBC, we firmly believe in maintaining our long-term profitable business model in order to contribute directly through the economic performance of our stakeholders and through our constant commitment to the communi-ties in which we do business.

The strength of HSBC’s capital base, its incomparable glo-bal network and the positioning of our brand are a clear competitive advantage in current economic conditions, and allow us to exert a positive influence in different areas at different levels.

The recent financial crisis poses challenges concerning the sustainability of the Group. It has brought with it unfo-reseen events around the world and throughout the region which have had the effect of stunting growth. This crisis presents opportunities, particularly as concerns devising standards and regulations to strengthen our sector and to provide guidelines for operating under a more sustainable business model. That gives rise to the need to create new financial products and finance new technologies and new ways of generating energy allowing for low-carbon eco-nomic growth. At HSBC, we strive to develop sustainable products and initiatives in a challenging economic environ-ment that will generate benefits for all our stakeholders.

The programs and initiatives developed by us are based on clear principles, values and attitudes for managing our relationship with the environment, our communities, the government, our shareholders and our clients. At HSBC, we have a very active community investment program, developed on the premise that what is good for the com-munity is good for HSBC. The participation of our team is critical for the long-term success of HSBC and its profes-sional and volunteer work can help to make a real differen-ce in the community.

In the 15 countries of LAM in which HSBC is present, we have a wide array of programs and initiatives for commu-nity support and investment, focused mainly on education and the environment. Our goal is to stimulate economic growth through community investment activities and im-prove education and the environment in less privileged communities, with a view to boosting social opportunities and economic growth.

HSBC seeks to ensure that its actions are affirmative with respect to financial, environmental and social resources within our operations in LAM. Our business platform pro-motes the rational use of resources within the organiza-tion, which sets an example for our employees, our clients and the communities in which we work.

Lastly, we at HSBC will continue to provide support to our clients in order for them to strengthen their capital in La-tin America and the world, by assisting them with their investment projects and increasing the supply of HSBC products and services, backed by an experienced team of professionals with the right financial tools to expand the horizon of their local and international businesses.

We celebrate and proudly present our first Corporate Sus-tainability Report for Latin America.

Emilson AlonsoHSBC GROUP MANAGING DIRECTOR AND CEO FOR LAM AND THE CARIBBEAN

HSBC seeks to ensure that its actions are affirmative with respect to financial, environmental and social resources within our operations in LAM.

1.1, 1.2

Letter from the Regional Head of Corporate Sustainability in Latin America


LETTER FROM THE REGIONAL HEAD OF CORPORATE SUSTAINABILITY IN LATIN AMERICA 5

It is my pleasure to present the first HSBC 2009 Corporate Sustainability Report for Latin America (LAM), which is part of our Corporate Sustainability strategy for the region. This report is intended to provide our regional, national and local stakeholders with an overview of all our actions in the region in a transparent and responsible manner.

At HSBC, we have established and implemented tangible and concrete actions in support of our Corporate Sustain-ability strategy, which go from our commitment in rela-tions with clients, suppliers and the communities in which we do business, to the transparency of our agreements and the rendering of value-generating services. Through this report, you will be witness to the link between our strategy and our performance.

We at HSBC are firmly committed to being good corporate citizens by offering financial products, which aside from en-couraging the social and environmental development of our communities, stimulate the economic development of our cli-ents by boosting their growth. We firmly believe that our oper-ations throughout Latin America can exert a positive influence by promoting commercial relations with clients, investors, the government and our shareholders and contributing to the eco-nomic growth and social development of those countries and improving the standard of living of its inhabitants.

Our community investment initiatives in the region are mainly focused on education, the environment and the community.

Our educational efforts are focused on assisting children and young people by implementing different projects, one of the most important of which involves providing courses and workshops on finances, with HSBC volunteers playing crucial roles. The intention of those workshops is to make participants aware of the basic concepts of proper money management, in an effort to contribute to a stronger and more stable and responsible financial future.

Educational programs implemented in the region depend on specific local needs. Those programs are in line with HSBC global education programs, which include: Future First (assistance for special-needs and at-risk children), JA More than MoneyTM (financial education at primary schools), HSBC Eco-schools Climate Initiative (environ-mental education) and SIFE (community programs con-ducted by university students).

As concerns the environment, we began with initiatives focused on reducing the environmental impact of our own operations. As from 2004, Group-wide goals were set for re-ducing the consumption of water and energy, as well as the generation of waste and carbon dioxide emissions by 2011.

One of our environmental initiatives has been to make our people aware of the possible effects of climate change on our clients, employees and suppliers and on the most vul-nerable communities. That is the basis for establishing the global program known as “HSBC Climate Partnership”, on which we are working jointly with four international organi-zations over a five-year period cleaning up rivers, protecting biodiversity and conducting research to generate information that can be used to deal with climate change. The Climate Confidence Monitor established by this initiative in 2006 has allowed us to understand the attitudes of consumers and our clients throughout the world as concerns climate change and has set the stage for steps we can take in that regard.

The success of our education and environmental projects is the result of our colleagues becoming involved as active volunteers, which provides the opportunity to determine the needs of the different communities, make other col-leagues aware of these matters and share enriching expe-riences. At HSBC, volunteering is a fundamental pillar of our investment in the community.

Lastly, the HSBC sustainability strategy for Latin America is focused on providing services and products that make an economic, social and environmental contribution to the region and that foster the overall development of our cli-ents, employees, suppliers and investors, as well as that of the communities in which we operate.

I cannot close without first commending the efforts of the Corporate Sustainability team in the region and express-ing my gratitude for the confidence shown in us. I know that together we will continue striving to ensure that our work will lead to a better future for our entire region.

María Eugenia Brizuela de ÁvilaREGIONAL HEAD OF CORPORATE SUSTAINABILITY IN LATIN AMERICA

We at HSBC are firmly committed to being good corporate citizens by offering financial products, which aside from encouraging the social and environmental development of our communities, stimulate the economic development of our clients by boosting their growth.

1.1, 1.2

HSBC LAM in Summary


HSBC LAM IN SUMMARY 7

HSBC Latin America Holdings (UK) Ltd (HSBC LAM) is a 99.9% subsidiary of Hong Kong & Shanghai Banking Corpo-ration -HSBC Holdings plc- headquartered in London.

HSBC Holdings plc serves more than 100 million clients around the world and owns approximately 8,000 properties in 88 countries and territories in Europe, the Asia-Pacific re-gion, the Americas, the Middle East and Africa.

HSBC was established as a uniform, international name in 1999, as a result of which, the HSBC Group corporate sym-bol became more and more familiar around the globe. In 2002, HSBC launched the following catch-phrase to streng-then its name: “The world’s local bank”.

The bank operates in 15 countries in Latin America, where it serves 18,679,717 Personal Financial Services clients with assets of USD$ 115,967 millions at December 31, 2009.

HSBC’s operations in Latin America cover mainly Argentina, Brazil, Chile, Colombia, Costa Rica, El Salvador, Guatema-la, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela.

Aside from its banking services, HSBC does insurance busi-ness in Mexico, Argentina, Brazil, Panama, Honduras, and El Salvador. In Brazil, HSBC offers consumer financing through its affiliate, Losango Promoções e Vendas Ltda.

Profile of the Organisation

The main activities of HSBC LAM are divided into two customer groups: Personal Financial Services and Commercial Banking, and by two global businesses: Global Banking and Markets and Private Banking.

2.2, 2.3, 2.6, 2.7

Principal HSBC LAM business areasOur business areas are concentrated in four lines.

(a) Personal Financial Services - This business line is aimed principally at individuals, most of whom are in-volved in providing consumer products and services, which allows us to promote a wide array of our own products and services.

(b) Commercial Banking: is the business line directed mainly at business entities. Commercial banking is di-vided into two large segments, one directed at medi-um-size companies and the other at small companies.

(c) Global Banking and Markets: is the business line that includes services in the debt security market and in-vestment banking directed mainly at business entities.

(d) Private Banking: this segment includes structural busi-ness operations and other income not pertaining to the business, such as the leasing of buildings, the sale of fixed assets and overdue portfolio when it no longer be-longs to the other segments; interest charged and port-folio provisions for this segment are recorded centrally.


‘81 ‘93 ‘97 ‘99 ‘00

HSBC History in LAM

Argentina

Brazil

Chile

Mexico

Panama

Uruguay

Paraguay

CentralAmerica(1), Colombia and Peru

The group establishes a new subsidiary in Brazil, Banco HSBC Bamerindus S.A. (now Bank Brasil S.A.-Banco Múltiplo), and acquires Roberts S.A. de Inversiones in Argentina (now HSBC Argentina Holdings S.A).

HSBC opened a business banking branch in Santiago. The branch was sold in 1993 to Banco Santiago (previously Banco O’Higgins)

From 1993 to 2000, HSBC was present only through a representation office at Midland Bank and held Banco Santiago shares.

HSBC acquires Grupo Financiero Bital, S.A., one of Mexico’s largest financial service groups.

Our presence goes back to 1999, when the HSBC Group acquired the Republic National Bank of New York at the worldwide level, which had operated in Uruguay since 1980.

(1) Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.


‘01 ‘03 ‘04 ‘06 ‘07 ‘09

HSBC Chile begins providing personal banking services.

HSBC Bank (Panama) S.A. was incorporated.

Acquisition of Lloyds TSB Bank Paraguay S.A.,

The expansion of the group in 2006 included the purchase of BNL in Argentina, the Lloyds operations in Paraguay, the startup of operations in Peru and the announcement in July of the acquisition of Banitsmo, the principal bank in Central America, with operations in Panama, Colombia, Costa Rica, Nicaragua, Honduras and El Salvador.

The bank opens in October 2006 with corporate banking services. Its services were extended in 2007 to include corporate banking, and currently include personal banking, foreign trade and support for corporations.

Its services were extended in 2007 to include corporate banking, and currently include personal banking, foreign trade and support for corporations.

Joined RNB

In 2003, HSBC consolidates its leadership position in Consumer Financing with the acquisition of Household International, the second-largest consumer financing entity in North America and the purchase of Losango in Brazil.


2009 HighlightsIn 2009, we have strengthened our presence in Latin America by positioning ourselves in 15 of the region’s countries. Our offices in Argentina, Brazil, Mexico and Panama account for 90% of our market in the region. We also offer our portfolio of products and services in Chile, Colombia, Costa Rica, El Salvador, Honduras, Paraguay, Peru and Uruguay.

We offer 12 sustainable products and services in the region, which are used by 286,817 clients. Those products and services include green insurance and green credit cards.

Our environmental and community work is aligned with five global programs, including the following: Future First (assistance for special-needs and at-risk children), JA More than MoneyTM (financial educa-tion at primary schools), HSBC Eco-schools Climate Initiative (environmental education), SIFE (community programs conducted by university students), and the HSBC Climate Partnership (research, conservation and volunteer projects). As well, we supported the British Chevening Scholarships Global Programme.

We encourage the involvement of our employees in the development and implementation of community

2.3, 2.5, 2.7

and environmental projects. In 2009, we carried out 657 projects in the region with the involvement of 13.73% of HSBC volunteers in their implementation (71,312 volunteer hours).

HSBC donated USD$10.9 millions and our clients USD$7 millions toward those projects. The resources were distributed as follows: 69% for education projects, 12% for the environment and 19% for other projects.

Being well aware of the impact of our operations, we have invested in equipping our offices with ef-ficient systems for the use of water, the handling of non-hazardous waste, a reduction in the consumption of electric energy and a reduction in carbon dioxide emissions. Examples of those initiatives are the Torre HSBC in Mexico City, the Cruz de Malta building in Argentina and the new branches in Uruguay.

The Latin American Climate Center was established through the HSBC Climate Partnership in the Rio Ca-choeira Natural Reserve in the State of Parana, Brazil. The purpose of the Center is to develop conservation and biodiversity projects, as well as environmental education, with the support of HSBC volunteers.

The Operating StructureHSBC LAM comprises the following subsidiaries:

Representation offices (*)

Chile

Paraguay

Peru

Colombia

Costa rica

El Salvador

Guatemala*

Nicaragua*

Venezuela*

Uruguay

Honduras

LAM International

Argentina

Panama

Brazil

Mexico

LAM


Our Presence in LAMThrough its operations in LAM, the HSBC Group is positioning it-self as one of the banks with the most presence in Latin America.

