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HSBC Brazil Sustainability Report 2011 Indicators

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Introduction HSBC Brazil Sustainability Report gathers all major information on the company’s guidelines and operations in 2011.

The publication presents partial or total responses to all 79 performance aspects set out by the Global Reporting Initiative (GRI) in the economic, social and environmental spheres. Furthermore, the publication also provides responses to specific indicators related to the financial segment, which are part of GRI’s sectorial supplement. Finally, the report is wrapped up by HSBC’s management approaches to economic, social and environmental performances. This material also outlines GRI’s established profile aspects, report parameters, governance and engagement. The content is correlated to the sustainability report’s full version available at hsbc.com. br/relatoriodesustentabilidade, where both the achievements and the challenges faced throughout the year are recorded. For more information on the elaboration of HSBC’s sustainability report, go to the On the Report section. In order to more easily locate any specific content, associate it with the related indicator or pinpoint information on any given issue, a series of symbols was created, as follows:

Labels used to represent responses to indicators and management approaches Accomplished Partially Accomplished Unaccomplished Additional information on the issue Whenever extra information on the content is provided, the reader will be taken to other sections of the publication. More info on the website The symbol is designed to identify issues that are presented on other websites. More info on the full version of the report The symbol represents issues available at the sustainability report’s full version.

Talk to us Comments, doubts, suggestions and/or critiques regarding HSBC’s Sustainability Report should be forwarded to [email protected].

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GRI Aspects Strategy and analysis 1.1 Message See the Message from the CEO section.

1.2 Description of key impacts, risks and opportunities Get to know HSBC’s Sustainability Vision positioning.

Organisational Profile 2.1 Name of the organisation HSBC Bank Brazil S.A. For the complete list of HSBC companies in Brazil enrolled in this Report, see 2.6.

2.2 Main brands, products and services See the Profile section.

2.3 Operational structure of the organisation See the Profile section. 2.4 Location of organisational headquarters HSBC Brazil is headquartered in Curitiba and is part of the HSBC Group’s international structure headquartered in London, UK

2.5 Number of countries where the organization operates, and names of countries with major operations Available information can be seen in the Profile section. 2.6 Nature of establishment and form of ownership

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Companies

Activity

Legal nature

Ametista Administração de Bens LTDA.

Management of company-owned assets

Limited liability company

Boaventura Administração de Bens LTDA.

Management of company-owned assets

Limited liability company

Credival Participações, Administração e Assessoria LTDA.

Services

Limited liability company

Estrela Guia Administração de Bens LTDA.

Management of company-owned assets

Limited liability company

Francinvest Investimentos e Participações LTDA.

Holdings

Limited liability company

HSBC (Brasil) Administradora de Consórcio LTDA.

Consortium Administration

Limited liability company

HSBC Administração de Serviços para Fundos de Pensão (Brasil) LTDA.

Administration of Pension Fund Liabilities

Limited liability company

HSBC Assistência Previdenciária

Insurance

Other forms of association

HSBC Bank Brasil S.A. – Banco Múltiplo

Banking services

Private equity entity

HSBC Capitalização (Brasil) S.A.

Capitalisation

Private equity entity

HSBC Corretora de Seguros (Brasil) S.A.

Insurance brokerage

Private equity entity

HSBC Corretora de Títulos e Valores Mobiliários S.A.

Security brokerage

Private equity entity

HSBC Empresa de Capitalização (Brasil) S.A.

Capitalisation

Private equity entity

HSBC Finance (Brasil) – Banco Múltiplo

Banking

Private equity entity

HSBC Gestão de Recursos LTDA.

Administration of investment funds and securities

Limited liability company

HSBC Leasing Arrendamento Mercantil (Brasil) S.A.

Leasing

Listed corporation

HSBC Private Equity Latin America (Brasil) LTDA.

Services

Limited liability company

Insurance

Private equity entity

Services and participation in other companies

Limited liability civil partnership

HSBC Software Development (Brasil) – Prestação de Serviços Tecnológicos LTDA.

Technology products R&D

Limited liability company

HSBC Vida e Previdência (Brasil) S.A.

Life insurance and retirement planning

Private equity entity

Instituto HSBC Solidariedade

Social initiatives

Non-profit organisation

HSBC Seguros (Brasil) S.A. HSBC Serviços e Participações LTDA.

Lírio Administração de Bens LTDA.

Management of company-owned assets Management of company-owned assets

Losango Promoções de Vendas LTDA.

Consumer finance

Limited liability company

Monte Alegre Administração de Bens LTDA.

Management of company-owned assets

Limited liability company

Serra Azul Administração de Bens LTDA.