HSBC LAM significant figures:

2009 2008

Overall assets 115,967 102,946Profit before tax 1,124 2,037 Profit per country before tax Argentina 232 224Brazil 510 910Mexico 272 714Panama 148 121Others (38) 68

Note: Figures in USD$ (millions of dollars)

2009 2008

Number of total staff(equivalent to full-time at year end) 54,288 58,559Turnover rate 21.4 % 24.6%Number of clients 18,679,717 -

Source: HSBC Annual Report & Accounts 2009 y Sustainability Report

2009, Holdings plc

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1 60 1

135 31 23

1,19

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Mex

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Uru

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Branches

Representation offices (*)

* * *

Claudia MalschitzkyHEAD OF SUSTAINABILITY - BRAZIL

HSBC Brazil has lived up to its commitment by incorporating sustainability in the organisation’s day- to- day life. Our Group values: being open, connected and dependable, have paved the way for our business as we invest in the community, protect the environment and develop relations with our stakeholders (shareholders, clients, employees, the government, suppliers and private organisations). We believe that our commitment to sustainability adds value to our clients’ experience.

At December 2009, HSBC LAM had more than 3,000 branches.

Latin America - strong network and connectivity in a fast growing region: •54,288 staff •3,000 branches •15 countries

Significant banking presence

Presence

No presence

HSBC also has offices in the Bahamas, the British Virgin Islands and the Cayman Islands

STRATEGYDrive profitable growth through:• Mass affluent• International bank of choice• Business banking• Improved efficiency through regionalisation• Product to relationship focus• Greater share of walletImprove efficiency by regionalisation

2.5, 2.8, LA02

Vision and Mission


VISION AND MISSION 13

Our CommitmentWe have developed a long-term commitment to eco-nomic, social and environmental matters that come within our sphere of influence. This is principally a question of achieving sustainable growth in such a way that the ben-efits generated by HSBC continue to reward sharehold-ers and employees, of building lasting relationships with clients and suppliers, of keeping up the payment of taxes and dues in the countries in which HSBC operates and of continuing to invest in the future of communities.

Ensuring continued HSBC financial success will depend partially on its ability to identify and deal with certain non-financial iterations important for the business, on mitigat-ing risks and on maximizing the opportunities arising from them. Those generally fall into one of the following four large areas:

• Sustainable business • Environmental matters • Community Investment • Participation of employees

Vision

Mission

To be the most efficient and integrated bank in Latin America based on a regional business platform and consistent propositions across the region.

To maximize our value to customers, staff and shareholders by leveraging off the brand, our global strengths and international connectivity built on a high performance culture and strong relationships with customers in target segments.

Sust

aina

ble business Environmental m

atters

Participation of employees Community In

vest

men

t

Financial success

4.8


Sustainable Business At HSBC we promote the development of lasting relation-ships with our clients throughout the world by providing consistent high-quality services and ensuring good client experience. The Group makes use of the benefits of its network connectivity, financial capacity, geographic scope and the strong value of the brand to achieve this. HSBC takes advantage of opportunities and manages the risks arising from world trends, and develops sustainable busi-ness models to cope with those risks. The Group under-stands that the world is changing, emerging markets will grow faster than developed markets, world trade will grow faster than GDP, and longevity is increasing across the world. In the long-term, HSBC expects to play a leading role in the financial sector’s responses to those challenges and determine how companies can respond by providing feasible economic, environmental and social benefits.

Environmental matters HSBC focuses its environmental initiatives mainly on han-dling and responding to questions pertaining to climate change, including energy, water management and biodi-versity. Climate change has the potential to significantly affect HSBC clients, and therefore also the long-term suc-cess of the Group by posing new risks to business activi-ties. However, it also has the potential to spur on a new era of low carbon growth, innovation and development.

In 2009, HSBC continues to expand its understanding of the possible effects that climate change and the respons-es to climate change will have on its business and that of its clients. Furthermore, the Group has developed its capacity to determine the commercial repercussions of ef-forts to mitigate climate change by improving the quality and distribution of its products and services.

The Group’s main environmental program is the HSBC Climate Partnership, a $100 million commitment to work with The Climate Group, Earthwatch, Smithsonian Tropi-cal Research Institute and the World Wildlife Fund (WWF) to address climate change issues.

Community InvestmentHSBC has a long-term commitment to the communities in which it operates. Many of the principal markets of the Group are in emerging economies. HSBC operations pro-mote domestic and local development of the countries in which it does business by paying taxes, boosting job crea-tion and training and making purchases from and invest-ments in domestic suppliers, among many other meas-ures. Beyond the impact of its main business, the Group enhances social and economic conditions by providing investment opportunities to the community.

HSBC implements projects and initiatives in the area of education and the environment, which it considers essen-tial for the development of communities and for economic growth. Global education programs such as Future First, JA More Than MoneyTM and Eco-Schools are focused on helping underprivileged children, promoting financial lit-eracy and providing environmental education.

In 2009, HSBC donated a total of $100 million dollars for projects involving investments in the community (2008 - 102 million dollars or 99 million dollars at a constant ex-change rate).

Participation of EmployeesHSBC acknowledges that its success is due to the com-mitment of its employees, who have maintained the high-est quality financial services. The HSBC Global People Survey 2009 shows that the employees value the Group‘s commitment to sustainable practices as well as the public perception of the Group as the leader in matters of sus-tainability. HSBC has made sustainability a key factor in employee and upper management training, and has in-cluded sustainability in the Group’s risk management.

VISION AND MISSION 15

Sustainability in the RegionWe established a Regional Corporate Sustainability Head in 2007 to direct and coordinate the development and im-plementation of sustainability initiatives in the region. All our operations in Latin America have their own sustain-ability functions and projects. HSBC operations in Latin America include environmental and social considerations

in loan applications and risk analysis. Group policies for sec-tors potentially sensitive to environmental and social risk make sure that the projects the bank is interested in financ-ing adhere to international, regional and national standards.

Corporate Governance


CORPORATE GOVERNANCE 17

Through its governance bodies, HSBC shows its commit-ment to guaranteeing efficient and transparent business management, respecting the laws in place in each country and the internal standards of the Group, thus guarantee-ing the implementation of regulations, codes of conduct and bank practices.

Corporate governance practices are established through each of the HSBC companies in the region. Corporate gov-ernance management is in line with the Group’s general management structure. Thus, HSBC Latin America Hold-ings (UK) Ltd., which includes all the countries in the region, reports to HSBC Holdings plc in the United Kingdom.

Although regionalization of Latin America is still in the consolidating process, corporate governance has been implemented within HSBC Latin America Holdings (UK) Limited, which is administered by a Board of Directors. The Board of Directors is structured as follows:

• Alexander A. Flockhart, Chairman of the Board - Group PFS/CMB/INS

• Emilson Alonso, CEO - Latin America and the Caribbean • Antonio M. Losada, CEO HSBC Argentina• Conrado Engel, CEO HSBC Brasil• Luis J. Peña Kegel, CEO HSBC Mexico• Ernesto Fernandes, CEO HSBC Panama• Víctor Jiménez Cervantes, CFO Latin America

The Board of Directors contains three committees: the Audit Committee, the Risk Management Committee and the Management Committee.

The Audit Committee: The Committee reports to the Board and assists it in complying with its responsibilities in order to ensure an effective compliance and internal control system. It also supports the Board in complying with its external financial reporting obligations, including obligations under the standards, laws and regulations of the different stock exchanges, and is directly responsible, on behalf of the Board, for the selection, oversight and remuneration of the external auditor.

Governance Structure

HSBC shows its commitment to guaranteeing efficient and transparent business management, respecting the laws in place in each country and the internal standards of the Group.

The Risk Management Committee: The purpose of the Committee is to control risk and set the framework for Group incentives, as established from time to time by the Board, the Latin America Management Committee, and the Chief Executive Officer of the Company or by the Committee itself.

The Administration Committee: The objective is to maintain a reporting and control structure whereby all of the line operations of the Latin American region are ac-countable to individual members of the Committee who report to the Chief Executive Officer of the Company, who in turn reports to the Chairman.

Without limiting the generality of the Committee’s objec-tive, the Committee shall have the following responsibili-ties, powers, authorities and discretion:1. To monitor financial performance in Latin America2. To monitor performance of the business lines in Latin

America3. To monitor implementation of the regional strategy4. To monitor and review the status of key initiatives5. To review the status of the risk management framework

and ensure the enforcement of controls 6. To discuss key issues affecting the region

Sustainability GovernanceThe HSBC Group’s governance structure was created spe-cifically to develop and implement sustainability policies at the different locations in which it operates.

The Corporate Sustainability Committee is part of the HSBC Holdings plc Board of Directors. It was created in September 2003 to oversee the Group’s Sustainability poli-cies and strategies. The Committee is composed of non-executive directors of the company and prestigious non-director members.

In the specific case of Latin America, the Head of HSBC Latin America Regional Corporate Sustainability, María Eu-genia Brizuela de Ávila, manages corporate sustainability strategy, which promotes opportunities for carrying out

4.1, 4.2, 4.3, 4.4, 4.6, 4.7, 4.9, 4.10, LA13


Juan Pedro Paz SoldánHEAD OF SUSTAINABILITY - PERU

Sustainability activities at HSBC Peru are supported by the bank’s Executive Committee and form an integral part of our business vision, as they are a component of a service model and develop leadership skills among the employees. The employees most committed to the bank are those most seriously involved in volunteering.

UN Global CompactHSBC is a corporate supporter of The Global Compact. The Compact challenges companies to demonstrate progress in supporting and advancing key principles in four fields: labor standards, human rights, environmental responsibil-ity and anti-corruption.

Global Business Coalition on HIV/AIDSGlobal Business Coalition on HIV/AIDS, Tuberculosis and Malaria (GBC) is a coalition of more than 220 companies united to keep the fight against HIV/AIDS, tuberculosis and malaria a global priority.

Global Sullivan PrinciplesHSBC is a corporate supporter of The Global Sullivan Prin-ciples. The principles address economic, social and politi-cal justice issues, such as human rights and equal oppor-tunities in employment.

OECD Guidelines for Multinational EnterprisesHSBC follows the OECD Guidelines for Multinational En-terprises which promote business conduct in the area of sustainability.

Equator PrinciplesThe Equator Principles are a set of voluntary guidelines which provide a common framework to address the envi-ronmental and social issues that arise in financing projects.

environmentally and socially sustainable businesses and investment activities in the community. The Head works jointly with other sections to ensure effective implementa-tion of policies and procedures in the region and is part of the Corporate Sustainability Committee belonging to the HSBC Holdings Board of Directors. The Corporate Sus-tainability Committee advises the HSBC Holdings Board, and the Board and Administration Committees concerning sustainability policies, which include environmental and social issues.

For further information on corporate governance, see the HSBC Holdings

plc Annual Report and Accounts 2009

http://www.hsbc.com/1/content/assets/investor_relations/hsbc2009ara0.pdf

International CommitmentsHSBC have voluntarily agreed to abide by a number of ex-ternal codes of conduct, some of which are listed here:

UN Universal Declaration of Human RightsHSBC has expressed its support for the UN Universal Dec-laration of Human Rights since 2004

UNEP Finance InitiativeHSBC is one of the founder signatories of the UNEP Finance Initiative, a global partnership between UNEP and the finan-cial sector working to understand the impacts of environ-mental and social considerations on financial performance.

4.13

CORPORATE GOVERNANCE 19

Code of Conduct Anti-money Laundering

Claudia de la OssaHEAD OF SUSTAINABILITY - NICARAGUA

We at HSBC are constantly training our employees on anti- money laundering activities and of the financing of terrorism. That training is designed to be given depending on the level of each employee and is based on local regulations and Group policies and procedures. This strengthens our operations in the region, where drug trafficking and money laundering continue to be sensitive subjects.

At HSBC, we make sure that our employees are aware of the conduct standards required by the Group for doing business. All employees are required to read the Group Code of Conduct at least once a year, and newly hired employees must read it as soon as they have joined the Group. The documentation provided to nearly hired em-ployees includes a certificate attesting to the fact that the Code of Conduct has been read, and a yearly campaign is carried out for a reading by existing employees.

Our Code of Conduct covers topics including:

• The commitment to adhere strictly to all laws and regulations • The commitment to truth and transparency • Conduct in personal matters, such as accepting gifts,

personal favors, services, hospitality, loans or commis-sions or any other benefit with a monetary value

• Protection of information • Letter of confidentiality • Employee credits and loans • Conflicts of interest • Procedures for setting employee guidelines • Harassment • Operations with privileged information • Fraud or internal theft • Policies on the use of the Internet and e-mail • Anti-money laundering • External appointments • Putting the interests of the team before individual interests

HSBC has implemented systematic procedures for prevent-ing and detecting money laundering and operations involving illicit resources. In all the countries in which we operate, we adhere strictly to current legislation in that area. The Group has developed the Global Policies and Procedures (GPP) - An-ti-Money Laundering Program, which trains the employees concerning the requirements of the GPP and local legal re-quirements, depending on their position and responsibilities.