Management of company-owned assets

Limited liability company

Valeu Companhia Securitizadora de Créditos Financeiros

Securitization of financial credits

Private equity entity

Jasmim Administração de Bens LTDA.

Limited liability company Limited liability company

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2.7 Markets served Get to know the markets served in the Profile section.

2.8 Scale of the organisation Customers: 5.4 million people and 450,000 companies Net profit: R$ 1.35 billion Total assets: R$ 130.9 billion Net equity: R$ 9.4 billion Employees: 23,467 professionals Data shown as of 31st December 2011.

2.9 Significant changes during the reporting period Eventual changes were bound to either opened or closed branches or administrative units. From 2010 to 2011, the report recorded an increase in the number of branches (from 865 to 867) and a reduction in the number of mini-branches (from 400 to 390). The total amount of employees decreased from 24,200 to 23,400

2.10 Awards received For further information on the recognitions received in 2011, please access the Awards section.

Report Parameters 3.1 Reporting period From 1st January through 31st December 2011 (exceptions are clearly indicated).

3.2 Data of latest previous report (if any) 2010.

3.3 Reporting cycle The first and the second publications (having 2006 and 2007 as a reference) were annual reports. In 2008, the report on the Brazilian operations was not published and the data on the bank’s operations in Brazil were part of the Group’s global report. From 2009 on, HSBC resumed the bank’s annual publication schedule.

3.4 Contact point for questions regarding the report or its contents HSBC Brazil Corporate Sustainability Phone: +55 41 3270 8400 E-mail: sustentabilidade. [email protected] Address: Av. Vicente Machado, 2100, 80440-020 - Curitiba-PR

3.5 Report content definition process Refer to the On the Report section.

3.6 Report scope All HSBC businesses in Brazil. See complete table in 2.6.

3.7 Statement of specific limitations on the scope or coverage of the report All information herein complies with the scope established in item 2.6 (all HSBC businesses in Brazil). Any exception is clearly indicated.

3.8 Report preparation basis This publication has no changes as compared to previous reports. All HSBC companies in Brazil are covered by this report.

3.9 Data metrics techniques and basis for calculations Data presented herein refer to all HSBC companies in Brazil and are based upon internal monitoring systems. Exception cases in which information is based on estimates are clearly indicated.

3.10 Re-statements of information provided in earlier reports, and the reasons for such re-statement Cases in which information and respective justifications were remodeled are presented as footnotes.

3.11 Significant changes from previous reports No significant change recorded. 3.12 Table identifying the location of the Standard Disclosures in the report See the table of contents.

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3.13 Policy and current practice with regard to seeking external assurance for the report HSBC decided not to carry out a data auditing process for the 2011 sustainability report.

Governance, Commitment And Engagement 4.1 Governance structure of the organisation, including committees under the highest governance body See the Corporate Governance section.

4.2 Indicate whether the chair of the highest governance body is also an executive officer HSBC’s CEO does not take on the function of executive director. Further information is available in the Corporate Governance section.

4.3 Number of members of the highest governance body that are independent and/or non-executive members There are no independent or non-executive members in the company’s highest governance body.

4.4 Mechanisms for shareholders and employees to provide recommendations The bank does not own public capital in Brazil. HSBC Group’s shareholders count on specific communication channels shown on the corporate website (http://www.hsbc. com/1/2/investorrelations/services-tools/ contact). In Brazil, some corporate areas count on work groups made of employees that are subordinated to the Sustainability Committee. These teams discuss issues such as the implementation of ecoefficiency projects, the monitoring of the Sustainability Balanced Scorecard (management and measurement tool based on the results of the strategic indicators), and the support to business development processes with the company’s high administration. Further information is available in the Corporate Governance and the Green Team sections.

4.5 Link between compensation for members of the highest governance body and organisational performance (including social and environmental performance)

Variable compensation systems depend on the compliance with corporate and individual goals in economic, social and environmental aspects. For more information, go to the Responsible Profits section.

4.6 Processes in place to avoid conflicts of interest See the Corporate Governance section.

4.7 Qualifications and expertise of the members of the highest governance body HSBC Procedures Manual sets the model for any professional recruitment process. The procedure must meet present and future business demands and also take into account the candidates’ potential capability of reframing work activities, the requirements for each opening, and whether or not existing teams should be involved in the process. New recruitment processes and internal promotions follow objective criteria, such as references, professional experience, qualification, and value in all functional levels. See the Values and Principles section for more information. 4.8 Internally developed statements of mission or values, codes of conduct, and principles See the Values and Principles section.

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4.9 Procedures of the highest governance body for overseeing the organisation’s 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 See the Corporate Governance section.