The purpose of that training is for all employees (full-time and temporary) to understand what money laundering and the financing of terrorism are and how they work. They are also taught the specifics of current legislation and of the existing pre-ventive measures necessary to comply with requirements con-cerning identification and knowledge of the client, the monitor-ing of transactions and the analysis and reporting of suspicious operations. HSBC also provides specific training focused on dif-ferent stakeholders in order to expand on know-how acquired. In addition to that internal training, HSBC has developed the Know Your Client Policy, a process used to identify and gather critical client information. That policy allows HSBC to get to know and understand its clients and their operations so that they can be offered appropriate services and the security of their transac-tions can be ensured. All information collected is confidential, unless required to be disclosed by the laws of the country in question. Unless all the information required by this process is provided, HSBC reserves the right to refuse to open an account.

By implementing that policy, HSBC wishes to be seen as a sound and responsible bank focused on maintaining long-term relationships with its clients.

4.8

Our Stakeholders


STAKEHOLDERS 21

This first Report on Sustainability LAM, aside from strength-ening the bank’s sustainability strategy in the region, is in-tended to provide relevant information on subjects of inter-est to our stakeholders, and to apprise them of what can be expected from our operations. Our employees, sharehold-ers, community and environment, suppliers and clients, as well as the government are the stakeholders with whom we remain in continual contact.

In 2009, different measures were taken in each of the countries in which HSBC operates to strengthen its rela-tions with key stakeholders. Each office in Latin America has its own mechanisms for communications and relation-ships with stakeholders, based on the interests and ex-pectations of local and national groups.

As part of its business strategy, HSBC LAM promotes ongoing communications with shareholders, clients, the government, suppliers, employees and communities, as well as with other key stakeholders in the region.

The stakeholder table summarizes the most important pri-ority issues for HSBC LAM as well as progress achieved up to 2009.

Mónica SuffiaHEAD OF SUSTAINABILITY - URUGUAY

As part of its business strategy, HSBC LAM promotes open and transparent communications with shareholders, clients, the government, suppliers, employees and communities, as well as with other key stakeholders in the region. That is why we work to make Corporate Sustainability an integral part of our strategy for achieving the sustained growth of profits, for building long- term relations with clients and for managing social and environmental impacts in the communities in which we operate.

Our employees, shareholders, community and environment, suppliers and clients, as well as the government are the stakeholders with whom we remain in continual contact.


HSBCLAM

Stakeholders

E

MPLOYEES

CO

MM

UN

ITY

SHAREHOLDERS

CLI

EN

TS

SUPPLIERS GOVERNMENT AND

BUSSINESS ASSOCIATIO

NS

EMPLOYEES

SHAREHOLDERS

COMMUNITY

• Diversity• Compensation• Volunteering• Learning and development• Remote training• Medical plans• Development• Benefits

• Profits• Fixed assets• Capital• Shares• Good corporate governance• Risk management• Number of Clients

• Alliances with NGOs• Eduaction• Social investment• Volunteering• Microfinancing• Environmental Education• Steps for mitigating climate change

INTERESTS AND EXPECTATIONS

• Contact and breakfast with the CEO• Monthly bulletins• Intranet• Promotional• Leaflets, newspapers and internal publications• Notice boards• Posters• Acknowledgements• Campaigns• E-mails• Career maps• Clubs• Telephone service line • Surveys• Internal publications

• Quarterly reports• Financial statements• Periodic Board of Directors’ meetings• Internal audit team• Sundry Committees• Sustainability Reports

• Website• Media network• Educational centers• Sector committees• Sustainability and Community

Investment Reports

COMMUNICATION CHANNELS

• Leader development program• Young leader program• Training • Policies for the recognition of efforts made • Programs designed to support employees

with specific problems, such as health and legal difficulties

• Physical workouts during office hours• Vacation camps

• Consolidation of the “Corporate Sustainability Principles” strategy

• Green products and services• Identification of new business opportunities

involving sustainability at different levels• Implementation of a Corporate Governance Manual• Code of Conduct• Consolidation of the HSBC presence in certain countries

• HSBC has provided financial help for 657 projects throughout the region

• Future First Program in LAM• HSBC Climate Partnership • Programs aimed at encouraging primary

education, the protection of the environment, the support of different community needs and the creation of new companies.

• Specific measures for reducing the carbon footprint and for saving water and paper

PROGRESS MADE UP TO 2009

4.12, 4.14, 4.15, 4.16, 4.17

STAKEHOLDERS 23

Miguel LaportaHEAD OF SUSTAINABILITY - MEXICO

In this first HSBC LAM Sustainability Report, we are disclosing information we consider relevant for our stakeholders in the region in an effort to strengthen our long-term relationships. Aside from being part of our sustainability strategy as a management and communications tool, this Report provides the opportunity to homogenize reporting and monitoring criteria in the region. This will strengthen our business vision in each country in LAM and make it possible to open up new channels of communication with our stakeholders.

GOVERNMENT AND BUSINESS ASSOCIATIONS

SUPPLIERS

CLIENTS

• Alliances• Compliance with the laws,

regulations and other provisions• Respectful and orderly participation

in the processes for consultation concerning legislative and regulatory subjects

• Proper social, environmental and economic performance

• Local job creation• Prompt payment of taxes and dues• Transparent operations• Anti-money laundering

• Compensation policies• Environmental policies• Employment conditions• Labor associations• Human Rights• Long-term relations• Strategic alliances• Integrated supply chain• Business ethics• Increased collaboration and openness in

information demand

• Access to branches• Security and risk• Yields• Access to capital• Interest rates

INTERESTS AND EXPECTATIONS

• Work meetings • Attending events• Joint programs• Financial reports • Sustainability Reports• Corporate TV (Brazil)

• Evaluations• Contracts• E-mail• Meetings• Financial reports• Sustainability Reports• Call center

• Call center• Personal surveys• Market studies• Financial reports• Sustainability Reports• Meetings with representatives• Suggestion boxes• International associations• Communications media: radio, TV, press, and website

COMMUNICATION CHANNELS

• Compliance with laws pertaining to engaging people under 18

• Encouraging programs for the support of underprivileged communities and vulnerable sectors of the population

• Support for and encouragement of education in sectors experiencing extreme poverty

• Social investment programs

• Supplier development programme• Compliance with the Equator Principles • Suppliers code of conduct

• Green products and services• Compliance with the Equator Principles (example at HSBC Bank Chile, La Higuera, La

Confluencia and Norvind electricity sector projects were approved.

PROGRESS MADE UP TO 2009

Our Economic Value


OUR ECONOMIC VALUE 25

At HSBC LAM, we have focused on promoting our growth on the basis of investments in Latin America, thus provid-ing continuation to the modernization and expansion of our operations in emerging economies. As part of that focus, we are currently operating in 15 countries in Latin America.

The HSBC strategy is to position ourselves as a local bank in the countries in which we operate, combining local his-tory and experience with best practices and international experience. Our strategy is also focused on positioning our global brand and on establishing standardized processes and systems in order to offer products and services with added value for our clients.

The HSBC strategy is in line with three important long-term global trends: emerging markets will grow more rapidly than developed markets, world commerce will grow more rapidly than the GDP and longevity is increasing worldwide.

The HSBC strategy is to position ourselves as a local bank in the countries in which we operate, combining local history and experience with best practices and international experience.

One HSBC The One HSBC initiative, which is focused on standardizing Group products, processes and tech-nologies, is mainly intended to bring us together as a single team… a single bank. This will facilitate doing business with clients and colleagues and al-low us to focus on generating added value.

Through One HSBC, we are changing from a group of locally-focus businesses with certain shared ca-pabilities to a global connectedness with a clear strategy in the markets in which we operate.

This will create a united bank where everything is much more valuable than the sum of its parts.

One HSBC will make it possible to unify our busi-ness model and develop common client satisfac-tion standards, more efficient services and more direct models, all contributing to client satisfaction.

One HSBC has five business objectives: 1. To improve client experience as concerns deliv-

ery of the promise behind the HSBC brand. 2. To draw up new global proposals that will really

attest to the incomparable presence of the Group. 3. To speed up cost reductions by standardizing sys-

tems, products and processes on a global scale. 4. To create models to generate global businesses

that satisfy the needs of our clients, sharehold-ers and employees.

5. To ensure that doing business with HSBC is sim-ple, intuitive and client oriented, with services available 24 hours a day, seven days a week.


HSBC operations in Latin America reported before-tax rev-enues of 1.1 billion US dollars in 2009, as compared to 2.0 billion in 2008. Profits before tax dropped 33%, which is at-tributable mainly to default charges on large loans made by Personal Financial Services and Commercial Banking, and market yield improved, driven by sound results of in general commercial activity and well-balanced management.

Personal Financial Commercial Global Banking Country Services Banking and Markets Private Banking Other 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009

Argentina - 24 111 86 113 122 - - - -Brazil 250 (224) 348 211 298 515 8 5 6 3Mexico 360 (31) 157 66 190 230 7 7 - -Panamá 51 69 37 55 33 24 - - - -Other 7 (54) 53 (19) 7 40 1 (1) - (4)

*Figures in USD$ million

Irene TafurHEAD OF SUSTAINABILITY - COLOMBIA

Banking activities in 2009 were conducted in an environment of monetary contraction as a result of the world crisis starting in late 2008. HSBC has maintained a conservative business strategy focused on strengthening the financing of our clients and tailoring Group processes and growth plans for each business unit.

Summary of results in Latin America

USD$ million 2007 2008 2009

Income from net interest 5,576 6,458 5,573Income from net commissions 2,153 2,167 1,729Other income 1,536 1,888 1,722Net operating income before charges for impairment of loans 9,265 10,513 9,024Charges for impairment of loans -1,697 -2,492 -2,526Net operating income 7,568 8,201 6,498Total operating expense -5,402 5,990 -5,375Profit from associations and joint collaborations 12 6 1Profit before tax 2,178 2,037 1,124

Profit before tax on HSBC shares 9.0% 21.9% 15.9%Cost-efficiency ratio 58.3% 57.0% 59.6%

Include net operations

Distribution of Economic BenefitsHSBC operations involve two groups of clients, i.e., Per-sonal Financial Services and Commercial Banking, and two global businesses, i.e., Global Banking and Markets and Private Banking. Below is the distribution of before-tax profits, by client group:

EC1

OUR ECONOMIC VALUE 27

Valeria VivaniHEAD OF SUSTAINABILITY - ARGENTINA

HSBC’s corporate sustainability strategy in Argentina is focused on achieving sustainable profits for shareholders, creating lasting relationships with our clients, valuing and motivating our employees, respecting environmental limits and adding value to the investment in the communities in which we operate.In order to achieve that last goal, the Group uses its economic resources, emphasizing the human and intellectual potential of its volunteers.

Underlining our commitment

to be the leading emerging

markets bank, at the end

of 2009 we invested US$1.3

billion in our operations in

Mexico and Brazil. Group

systems, including “One

HSBC”, were implemented

in Chile and the operations in

Panama were fully integrated.

We also saw growth of 24 per

cent in net earned insurance

premiums as a result of higher

sales of pension and life

assurance products.

Profit before tax

In Latin America, portfolios were affected by the economic environment most of the year. In Personal Financial Ser-vices, default charges on loans rose 12% for a total of 2.0 billion US dollars, and there was an increase in late pay-ment of credit cards, mortgages, vehicle financing and payroll loans, due to higher unemployment.

One of HSBC Latin America’s main goals is to achieve long-term sustainable development of its different stake-holders. Our commitment to them is seen in the distribu-tion of the value generated in the reported period.

The following figures show how HSBC has contributed to the development of Latin America and how our generated value has been distributed among the different stakehold-ers. Following is summarized information based on HSBC Holdings plc Annual Report and Accounts 2009.

Distribution of Economic Benefits 2009

Distribution to shareholders* US$b 5.6Contribution in taxes US$b 1.6Donations made to the community US$m 10.2

*Information regarding our global activities included in HSBC Holdings

plc Sustainability Report 2009

USD$b: Billion of dollars

USD$m: Million of dollars

Distribution of the Economic Benefit

Rank Country PBT 2009 % Total

1 Hong Kong 5,029 712 United Kingdom 2,126 303 China 1,632 234 France 624 95 Singapore 542 86 Brazil 510 77 Switzerland 450 78 Canada 423 69 India 374 510 South Kore 359 511 Germany 290 412 Malaysia 286 413 Mexico 272 414 Turkey 261 415 Argentina 232 316 Egypt 224 317 Australia 198 318 Saudi Arabia 193 319 Taiwan 160 221 USA -8,304 -117 Other 1,198 17 Total PBT US$m 7,079 100

In 2009, Latin

America’s share

of profit before tax

contributed to the

HSBC Group was

15.9%

Argentina, Brazil and

Mexico contributed

14 %. Those countries

are among the 20 that

contribute the most

profits to the Group.

EC1

Brazil 45%

Mexico 24%

Argentina 21%

Panama 13%

Other -3%

Brazil 45%

Mexico 35%

Argentina 11%

Panama 6%

Other 3%

2009US$1,124 million

2008US$2,037 million

Our Environmental Value


OUR ENVIRONMENTAL VALUE 29

HSBC manages its direct environmental impacts by address-ing its consumption of water and energy and by managing the generation of nonhazardous waste and C02 emissions.

Progress achieved to date is the result of setting clear reduction goals, encouraging efficiency in our operations and including the concept of sustainability in our business decisions. As a result, HSBC was the first bank to achieve carbon neutrality, its operations throughout the world con-tribute net zero CO2 to the atmosphere.

“The Green Team” Sustainable Operations Working Group LAM

The goal of The Green Team is to integrate sustainability into HSBC operations by developing strategies focused on generating environmental and financial efficiency and sav-ings in our operations.

The Green Team has developed the following commit-ments for 2010:

• Increase levels of awareness and use of mobility solutions to reduce impacts of business travel and commuting.

• Trail software to virtually connect HSBC´s property port-folio to monitor and manage energy use.

• Ensure the achievement of the 16 sustainability objectives contained in the Chief Technology and Services Officer bal-ance scorecard at country, regional and Group levels.

• Increase engagement with employees in operational functions to create change agents who drive internal sustainability projects

Group objectives (2008-2011)At HSBC, we are fully aware of the fact that our operations have an environmental impact, and we have therefore es-tablished clear objectives for the Group.

The Environmental Commitment

HSBC was the first bank to achieve carbon neutrality, its operations throughout the world contribute net zero CO2 to the atmosphere.

Following are the most recent global objectives for the con-sumption of electricity, the use of water and the generation of waste and CO2 emissions. Reductions are per full time employee, and do not refer to an absolute reduction.

For further information on the Group at the global level, see:

http://www.hsbc.com/1/2/sustainability/protecting-the-environment/

footprint-management

6% 8% 10% 11%CO2 (t) Energy (kWh) Waste (t) Water (m3)

Conservation of Eco Bahía de Asunción and Reserva del Mbaracayú - HSBC ParaguayThe Eco Bahia de Asunción project is intended to eliminate the pollution from the Asunción Bay, protect the environment, promote sustainable development, mitigate the impact of climate change and turn the bay into an ecological park.

We have signed contracts with NGOs such as Fundación Moises Bertoni and have made donations towards the maintenance of the “Reserva del Mbaracayú” Forest Reserve and the Fundación Milenio, which we are assisting in connection with the reclaiming of the Asuncion Bay. We are also implementing internal and external measures such as the collection of batteries, campaigns for awareness in the consumption of water, energy and paper, planting trees and arranging guided tours of the of the zoo with our children to instill in them a love of animals and their importance for the preservation of the environment, among other actions.

CO2


Mirtha HauensteinHEAD OF SUSTAINABILITY - CHILE

At HSBC, we support practical measures and policies that help to protect and improve the environment. This is done by means of financing projects with defined social and environmental components. We link the needs of our business to those of the planet in order to facilitate a more sustainable future and a low carbon global economy.

Internal Recycling - HSBC PeruAs part of HSBC Sustainability policies, HSBC Peru has launched the Recycling Project in collaboration with Aldeas Infantiles SOS (“AISOS”). The project involves internal coordination in order to generate recyclable paper material to be donated to AISOS for them to sell. This constitutes a donation to support the children living in those villages.

The project was started on July 14, 2009 at the meeting of the organization held at the Miraflores venue where 15 volunteers initially registered and were organized into four groups under a coordinator. Eleven weeks after the Project got under way; 1107 kg of material had been collected.

In total, the project collected 1786.7 kg which is the equivalent of the upkeep of five children per month throughout the duration of the campaign (September, October and November). The project is currently in the hands of management and infrastructure department and has become part of bank routine.

The total volume of waste HSBC LAM generated reduced by 47 per cent to 10,366 tons. The decrease was due to promote paperless offices, and in a less degree in reduction in full time employees.

Waste (tonnes)

Waste per FTE (tonnes per FTE)

2,400

2,000

1,600

1,200

800

400

0

0.6

0.5

0.4

0.3

0.2

0.1

0

2009

200819,499

0.36

0.21

10,366

EN26


Reduction of water consumption - HSBC MéxicoSince 2007, HSBC Mexico has succeeded in reducing water consumption is at its facilities by 17.5% by means of the following actions: • The use of HIPPOS (plastic bottles of from 0.5 to 2 liters filled with

heavy material and placed inside toilet tanks) at 967 branches. • The use of Dualflush (dual-purpose water tanks) at remodeled

branches. • The use of extremely low water consumption at new

branches. • Water treatment plant for soapy water and capturing rain

water at the main corporate building.

Water Consumption (‘000 m3)

Water per FTE (m3 per FTE)

1,200

1,000

800

600

400

200

0

30

25

20

15

10

5

0

2009

2008

HSBC’s water consumption increased 1 per cent per em-ployee in offices and branches.

Our total water consumption decreased 6 per cent to 1.04 million m3 in 2009, due to conversion to more energy ef-ficient water-cooled chillers.

1,113

20.72 20.97

1,042

EN22


Energy consumption

The management of climate change will be one of the major challenges of the 21st century. Climate change presents a number of different types of risk for our business and our clients. However, it also pro-vides the potential to stimulate innovation and develop-ment, in order for companies to adapt to a changing world. There are opportunities for the expansion of banking, in-surance, investments and services that facilitate growth in areas such as energy efficiency, renewable sources of energy, carbon management and adaptation.

An internal team, drawn from businesses across the Group, has been put together to implement best practices throughout HSBC. Lord Nicholas Stern, a world renowned economist specializing in climate change, also provides the Group with strategic advisory services.

In 2008, HSBC adopted the Climate Principles, a voluntary worldwide framework for the financial services sector de-signed as a guide for responding to climate change and managing the transition towards a low carbon economy.

Mitigating and adapting to climate change offers potential commercial opportunities for HSBC

Global ProgramsThe Climate Change Centre of Excellence was established in 2007, and is focused on the identification and analysis of eco-nomic risks and opportunities resulting from climate change.

The HSBC Climate Change Benchmark Index provides vi-tal information to investors concerning renewable energy and the growing market for clean energy, for use in deci-sion-making.

In order to understand the points of view of people around the world, an annual study by the name of HSBC Climate Confidence Monitor was carried out, which analyzes the attitudes of 12,000 persons in 12 markets. Investigations such as this have helped to gather information concerning insurance products related to climate change put in place in Brazil, Mexico and Argentina.

Energy and Climate Change

Total energy consumption in HSBC LAM has decreased by 11 per cent over the last year. This was achieved through the implementation of environmental initiatives such as:• The installation of ‘intelligent’ lighting systems, and ef-

ficient air conditioning and heating equipment;• The use of renewable technologies such as ground

source heat pumps, solar thermal and photovoltaic pan-els, and micro wind turbines.

Energy Consumption (GWh)

Energy Consumption per FTE (KWh/FTE)

EN04

400

350

300

250

200

150

100

50

0

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

2009

2008366

5,601 5,895

324


“Campaña verde”- HSBC HondurasThe principal purpose was to reduce the consumption of water, electricity and paper at our offices through an interactive internal campaign involving each and every one of the employees comprising the HSBC Financial Group (Banking and Insurance). The campaign lasted three months, during which time, work was done on awareness, visits to protected areas, recycling contests, etc.

Climate changeTaking account of the potential impacts of climate change, governments around the world are increasingly mandating change, introducing targets for greenhouse gas emission reductions. Energy use is our most significant environ-mental impact, being CO2 the most significant green-house gas for HSBC´s operations.

Using HSBC’s environmental reporting system carbon di-oxide emissions are calculated for the LAM region, which represent 2.19 CO2 tonnes per FTE in 2009, and 2.09 CO2 tonnes per FTE in 2008.

In 2009, HSBC LAM total carbon dioxide emissions ac-counted 120,450 tonnes, staying approximately the same as in 2008, were accounted 121,600 tonnes.

Carbon neutralityIn 2005, HSBC became the first bank to achieve carbon neutrality. What that means is that our operations world-wide contribute net zero CO2 to the atmosphere.

We became carbon neutral by following our management plan, which includes four key steps:

1. Measuring our carbon footprint2. Reducing energy consumption3. Using green energy (from renewable sources)4. Neutralizing our CO2 emissions by purchasing carbon credits.

Through the HSBC Climate Partnership, employees can help reduce HSBC impact on the environment but also look-ing for business opportunities arising from climate change.

The Carbon Disclosure Project (CDP)HSBC is an investor signatory to the CDP, which facilitates dialogue among the shareholders and their companies con-cerning climate change strategies. As a signatory of the CDP, HSBC responds an annual questionnaire to disclose information on the climate change impact of our business.

The HSBC Climate PartnershipAt HSBC, we support regional and local environmental projects that are directly related to our business or to the communities in which we operate. We have chosen to focus our efforts on a climate change program, because it directly involves our business and our communities.

The HSBC Climate Partnership is an innovative US$100 million program focused on reducing the effects of climate change on society, forests, water resources and cities. Through this 5-year program, HSBC is working on a number of projects with The Climate Group, Earthwatch, the Smithsonian Tropical Research Institute and the World Wildlife Fund (WWF).

Opportunities exist at each office and on the Internet for our employees to support this initiative as volunteers by donating their time and skills. Coordination teams have been formed, as well as intranet tools concerning partici-pation opportunities, which include:

• Creating awareness of the issue by making use of infor-mation from the climate change website;

• Leading or taking part in specific projects established in the local community or projects conducted through HSBC Group partnerships;

• Working with other parties on reducing the environmen-tal impact of corporate buildings;

• Identifying new projects, which could cover anything from awareness of climate change at a school in the community, to working with a client on jointly evaluating climate change risks and opportunities.

Employees who make a commitment and want to get fur-ther involved become Climate Champions.

Under that initiative, a number of projects have been de-veloped involving employees who have volunteered to work on matters of conservation, education, research, etc. Following are examples of our work in the region:

3.9, EN05, EN07, EN16, EN18, EN26


Camilo JiménezHEAD OF SUSTAINABILITY - PARAGUAY

The HSBC Climate Partnership seeks to encourage our employees to volunteer for environmental conservation projects and to promote the awareness of the effects of climate change. Under this initiative, we work jointly with four international organizations in an effort to understand, reduce and reverse the effects of climate change, inside and outside our business.In the area of education, we continue to support For a Happier Paraguay programme, by assisting 85 children, providing education, food and clothing.

Financing environmental projectsOur work is focused on environmental matters of impor-tance for our business and communities, such as:• conservation of biodiversity and on-land habitats• the cause and effect of climate change• fresh water ecosystems

We therefore prefer to support organizations working in the areas of:• Research and conservation having a non-partisan political

effect

Our policy avoids:• Controversial areas such as zoos and safari parks• Projects involving a short-term improvement of local

community (such as painting a fence).

Climate Champions - HSBC BrasilThe Latin American Regional Climate Center is located in one of the last tropical forests remaining in Brazil. It is the home of a great variety of animal and plant species, yet this crucial eco-system is threatened by deforestation and climate change.

According to be UN Intergovernmental Panel on Climate Change (IPCC), in 2050, the Amazon forest will be completely decimated, resulting in the extinction/loss of biodiversity and affecting millions of Brazilians who depend on those forests for refuge, food and fuel.

At the Regional Climate Center in Brazil, HSBC Climate Champions gather data to be used to determine the effects of climate change on forests around the world.

From its beginnings, the HSBC Climate Partnership has helped HSBC Brazil to raise its local and national environmental profile. Thanks to the work and dedication of each of our Climate Champions, HSBC Brazil was awarded its first national climate change prize.

HSBC Climate Partnership - HSBC ArgentinaIn 2009, 12 HSBC Argentina Climate Champions were chosen to take part in the program at the Regional Climate Center in La Mata Atlantica in Brazil. Those leaders became involved in scientific climate change research and wove those issues in with business management, as well as increasing awareness among society in general concerning these factors pertaining to sustainable development.

Valeria RosalesHEAD OF SUSTAINABILITY - EL SALVADOR

Corporate Sustainability at HSBC is a topic in which all areas of the bank have become involved, either in reducing the environmental impact, volunteering or adopting a system for classifying and evaluating the environmental and social risks of projects receiving HSBC financing.


HSBC Mexico is also actively working to reduce the direct impact of its operations on the environment. An important step in that direction was the construction of its new head-quarters in Mexico City, the HSBC Tower, which includes energy-saving systems for the reduction of emissions into the atmosphere, systems for ensuring water recycling and lower water consumption and policies and processes for im-proved waste management. In November 2007, the HSBC Tower received LEED certification from the US Green Build-ing Council, making it the first building of its type in Mexico and Latin America to receive said certification.

HSBC Tower LEED certification - HSBC MexicoThe HSBC Tower in Mexico City was granted the first Gold certification in Latin America of the LEED System (Leadership in Energy and Environmental Design) for a building of those characteristics. The LEED certification is granted by the US Green Building Council (USGBC), a body consisting of US construction industry leaders. That certification reflects the HSBC Mexico commitment to sustainable development and environmental conservation. In order to secure it, was necessary to comply with USGBC requirements, which are broken down into five categories:• Sustainable site planning • Care and efficiency in the use of water • Efficiency in the use of energy and renewable energy sources • Conservation of materials and resources • The quality of the interior environment

Some of the most important environmental features of the HSBC Tower are:• The drainage system was not damaged during the construction

phase, thanks to a system for the control of erosion and sedimentation.

• In that phase, another system was implemented for separation and subsequent recycling of waste.

• The building is designed to operate with lower consumption of water and electric energy and lower CO2 emissions and waste.

• The design of open spaces allows more efficient use of natural sunlight. The building also has an intelligent lighting system that automatically regulation lighting, depending on the area to be lit.

• No chlorofluorocarbons are used in the air-conditioning system. • Car-pooling and the use of bicycles are encouraged. • The building is equipped with a water treatment plant. • The paint used in the building contains no hazardous

components and all carpets are made with natural and recycled materials.

• Furnishings have the Green Guard certification. • The building has the largest green roof-top in Latin America.

2009 Climate Confidence MonitorThe Climate Confidence Monitor, which was conducted in 12 markets with the participation of 12,000 individuals, discloses a clear call for government action on climate change. Seven of every 10 people (69%) stated that action on climate change is at least as important, if not more important than, support for the national economy during the economic crisis.

The four key questions analyzed since 2007 in the Climate Confidence Monitor measure people’s concern, confidence, commitment and optimism in connection with climate change.

Concern for climate change:The number of persons believing that climate change is the most important cause for concern was in 4th place; world economic stability is the number one concern. The commitment to fight climate change in Latin AmericaThe Latin American countries responding (Mexico and Brazil) to questions in connection with public expense priority versus climate change rated those two concerns on more or less the same level, an opinion which was echoed in other countries. The number of people claiming to be making a significant personal effort to help reduce climate change by making changes in their lifestyle increased 5% in the emerging economies in 2008.

Optimism concerning climate change:Optimism that climate change can be controlled has dropped 7% in Latin America as compared to 6% worldwide since 2007.

Confidence in climate change leadership:Consumers continue to have high expectations that their governments will deal with climate change; 65% of those surveyed worldwide are in favor of a new global carbon emissions pact. Brazil and Mexico had the highest levels of confidence, 86% and 83%, respectively.

For further information, see:

http://www.hsbc.com/1/2/sustainability/2009-reports/ccm-2009

DEVE

LOPE

D M

ARKE

TSEM

ERGI

NG

MAR

KETS

Trends in statements – attitudes to climate changeAttitude statements – developed markets vs. emerging markets 2007-2009

Concern: Climate change is my greatest

concern nowadays.

Confidence: Those who should

be doing something about climate

change are doing it.

Commitment: I am personally

making a concerted effort to reduce climate change.

Optimism: I think we are going

to stop climate change.

* 6+7 on a scale of 1 to 7 1=totally disagree and 7= totally agree* Australia, Canada and Malaysia were not surveyed on 2007

25

43

10

28

31

43

8

26

32

52

8

27

28

37

9

31

29

54

8

26

24

44

10

33

2009 2008 2007

EN26

Our Social Value


OUR SOCIAL VALUE 37

At HSBC we are aware of the fact that the work of our em-ployees makes it possible to offer services of excellence to clients and investors. HSBC Latin America therefore seeks to motivate, respect, train and involve all employees in an ef-fort to achieve business success and personal development.

HSBC values each individual in its team, based on a Pol-icy of Diversity which encourages respect among gen-der, race, age, ideas, perspectives, leadership styles and points of view. That commitment has allowed HSBC LAM to remain in the vanguard.

In that regard, a worldwide HSBC Group performance manage-ment system was implemented in 2009, whose objectives are:

• To achieve a single approach to performance manage-ment with the same processes and language, consist-ent with Group objectives.

• To generate a culture of high performance.• To improve employees’ perception of the entire perfor-

mance management process.

Fair Work PracticesDiversityAt HSBC, diversity is a key factor for our brand and our per-manence in the market. The value we confer upon diversity is what distinguishes us from our competitors. Diversity does not simply involve gender, special needs, religion, sexuality or age; it is a question of respecting everyone and treating everyone, both clients and employees, with dignity.

We have very clear principles and standards as concerns respect for diversity and we are constantly striving to instill the concept of respect in our employees through our Re-gional Diversity Commission. The results of our Organiza-tion Climate Survey in Latin America brings to light two de-termining factors in our employees’ commitment to HSBC, which are related directly to the matter of diversity: the per-ception that the employer provides equal opportunity and values different perspectives.

The Value of our People

HSBC values each individual in its team, based on a Policy of Diversity which encourages respect among gender, race, age, ideas, perspectives, leadership styles and points of view.

Diversity - HSBC BrazilHSBC Brazil is the only bank in the country that has complied with the national requirement for 5% of the staff to consist of special-needs employees. In order to meet that goal, HSBC Brazil has developed a 12-month training program for special needs employees (three months of classes and nine months of office training). HSBC Brazil has also created a Diversity and Inclusion Committee to promote respect and appreciation of individual differences.

A program of female leadership has been developed, under which 71 managers have been identified and are being advised by our group of directors. The results at HSBC Brazil for the last four years is that diversity has increased 13%, women in upper management 76%, the hiring of recently graduated university students 194% and special-needs persons 400%.

In Latin America, two of our bank General Directors are women, and four women sit on the Regional Management Committee. More than half of our employees in Latin America are currently women.

Wom

en

Men

Men

25,8

51

29,1

51

27,3

51 30,8

42W

omen

Employee Distribution by Genderin Latin America

40,000

30,000

20,000

10,000

0

2009

2008

LA01, LA02

In 2009, women accounted for

53% of full-time HSBC Latin

America employees. Employee

turnover in 2009 was 21.4%, 3.2

percentage points below the

preceding year, when it was

24.6%. That reduction was

strongly influenced by the effects

of the global economic crisis.


Social BenefitsHSBC LAM employee benefits exceed those required by law in each of the countries in which it operates. In each country in Latin America, we work to ensure that our com-pensation policy recognizes effort, merit, skills developed and goals achieved by the employees.

Different benefits are granted in Latin America, and vary depending on the country in question:• Comprehensive health plans• Products and Service bonus• Life insurance• Savings plan for the purchase of shares• Assistance in securing a university degree• Mortgages at preferential rates• Automobile loans• Yearly medical checkup• Cancer diagnosis and treatments

SalariesIn each of the countries of Latin America in which we oper-ate, employee salaries are reviewed annually on the basis of performance, market practices and internal factors. Per-sonal performance is compared to financial and nonfinancial indicators. That performance is also measured on the basis of legislation determining local compensation standards.

The global Management Remuneration Committee oper-ates in accordance with a series of principles. Further information concerning compensation and bonuses paid to executives

and employees is contained in Holdings plc - Annual Report and Accounts 2009.

HSBC’s global human resources strategy is to be “the best place to work”, so as to attract prospect employees and re-tain existing employees; this takes into account the need to reward performance and not tolerate mediocrity, on the basis of the following:

• Establishing internally fair and externally competitive lev-els of compensation, based on the tasks and responsibili-ties of each position.

• Managing compensation so as to reward employees with the highest performance within an established frame-work, in order to encourage higher levels of performance.

• Providing basic tools for effective management of com-pensation.

Employee Training and DevelopmentAt HSBC LAM, we are committed to the development of our employees, given they make the difference with our cli-ents and investors in the community. Our work teams have ample experience, which allows them to provide quality service to internal and external clients. As a result, even in difficult scenarios, we can forge ahead and develop action plans for improving the HSBC culture on a day-to-day basis.

HSBC training policy is regulated by the LAM Learning area under the region’s Human-Resources Department, which has implemented a “Business School”. Under that arrange-ment, training is organized on the basis of curricula, which in turn are organized by Academies and Solutions Centers. The Academies are organized in accordance with business lines and support areas, while Solutions Centers are areas of expertise in specialties such as Leadership, Sales and Products. There are currently 15 Academies, and each Acad-emy Head handles the training needs of the employees.

HSBC offers a wide array of training and updating cours-es. In 2008, approximately 3,000,000 hours, which breaks down to 8.1 days per employee, while in 2009, the figures were 1,700,000 of training per employee. The difference in hours can be explained by a reduction in budgets of $ 31 million in 2008 to $ 20 million in 2009.

Following is a breakdown of subject matter and of the number of hours involved in in-person courses and virtual courses in 2009.

Aside from training courses, HSBC has developed specific programs for top management, such as the International Management Program, which makes it possible to follow a unique international career based on assignments to different countries and areas with growing exposure and challenges.

The Learning Transformation – Our Vision

To be a world class HR practice recognised for enabling business

performance through people

Relevant learning, effectively delivered

Global Integration

BusinessFocus

Effectiveness Efficiency

HR Vision

What this means for learning

Strategic Foundations

Curriculum YTD YTD Category ILT Classroom e-Learning Total (Actual Hours) (Actual Hours)

Leadership Development 128,446 34,354 162,810 Sales & Relationship Mgmt 118,081 32,637 150,718 Credit & Risk 19,826 31,127 50,952 Product & Technical 286,765 315,533 602,298 Professional Skills 128,351 95,447 223,799 Regulatory & Compilance 94,094 381,732 475,826 IT User Training 52,145 7,324 59,469Corporate Responsibility 9,248 16 9,264 Total 836,954 898,179 1,735,133

4.5, LA03, LA10

OUR SOCIAL VALUE 39

Retaining talentThe HSBC strategy is to attract and retain the best employ-ees. We strive to recruit people willing to commit to a long-term career with the Group; people attracted not only by the compensation, but also by a competitive organization offering development values and opportunities.

Both in Latin America and around the world, HSBC has de-veloped programs designed to bring in and develop talent, from graduates from universities to people at management level. The purpose of the HSBC talent strategy is to create the conditions necessary for our people to develop. The strategy rests on four large pillars: Talent identification, Cali-bration, Succession plans and Career talks.

Talent identification: Managers are required to maintain a collaborative dialogue to agree on employees’ strengths and areas requiring improvement. Talent Review: It must be jointly decided which employ-ees have the greatest potential for occupying positions and dealing with the challenges of the future. Succession Planning: Managers create career plans based on the results of their talent identification. Career Development: Managers must have a frank talk with their employees to discuss their potential and to agree on career interests and future opportunities.

This process is carried out jointly with the Human Resources team and Business Leaders, only for top management posi-tions. We continue to strengthen systems that will help us to devise mass processes and implement them at every level.

Employee evaluations Identifying our employees’ talent is the first step in HSBC Talent Management. The 9-Box Model is used to identify employees with the highest future growth potentials for critical positions. This model is a 9-box matrix, where po-tential and performance are evaluated, from Low/Medium/High, to assess career paths of employees at HSBC.

Creating an HSBC ‘TalentMindset‘Access to ready, high-quality internal pipeline of talent aligned to business needs to fill 80% of key internal roles

TalentIdentification

TalentReview

SuccessionPlanning

CareerDevelopment

Who do we have individually?

Line manager judgment to place individuals in 9-box

Who do we have collectively and what are the issues?

Collaborative dialogue occurs about talent

Line managers take accountability employee & business issues

Who do we need and where are the gaps?

Succession plans used as first point of reference when vacancy arises

How do we develop or resource to fill those gaps?

Candid communication with employees about potencial, future career and performance

Measuring potential involves evaluating three major areas: Agility, Aspiration and Commitment. Goal achievement and the manner in which those goals were achieved are evaluated.

By means of that system, HSBC promotes:• Evaluating employee performance with respect to estab-

lished goals, where strengths and areas of opportunity to improve performance are evaluated.

• Promoting self-development of gaps in their skills.• Generating development programs designed to strength-

en employee potential and their growth opportunities in the business.

Job Security and Health In each of the countries of Latin America in which we op-erate, we guarantee that our employees work in a secure environment, which complies with local legislation of each country and with HSBC Group internal guidelines.

We have implemented health and security practices at our local offices, for which health and security equipment has been designed to coordinate and execute actions for improving working conditions and environment. A priority among those actions is the prevention of workplace risks in order to avoid accidents, fire and work-related diseases/illnesses.

Among other steps taken in that regard, we have conduct-ed evacuation drills at the main HSBC buildings as well as at the branches. The buildings are outfitted with fire detection devices which monitor all company facilities. HSBC Latin America health program initiatives have been independently developed in each of the countries in the re-gion, on the basis of local legislation, the features of the population and the different trends in each country.

Leader Development Program - HSBC ArgentinaThe purpose of the Program is to generate a change of culture at the company and improve the quality of life of its employees. As a result of the positive impact of this program in 2007 and 2008, HSBC Argentina decided to extend it to all employees wishing to take up the challenge to generate change and add value to the relationship with clients, coworkers and other persons involved in their activities.

In 2009, the second phase was implemented, in which all employees were invited to participate, followed by a third phase at end of year for those who had not managed to take part in the previous stages. The same methodology was used in all stages. The participants in each stage coached those participating in the following stage, and the members of the Executive Committee acted as coach of coaches. In this reporting year, the Program was extended to the interior of the country, and 88% of HSBC Argentina employees took part and became involved in generating change and adding value to their daily tasks.

LA12


HSBC has a strong commitment to the communities in which we operate. HSBC is key in the development of Latin American countries. Our operations in the region provide a number of benefits in the form of our tax payments, job cre-ation, training, acquisitions, investments and volunteering.

Our goal, beyond the impact of our business, is to stimulate sustainable economic growth by means of our investment activities in the community.

Investing in the CommunityThe global HSBC strategy is based on two core factors: educational and environmental support. We believe that education and the environment are basic components for the development of communities and worldwide concerns.

What do we support?Three quarters of our support involves education and the environment in the communities in which we operate. The remaining 25% is used for other purposes, such as natu-ral disasters and local community projects. We also have Group guidelines for investing in the community, which al-low us to choose the types of projects and business areas to be supported.

HSBC donated USD$10.9 million toward HSBC LAM pro-jects, and our clients USDD$7 million. The resources were distributed as follows: 69% for education projects, 12% for the environment and 19% for other projects.

Support for education depends on specific local needs. We have a large variety of global initiatives in the HSBC Global Education Program, including: Future First (marginalized children), More than MoneyTM (financial education) and the HSBC Eco-Schools Climate Initiative.

The Value of our Community

Instituto HSBC Solidariedade - HSBC BrazilInstituto HSBC Solidariedade was established in 2006 and focuses on HSBC’s private social investments, giving impetus to a wide network of development by funding projects in the fields of education, income generation for communities and the environment. Its monitoring and assessment system was improved in 2009, ensuring the effectiveness of initiatives and leveraging results. Acting as an interlocutor for HSBC for sustainability-related subjects, the Institute coordinates the company’s global projects under development in Brazil and fosters volunteer employees’ engagement.

Activities are funded with resources from HSBC’s companies in Brazil and contributions from customers, collected by means of a number of products and services bringing together financial return and socio-economic solutions. Among products sold that help fund the Institute are Instituto HSBC Solidariedade Credit Card, Vida Protegida Empresarial Solidariedade insurance, Capital de Giro Socioambiental (Socio-environmental Working Capital), green insurance and ISE, HGIF and DI Solidariedade funds.

After annual selection, Instituto HSBC Solidariedade funds community projects in the areas of education (with emphasis on school success), community (generating income) and the environment (water and climate) with an average duration of two years. The initiative has grown year to year: 187 projects enjoyed the Institute’s support in 2008, with total planned investment of R$ 14.1 million. In 2009 this figure soared to 263 projects (R$ 15.8 million), reaching 176 thousand people.

Through Instituto HSBC Solidariedade Credit Card, the bank offers customers a chance to contribute to social projects. Clients make monthly donations (of a value between R$ 5 and R$ 30) and the bank waives the annuity and donates 50% of revenue stemming from interchange rates. In 2009, nearly 167 thousand active cards gave R$ 5.27 million to such activities. Of this total, 70% went to projects supported by Instituto HSBC Solidariedade; 10% went to training for entities running these projects; and 20% went to Child Pastoral’s initiatives. Since it was set up in 2006, this product has raised over R$ 15 million for such initiatives.

R=Brazil real

Education

Environment

Other

OUR SOCIAL VALUE 41

Proyectos con Comunidad - HSBC ArgentinaHSBC Argentina has built alliances with various civil society organizations seeking to promote education and community investment efforts. During 2009, the following projects were developed:

•Cáritas:implemented the program “Family Scholarships” aimed to provide financial aid and group training for parents in extreme poverty, in order that their children can access and remain in the formal education system, strengthening the educational function of the family.

•FundaciónUniendoCaminos: continued working with the Academic Support Center “Learning to Learn” project which encourages teenagers to improve their school performance by providing access to a reference library and computer lab.

•FundaciónCompañíaSocialEquidad: collaborated with the Recycling Program, which aims to refurbish donated computers and software for schools, and thus encourage the social integration of children through the teaching of basic computer use. With all the material obtained, school computer labs were assembled.

•Fundación Leer: continued working with the program “Holidays of Reading”, promoting environmental-related books to raise awareness.

•Asociación Civil Centro Lekotek: supported the development of the “Family Program” carried out by Civil Partnership Lekotek Center, which aims to work with children with disabilities and their families who are assisted by a team of specialists from the health fields, education, and social work.

•Junior Achievement: continued with the partnership established for the delivery of the course “The Advantages of Staying at School” in public schools across the country. The course is held only in public schools and through volunteers aiming to reduce school dropouts and it is intended for students to understand the importance of education for their future and the role of this in their personal achievements and fulfillment. In 2009, HSBC Argentina was granted the “Corporate Volunteer Award” for its involvement and support of this project.

•Fundación Poder Ciudadano: developed the “Conflict Resolution and Building Goals at Schools” in public schools, with the aim of providing students with tools to resolve their conflicts and differences peacefully.

Future First is one of the HSBC Global Programs through which support is provided to vulnerable and disadvantaged children. That initiative promotes volunteering by HSBC employees throughout the world. Under that program, HSBC is allocating $10 million dollars worldwide to support that cause. We also work with other NGOs providing access to education.

Future First: continues working for disadvantaged children “Future First” is a global HSBC Group 5-year program focused on street children and orphans. The HSBC Group worldwide cooperates with local civil organizations by supporting different proposals and projects designed to provide a new direction in the lives of those children.

The company is aware that we live in a world in which millions of children have lost their parents and the protection of their families. They are frequently unable to find the protection, care and support they need for healthy growth. The Group therefore supports Aldeas Infantiles SOS, which, together with individuals, families, communities and other allies, creates a society in which all boys and girls can experience a warm family environment.

HSBC Argentina once again took part in the Future First Toy Drive benefiting the children of the NGOs involved in the program. Additionally, HSBC volunteers delivered toys to the children at the community homes run by the Aldeas Infantiles SOS Argentina Program for Strengthening the Family in Mar del Plata, Rosario and Luján.

SO1


VolunteeringIn the spirit of giving back to the communities in which we operate, our employees volunteer their time, talent or mon-ey, either individually or collectively, for the benefit of the dif-ferent causes in their communities. In the countries in which it operates, HSBC supports these initiatives with financial, material and human resources as well as physical spaces where the employees can conduct their volunteer activities.

Distribution of value in our Latin American Community

2009 2008 2007

Donations to communities 10.2* 8.2* 7.2*Total volunteer services (hours) 71,321 21,096 2,701

Figures in millions of dollars

*Taken from HSBC Holdings plc Sustainability Report 2009

Future First - HSBC El SalvadorA total of USD$224,320 have been provided to the following institutions through Future First:

Fundación Mensajeros de la PazWe donated USD$24,320 to the Foundation for a home housing 21 HIV-positive children aged 0 to 7 years. That money will be used to pay the staff looking after those children, to purchase teaching material and medications and to provide psychological care to the children.

Hogares ProvidenciaWe donated USD$25,000 to Hogares Providencia for a home currently housing 26 children and teenagers aged 0 to 18 years. That money will be used to pay the staff looking after those children and young people, to purchase teaching material, to cover tuition payments, cultural and recreational activities and vocational orientation workshops and to provide psychological care.

FundaciónNuestrosPequeñosHermanosWe donated USD$75,000 to assist 450 girls and boys in El Salvador. That donation will help to provide a comprehensive and dignified quality of life for those children by strengthening their homes so that they can provide, educational, medical services and re-creation.

Aldeas Infantiles SOS Aldeas Infantiles SOS are supported by HSBC throughout the world. In El Salvador, we specifically support the villages located in Santa Ana with our USD$75,000 donation.That donation benefits 130 boys and girls from 5 to 18 years of age who have been abandoned or lost parental protection. Some of those children have been mistreated or suffered family violence, which is why our purpose is to afford them a family, medical attention, food, clothing and above all, education.

Happier Uruguay campaign - HSBC UruguayFor a Happier Uruguay campaign was launched in 2009, and was the first product through which HSBC Uruguay generated a social benefit.

For each purchase made with HSBC Uruguay credit cards, the Bank makes a donation of 0.5% of the profit arising from the purchase.

That donation is used for the Ventana project run by the NGO Gurises Unidos, which works with 20 street children and their families in an effort to get them into the education system. That product does not represent an additional expense for the client, since the donation is made directly by the Bank.

Results at December 2009:• 90% of the girls, boys and teenagers involved in the

Project are no longer homeless.• 100% of the girls, boys and teenagers benefited by the project

have been integrated into the formal education system.• 90% of the teenagers involved in the Project have been

integrated into the Formal Secondary Education System.• 86% of the boys and girls involved in the project pass their

year-end examinations.• 95% of the boys, girls and teenagers and their families

involved in the project have achieved effective and adequate access to Basic Childhood and Family Services (health, recreation, documentation, social benefits).

“Telethon 20-30” - HSBC PanamaThe Active 20-30 Club of Panama is a non-governmental organization constituted in Panama since 1955 and its mission is to serve the Panamanian children through reciprocal cooperation with other sectors.

The goal of the “Telethon 20-30” 2009 was to equip the pediatric dentistry facilities and retina operations of the “Children’s Hospital” and the “Orthotics and Prosthetics National Institute Laboratory of Physical Medicine and Rehabilitation”.

During the 27 hours of TV transmission, our nearly 200 staff volunteers participated as telephone assistants, taking calls from donors and providing technological support for raising funds. Our total contribution totaled USD$115, 000, of which USD$50, 000 correspond to the sponsorship of HSBC and USD$65, 000 correspond to employees and customers that support the activities of the Telethon Committee.

SO1

OUR SOCIAL VALUE 43

In 2009, the HSBC Eco-Schools Climate Initiative was launched jointly with the Foundation for Environmental Education, an NGO headquartered in Denmark. The program will establish an international network of schools working jointly to reduce climate change and adapt to its possible effects. The pilot program started in Brazil.

Our global program, which concentrates on business training, is known as More Than Money™ and is administered jointly with Junior Achievement Worldwide, an organization with considerable experience in teaching finances and entrepreneurship to children. HSBC LAM is part of the Americas Board of Directors contributing to project planning and strategic management.

Students in Free Enterprise (SIFE) is a program financed by HSBC and the Global Education Trust, where university students have the opportunity to make a difference by providing financial education to primary school children middle school and upper school children, university students, adults, heads of families, senior citizens and any groups that wish to formalize their commercial activities and aspire to becoming micro-entrepreneurs.

SO1


Our clients and suppliers are a fundamental part of the value of our group.

Our ClientsIt is the goal of HSBC to provide our clients with high-quality services through large scale benefits, geographic scope and brand strength. We have developed systems and technology to simplify banking processes for our cli-ents. In order to continue strengthening our sustainability, we implement global initiatives designed to reduce the use of paper when opening accounts and services.

We receive constant feedback and measurement from our clients so that we can continue to improve our services. The measurements are made by external organizations.

In order to achieve the highest transparency levels in areas such as honesty, integrity and fairness in dealing with our clients, suppliers and employees, HSBC has established a Code of Conduct, which contains HSBC Group worldwide policies as well as guidelines for local legislation in that area.

Socio-environmental products and servicesHSBC promotes sustainable products and services within our service portfolio. Our goal is to develop products and ser-vices that will provide society with social and environmen-tal benefits. We also recognize the value of products that involve clients and inform them of matters of sustainability.

Through our business development teams in the Corpo-rate Sustainability departments in each country, HSBC Latin America detects and evaluates business opportuni-ties with environmental and social benefits, as well as fea-sible economic returns.

The Value of our Clients and Suppliers

ATM Client Contribution - HSBC MexicoThrough our programme of ATM donations made by clients, HSBC Mexico can strengthen education, environment and community initiatives. Since 2003, HSBC Mexico has raised more than USD$9.5 million, being one of our best practices in sustainability.

In 2009, our clients use our 6288 ATM network to funneled USD$ $1,271,608 for the support of education, environment and community projects within Mexico. The implementation of this type of fundraising and its operative cost are internalized for HSBC.

Our sustainable products are designed to reduce the impact of climate change, and are especially oriented to-wards finding solutions to social and environmental chal-lenges, such as comprehensive management of energy, water, waste and biodiversity in the region.

As a financial institution, one of the ways in which we can con-tribute to sustainability is through our loans and investments.

When developing our products and services, we consider potential environmental and social risks associated with loans and investments, and follow international best prac-tice standards, such as the Equator Principles, which are applied in financing projects. HSBC has also developed its own sustainable financing policies.

Sustainable Management System - HSBC El SalvadorThe HSBC El Salvador Sustainable Management System has been in place since 2005. That system is based on ISO 14000 concepts and regulates relations between the Sustainable Risk, Business, and Levels of Delegation (loan approval) areas, among others. The Sustainable Management System combines the Group’s international requirements, regulations, criteria and local experience.

Additionally, for projects requiring capital in excess of USD$10 million, evaluations are carried out under the Equator Principles and the IFC World Bank standards. HSBC EL Salvador has adopted the Group’s risk classification system, under which two classifications are assigned to each recognized project or client.

There is a documented procedure for environmental evaluation. Under that procedure, information and documentation on the case is gathered in coordination with the business area, but the Risk area handles the assignment or grading in order to provide transparency and independence to decision-making within the Group.

The evaluation considers the size of the project, the prevailing conditions and reversibility. Also considered are the commitment, history and capacity of the client as concerns managing environmental impacts and matters related to society or the community.

Environmental evaluations are documented internally in a report, which is taken into account when it comes time to approve the loan.

OUR SOCIAL VALUE 45

Rina ReyesHEAD OF SUSTAINABILITY - HONDURAS

Part of the HSBC commitment to the development of our clients in the communities in which we operate is to provide support with educational, financial and environmental initiatives that provide the underprivileged the opportunity to stand out in life. Being part of the HSBC team and taking part in these initiatives as volunteers has allowed us to determine the needs of the communities and contribute our time, know-how and skill in building a more sustainable future for all.

Argentina• Green Insurance• Sustainable statements of account (less paper) Brazil• Social investment funds• Green Insurance• Reward Club • Green loans • Investment in education campaign El Salvador• Compact-car loans• Green catalogs• Green bonds Honduras• Green life insurance

Mexico• Green Insurance• Sustainable statements of account• Investment funds• Flexible account Nicaragua• Loans for energy efficient cars Panama• Green Insurance Paraguay• Sustainable statements of account• Green automobile insurance• Credit card for donations to NGOs Peru• Credit card for donations to NGOs Uruguay• Credit card for donations to NGOs

Socio-environmental in Latin America


Joycelyn GarcíaHEAD OF SUSTAINABILITY - PANAMA

We are pioneers in introducing the so-called Green Insurance to the Panamanian market, which aside from offering protection, also supports sustainable programs in communities that encourage the management and conservation of mangroves in the Gulf of Panama.

Our SuppliersOur Suppliers’ Corporate Sustainability Although the HSBC Latin America relationship with sup-pliers involves different cultures, standards and values, we nevertheless apply a code of conduct to suppliers of goods and services. HSBC expects its suppliers to comply with its value standards within the context of their own culture. Relationships with suppliers are based on the principle of honesty and fair treatment permanently. Therefore, HSBC expects its suppliers to apply the same honest and fair treatment to all parties with which they deal, including em-ployees, subcontractors and other third parties.

We request our suppliers to provide information concern-ing sustainability criteria as part of the process for request-ing a proposal. We asked our suppliers to conduct audits and monitor their practices to ensure that they comply with our code of conduct, including social matters such as labor rights and working conditions, as well as envi-ronmental improvement strategies. We have continued to use third-party audits to evaluate the performance of cer-tain suppliers in order to ensure compliance with HSBC standards and local laws.

• Suppliers must include basic negotiating principles in a Code of Business Standards or similar policy, including factors such as adhering to local laws and steps for deal-ing with bribery and corruption.

• Suppliers must have reasonable policies for payment of their own suppliers.

We are fully aware of the impact we have on the suppliers with whom we deal and of opportunities for promoting sustainable development through those suppliers. In Lat-in America, we are working with our most critical suppliers in order for them to implement best social responsibility practices; we are also attempting to ensure that the chain of production applies better practices.

Vendor ManagementAs part of the HSBC Group corporate sustainability strategy, the Vendor Management program was successfully implemented in 2009. This tool is currently used by the company throughout Latin America and allow us to select and approve strategic and critical suppliers and begin to conduct individual analyses on the basis of the Group’s international policies and guidelines.

The purpose of the Vendor Management tool is to bring a larger number of suppliers into the Supplier Development Program, which seeks to establish a cooperative relationship with each, by gradually incorporating social and environmental factors in their selection and evaluation, thus boosting ethical behavior standards throughout the value chain, including factors such as child labor, forced labor and poor working conditions.

OUR SOCIAL VALUE 47

Leticia ArguedasHEAD OF SUSTAINABILITY - COSTA RICA

Because HSBC is aware of its responsibility to society and the environment, it includes sustainability in its group strategy and practices. That implies respect of ethical values and surveillance of business conduct, particularly as concerns the projects financed by the Group and the possible economic, social and environmental impacts.

HSBC Latin America in Figures

2009 2008

Number of countries in Latin America in which HSBC operates 15 14Total number of employees 55,002 58,193Number of Clients 18,679,717 -

Economic

Total assets USD$ million 115,967 102,946Profit before ta (total) USD$ milliion 1,124 2,037Taxes paid USD$ billion 1.6 -

Social

Employees Women % 53 53Men % 47 47Turnover rate % 21.4 24.6Investment in the community USD$ milliion 100 99Volunteer work hours 71,312 21,096Donations to the community USD$ milliion 10.9 8.2

The environment

Energy consumption GWh 324 366Energy consumption per employee KWh/employee 5,895 5,601CO2 emissions tons 120,450 121,600CO2 emissions ton/employee 2.9 2.09Water consumption m3 1,042,331 1,113,906Water consumption m3/employee 20.97 20.72Generation of non-hazardous waste tons 10,366 19,499Generation of non-hazardous waste ton/employee 0.21 0.36


AWARDS AND ACKNOWLEDGMENTS 49

Awards and Acknowledgments

• HSBC Bank Argentina S.A. - leader in the availability of ATMs (2008).

• Command Center Project - Brazil.

• Melhor Grupo Segurador do Brasil.

• XV Prêmio ABEMD de Marketing Direto.

• Premiação Valor Investe.

• Premiação Gazeta Investe.

• HSBC is the only bank brand with AAA+ in 2009 (Brand Finance, February 2009).

• HSBC is the most ethical company in the world (Covalence, February 2009).

• HSBC is one of the banks with the best performance in the Western world at this time

(The Economist, March 2009).

• “HSBC is healthier than most banks” (The New York Times, March 2009).

• HSBC was considered the best global bank in the world by Euromoney -, July 2009.

• HSBC LAM was recognized by Euromoney as the best debt platform in that region’s capital markets.

• HSBC - awarded prizes for excellence in 2009.

• HSBC recognized in its 4th year as “Socially Responsible Company” by CEMEFI.

• The HSBC group and its subsidiaries received more than 17 awards for excellence from the

magazine Euromoney. Chief amongst those prizes were Best Global Bank, Best Debt Platform

in the world and Best Transactional Bank at the global level.

2.10

GRI Index

Indicator Description Page

1.1 Statement from the most senior decision-maker of the organization 3, 5 (e.g., CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and its strategy. 1.2 Description of the principal impacts, risks and opportunities 3, 52.1 Name of the organization Inside front cover2.2 Principal brands, products and/or services 72.3 Operating structure of the organization, including main divisions, 7, 10 operating companies, subsidiaries and joint ventures 2.4 Location of organization´s headquarters 12.5 Number of countries where the organization operates, and names 10, 11 of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report. 2.6 Nature of ownership and legal form 72.7 Markets served (including geographic breakdown, sectors served, and 7, 10 types of customers/beneficiaries). 2.8 Scale of the reporting organization, (number of employees, net sales, 11 total capitalization, Quantity of products or services provided. 2.9 Significant changes during the reporting period regarding size, structure, 1 or ownership including: The location of, or changes in operations, including facility openings, closings, and expansions; and Changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organizations). 2.10 Awards received in the reporting period. 493.1 Reporting period (e.g., fiscal/calendar year) for information provided. 13.2 Date of most recent previous report (if any). 13.3 Reporting cycle (annual, biennial, etc.) 13.4 Contact point for questions regarding the report or its contents. Inside back cover3.5 Process for defining report content, including: Determining materiality; 1 Prioritizing topics within the report; and Identifying stakeholders the organization expects to use the report. 3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, 1 joint ventures, suppliers). See GRI Boundary Protocol for further guidance. 3.7 State any specific limitations on the scope or boundary of the report8. 13.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, 1 outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations. 3.9 Data measurement techniques and the bases of calculations, including 33 assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report. 3.10 Explanation of the effect of any re-statements of information provided in earlier None - since this is reports, and the reasons for such re-statement (e.g., mergers/acquisitions, the first sustainability change of base years/periods, nature of business, measurement methods). report for LAM



3.11 Significant changes from previous reporting periods in the scope, boundary, None - since this is or measurement methods applied in the report. the first sustainability report for LAM3.12 Table identifying the location of the Standard Disclosures in the report. Inside front cover3.13 Policy and current practice with regard to seeking external assurance for the The report was not verified report. If not included in the assurance report accompanying the sustainability report, explain the scope and basis of any external assurance provided. Also explain the relationship between the reporting organization and the assurance provider(s). 4.1 Governance structure of the organization, including committees under the 17 highest governance body responsible for specific tasks, such as setting strategy or organizational oversight. 4.2 Indicate whether the Chair of the highest governance body is also an 17 executive officer (and, if so, their function within the organization’s management and the reasons for this arrangement). 4.3 For organizations that have a unitary board structure, state the number of members 17 of the highest governance body that are independent and/or non-executive members. 4.4 Mechanisms for shareholders and employees to provide recommendations or 17 direction to the highest governance body. 4.5 Linkage between compensation for members of the highest governance body, 38 senior managers, and executives (including departure arrangements), and the organization’s performance (including social and environmental performance). 4.6 Processes in place for the highest governance body to ensure conflicts of 17 interest are avoided. 4.7 Process for determining the qualifications and expertise of the members of the 17 highest governance body for guiding the organization’s strategy on economic, environmental, and social topics. 4.8 Internally developed statements of mission or values, codes of conduct, and 13, 19 principles relevant to economic, environmental, and social performance and the status of their implementation. 4.9 Procedures of the highest governance body for overseeing the organization’s 17 identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles. 4.10 Processes for evaluating the highest governance body’s own performance, 17 particularly with respect to economic, environmental, and social performance. 4.11 Explanation of whether and how the precautionary approach or principle is Not disclosed addressed by the organization. 4.12 Externally developed economic, environmental, and social charters, principles, or 22 other initiatives to which the organization subscribes or endorses. 4.13 Memberships in associations (such as industry associations) and/or 18 national/international advocacy organizations in which the organization: Has positions in governance bodies; Participates in projects or committees; Provides substantive funding beyond routine membership dues; or Views membership as strategic.

GRI INDEX 51


4.14 List of stakeholder groups engaged by the organization. 224.15 Basis for identification and selection of stakeholders with whom to engage. 224.16 Approaches to stakeholder engagement, including frequency of engagement 22 by type and by stakeholder group. 4.17 Key topics and concerns that have been raised through stakeholder 22 engagement, and how the organization has responded to those key topics and concerns, including through its reporting. EC1 Direct economic value generated and distributed, including revenues, 26, 27 operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments. EC2 Financial implications and other risks and opportunities for the organization’s Not disclosed activities due to climate change. EC3 Coverage of the organization’s defined benefit plan obligations. Not disclosedEC4 Significant financial assistance received from government. Not material issue, not disclosedEC5 Range of ratios of standard entry level wage compared to local minimum wage Not disclosed at significant locations of operation. EC6 Policy, practices, and proportion of spending on locally-based suppliers at Not disclosed significant locations of operation. EC7 Procedures for local hiring and proportion of senior management hired from Not disclosed the local community at locations of significant operation. EC8 Development and impact of infrastructure investments and services provided Not disclosed primarily for public benefit through commercial, in-kind, or pro bono engagement. EC9 Understanding and describing significant indirect economic impacts, including Not disclosed the extent of impacts. EN01 Materials used, by weight or volume Not material issue, not disclosedEN02 Percentage of materials used that are recycled input materials. Not material issue, not disclosedEN03 Direct energy consumption, listed by primary source Not material issue, not disclosedEN04 Indirect energy consumption, listed by primary source 32EN05 Energy saved due to conservation and efficiency improvements. 33 EN06 Initiatives to provide energy-efficient or renewable energy based products and Not material issue, services, and reductions in energy requirements as a result of these initiatives. not disclosedEN07 Initiatives to reduce indirect energy consumption and reductions achieved. 33EN08 Total water withdrawal by source. Not material issue, not disclosedEN09 Water sources significantly affected by withdrawal of water. Not material issue, not disclosedEN10 Percentage and total volume of water recycled and reused. Not disclosedEN11 Location and size of land owned, leased, managed in, or adjacent to, protected Not material issue areas and areas of high biodiversity value outside protected areas. EN12 Description of significant impacts of activities, products, and services on Not material issue biodiversity in protected areas and areas of high biodiversity value outside protected areas. EN13 Habitats protected or restored. Not material issueEN14 Strategies, current actions, and future plans for managing impacts on biodiversity. Not material issueEN15 Number of IUCN Red List species and national conservation list species with Not material issue habitats in areas affected by operations, by level of extinction risk. EN16 Total direct and indirect greenhouse gas emissions by weight. 33



EN17 Other relevant indirect greenhouse gas emissions by weight. Not material; carbon dioxide is our most significant direct GHG emissionEN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. 33EN19 Emissions of ozone-depleting substances by weight. Not material issueEN20 NO, SO, and other significant air emissions by type and weight. Not material issueEN21 Total water discharge by quality and destination. Not material issueEN22 Total weight of waste by type and disposal method. 31EN23 Total number and volume of significant spills. Not material issueEN24 Weight of transported, imported, exported, or treated waste deemed hazardous Not material issue under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally. EN25 Identity, size, protected status, and biodiversity value of water bodies and related Not material issue, habitats significantly affected by the reporting organization’s discharges of water and runoff. EN26 Initiatives to mitigate environmental impacts of products and services, and 30, 33, 35 extent of impact mitigation. EN27 Percentage of products sold and their packaging materials that are reclaimed by category. Not material issue,EN28 Monetary value of significant fines and total number of non-monetary sanctions Not disclosed for non-compliance with environmental laws and regulations. EN29 Significant environmental impacts of transporting products and other goods and Not disclosed materials used for the organization’s operations, and transporting members of the workforce. EN30 Total environmental protection expenditures and investments by type. Not disclosedLA01 Total workforce by employment type, employment contract, and region. 37LA02 Total number and rate of employee turnover by age group, gender, and region. 11, 37LA03 Benefits provided to full-time employees that are not provided to temporary or 38 part-time employees, by major operations. LA04 Percentage of employees covered by collective bargaining agreements. Not disclosedLA05 Minimum notice period(s) regarding operational changes, including whether it is Not stated – specified in collective agreements. The Group Manual of Standards stipulates that each member group must work in a professional manner with legitimate employee representative bodies such as unions employee associations, or any other employee representative body established by mutual agreement with HSBC Group Compaby.LA06 Percentage of total workforce represented in formal joint management–worker Not disclosed health and safety committees that help monitor and advise on occupational health and safety programs. LA07 Rates of injury, occupational diseases, lost days, and absenteeism, and number Not disclosed of work-related fatalities by region. LA08 Education, training, counseling, prevention, and risk-control programs in place Not disclosed to assist workforce members, their families, or community members regarding serious diseases. LA09 Health and safety topics covered in formal agreements with trade unions. Not disclosed

GRI INDEX 53


LA10 Average hours of training per year per employee by employee category. 38LA11 Programs for skills management and lifelong learning that support the continued Not disclosed employability of employees and assist them in managing career endings. LA12 Percentage of employees receiving regular performance and career 39 development reviews. LA13 Composition of governance bodies and breakdown of employees per 17 category according to gender, age group, minority group membership, and other indicators of diversity. LA14 Ratio of basic salary of men to women by employee category. Not disclosedHR1 Percentage and total number of significant investment agreements that include Not disclosed human rights clauses or that have undergone human rights screening. HR2 Percentage of significant suppliers and contractors that have undergone screening Not disclosed on human rights and actions taken. HR3 Total hours of employee training on policies and procedures concerning aspects Not disclosed of human rights that are relevant to operations, including the percentage of employees trained. HR4 Total number of incidents of discrimination and actions taken. Not disclosedHR5 Operations identified in which the right to exercise freedom of association and Not stated – collective bargaining may be at significant risk, and actions taken to support The Group Manual of these rights. Standards stipulates that each member group must work in a professional manner with legitimate employee representative bodies such as unions employee associations, or any other employee representative body established by mutual agreement with HSBC Group Company.HR6 Operations identified as having significant risk for incidents of child labor, Not stated- and measures taken to contribute to the elimination of child labor. low risk in direct operationsHR7 Operations identified as having significant risk for incidents of forced or Not stated- compulsory labor, and measures to contribute to the elimination of forced low risk or compulsory labor. in direct operationsHR8 Percentage of security personnel trained in the organization’s policies or Not disclosed procedures concerning aspects of human rights that are relevant to operations. HR9 Total number of incidents of violations involving rights of indigenous people Not disclosed and actions taken. SO1 Nature, scope, and effectiveness of any programs and practices that assess 41, 42, 43 and manage the impacts of operations on communities, including entering, operating, and exiting. SO2 Percentage and total number of business units analyzed for risks related to corruption. Not disclosedSO3 Percentage of employees trained in organization’s anti-corruption policies Not disclosed and procedures. SO4 Actions taken in response to incidents of corruption. We do not report publicly on this indicatorSO5 Public policy positions and participation in public policy development and lobbying. HSBC does not engage in political lobbying - not disclosed



SO6 Total value of financial and in-kind contributions to political parties, politicians, HSBC does not make and related institutions by country. political donations. For a summary of our donations to the community, see page 40 of the LAM Sustainability Report SO7 Total number of legal actions for anti-competitive behavior, anti-trust, Not disclosed and monopoly practices and their outcomes. SO8 Monetary value of significant fines and total number of non-monetary Not disclosed sanctions for non-compliance with laws and regulations. PR1 Life cycle stages in which health and safety impacts of products and services Not stated - not material are assessed for improvement, and percentage of significant products and services categories subject to such procedures. PR2 Total number of incidents of non-compliance with regulations and voluntary Not disclosed codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes. PR3 Type of product and service information required by procedures, and percentage Not stated - not material of significant products and services subject to such information requirements. PR4 Total number of incidents of non-compliance with regulations and voluntary codes Not disclosed concerning product and service information and labeling, by type of outcomes. PR5 Practices related to customer satisfaction, including results of surveys measuring Not disclosed customer satisfaction. PR6 Programs for adherence to laws, standards, and voluntary codes related to HSBC adheres to marketing communications, including advertising, promotion, and sponsorship. marketing, advertising and promotional laws in all of the countries it operates - not disclosedPR7 Total number of incidents of non-compliance with regulations and voluntary codes Not disclosed concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes. PR8 Total number of substantiated complaints regarding breaches of customer privacy Not disclosed and losses of customer data. PR9 Monetary value of significant fines for non-compliance with laws and regulations Not disclosed concerning the provision and use of products and services.

Levels of Application of GRI Principles

Report Application Level C C+ B B+ A+A

G3 ProfileDisclosures

Report on:1.12.1 - 2.103.1 - 3.8, 3.10 - 3.124.1 - 4.4, 4.14 - 4.15

Not Required

Report on a minimum of 10Performance indicators, including at least on from each of: social, economic, and environment.

Report on all criteria listed forLevel C plus:1.23.9, 3.134.5 - 4.13, 4.16 - 4.17

Management Approach Disclosures for each Indicator Category

Report on a minimum of 20Performance indicators, at least one from each of: economic, environment, human rights, labor, society, product responsibility.

Same as requirement for Level B

Management Approach disclosed for each Indicator Category

Respond on each core G3 and Sector Supplement* indicator with due regard to the materiality Principle by either: a) reporting on the indicator or b) explaining the reason for its omission.

G3 ManagementApproach

Disclosures

G3 Performance Indicators &

Sector SupplementPerformance Indicators

Stan

dard

Dis

clos

ures

Repo

rt E

xter

nally

Ass

ured

Repo

rt E

xter

nally

Ass

ured

Repo

rt E

xter

nally

Ass

ured

*Sector supplement in final version

OUTP

UTOU

TPUT

OUTP

UT

GRI INDEX 55

The Hexagon

The Group HSBC hexagonal symbol was introduced as part of its corporate identity in 1983. The basis for the hexagon

was the flag of the Scottish Navy, which, together with other groups, founded the Hong Kong and Shanghai Banking Cor-

poration in 1865. The symbol consists of a rectangle divided diagonally to form the shape of a red hourglass on a white

background. The original design was inspired by the cross of St. Andrew, the patron saint of Scotland. Two red triangles

were subsequently added at each end to form the current HSBC symbol.

HSBC serves approximately 100,000,000 individual and commercial clients worldwide. Around 300,000 people work at HSBC at 8,000 offices in 88 countries and territories.

HSBC started in 1865 as The Hong Kong and Shanghai Banking Corporation, with offices in Hong Kong and Shanghai. Its current headquarters are in London and it does business throughout Europe, Asia Pacific, North America, Latin America and the Middle East.

HSBC has voluntarily agreed to abide by a number of external codes of conduct, some of which are listed here:• UNGlobalCompact• UNUniversalDeclarationonHumanRights• UNEnvironmentalProgrammeFinanceIniciative• EquatorPrinciples• TheClimatePrinciples

HSBC CEO’s IN LATIN AMERICA

ARGENTINAAntonio M. Losada

BRAZILConrado Engel

CHILEGustavo Costa

COSTA RICAFrancisco Coccaro

COLOMBIAHans Theikul

EL SALVADORGerardo Siman

GUATEMALAPaul Stickland

HONDURASJonathan P. Hartley

MEXICOLuis Peña

NICARAGUAClaudia de la Ossa

PANAMAErnesto Fernades

PARAGUAYDiego Ramallo

PERULuiz Felipe Mauger

URUGUAYVirginia Suárez

VENEZUELACarlos F. Solorzano

INDEX

About the Corporate Sustainability Report 1

Letter from the HSBC Group Managing Director and CEO for LAM

and the Caribbean 2

Letter from the Regional Head of Corporate Sustainability

in Latin America 4

HSBC LAM in summary 6

Vision and Mission 12

Corporate Governance 16

Stakeholders 20

Our Economic Value 24

Our Environmental Value 28

Our Social Value 36

HSBC Latin America in Figures 48

Awards and Acknowledgments 49

GRI Index 50

Contact:

María Eugenia Brizuela de Ávila

Regional Head of Corporate Sustainability

in Latin America

Centro Financiero HSBC

Avenida Olímpica No. 3550

San Salvador, El Salvador

Telephone: (503) 2214-2722

Facsimile: (503) 2214-2751

Email: [email protected]

A pdf version of this report is available at

www.hsbc.com/sustainability

© Copyright HSBC Holdings plc 2010

All rights reserved

No part of this publication may be

reproduced, stored in a retrieval

system, or transmitted, in any form or

by any means, electronic, mechanical,

photocopying, recording, or otherwise,

without the prior written permission of

HSBC Holdings plc.

Published by Group Corporate

Sustainability, HSBC Holdings plc, London

2.1, 3.12 3.4

The Value of Our Sustainability

2009 Sustainability Report HSBC Latin America

HSBC Latin AmericaCorporate SustainabilityAv. Paseo de la Reforma 347 Mexico City, 06500

the value of our sustainability - 33docu.com . value. of our sustainability. 2009 sustainability...

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