4.10 Processes for evaluating the highest governance body’s own performance The Balance Scorecard tool monitors the company’s progress towards accomplishing the goals set for individuals, for the bank’s different structural areas and/or for HSBC Brazil as a whole.

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation The HSBC Group does not fully apply the Precautionary Approach; nonetheless, the bank executes programmes targetted at protecting ecosystems against climate change effects, inserting environmental impact potential assessment programmes in all risk analyses, carrying out annual

audits for any eventual serious and irreversible risk, and prohibiting loans to activities with proven history of high environmental impact.

4.12 Externally developed charters, principles, or other voluntary initiatives Get to know the volunteer initiatives taken on by HSBC in the Commitments section.

4.13 Meaningful participation in associations or advocacy organisations For further information, see the Commitments section.

4.14 List of stakeholder groups engaged by the organisation HSBC’s major stakeholders are: employees, customers, suppliers, government agencies, and entities from the financial services segment. See the On the Report section.

4.15 Basis for identification and selection of stakeholders for engagement In order to perform its business, HSBC carries out engagement processes with stakeholders. Stakeholders

are deemed to be those directly impacted by the bank’s operations. For furter information, please access the On the Report section.

4.16 Approaches to stakeholder engagement See the On the Report section. The Sustainability = People – Valuing our Employees, Customers and Suppliers sections present information on the bank’s relationship strategy with employees, customers and suppliers.

4.17 Key topics and concerns that have been raised through stakeholder engagement See the On the Report section. For more information on the demands brought about by each type of stakeholder, see the Sustainability = People – Valuing our Employees, Customers and Suppliers.

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Economic development Aspect Economic development Disclosure on management approach See the Responsible Profits, Performance in 2011, Corporate Governance and Selection and Remuneration sections. Direct economic value generated and distributed The major part of the distributed added value – equivalent to 50% – is directed to employee compensation, including the mandatory legal charges of the hiring process. Governmental-related payments reach 22%. The remainder 28% is directed to capital remuneration and retained income. Indicator EC8 introduces the community investments.

Value added generated (R$ thousand)

2010

2011

A – Revenue

15,400,016

19,126,046

Financial intermediation

14,208,772

18,518,273

Service revenues

1,955.724

2,149,062

Fee income

319,750

281,691

Loan impairment charges

(1,951,960)

(3,013,650)

Others

867,730

1,190,670

B – Expenses from financial intermediation

(7,104,025)

(10,311,505)

C – Inputs acquired from third parties

(3,946,163)

(4,115,654)

Water, energy and gas expenses

(48,694)

(51,586)

Communication expenses

(264,784)

(262,291)

Expenses with general material

(31,173)

(37,715)

Expenses with outsourced services

(696,524)

(850,879)

Expenses with specialised technical services

(319,195)

(359,500)

Other administrative expenses

(1,754,704)

(1,831,503)

Others

(831,089)

(721,550)

D – Gross added value (A + B + C)

4,349,828

4,698,887

E – Depreciation, amortisation and intangible assets

(308,808)

(416,676)

F – Net added value produced by the entity (D + E)

4,041,020

4,282,211

G – Added value received from transfers

391,514

554,674

H – Total added value to be distributed (F + G)

4,432,534

4,836,885

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Value Added Distribution (R$ thousand)

2010

2011

Added Value to be Distributed (A + B + C + D + E)

4.432.534

4.836.885

A – Work Remuneration

1.991.735

2.407.314

Direct remuneration

1.569.338

1.919.826

Benefits

326.136

373.853

FGTS (service guarantee fund)

88.688

106.753

Other charges

7.573

6.882

1.151.133

1.086.680

Federal

971.034

936.194

State

827

2.371

Municipal

179.272

148.115

207.497

225.307

207.497

225.307

D – Interests on net equity

416.000

460.000

E – Retained income

666.169

657.584

B – Taxes, fees and contributions

C – Remuneration of outsourced interests Rents

Value Added Distribution

Value Added Distribution

Interests on net equity (9%) Retained income (14%) Remuneration of outsourced interests (5%) Taxes, fees and contributions (22%) Work remuneration (50%)

EC2 Financial implications and other risks and opportunities for the organisation’s activities from climate change The initiatives developed by HSBC towards fighting climate changes place the bank in a vanguard position in the segment. Headed by the Group’s CEO, the Climate Change Council was created in 2011. The group gathers every quarter aiming to identify opportunities related to the issue. HSBC also applies tailor-made sectorial policies related to the bank’s operations. For further information, see indicators FS1, FS2, FS3, FS4 and FS5. The bank’s R&D area counts on a research centre on climate change. This department seeks to potentialise the operations of the bank in different scenarios. Studies point out that the low carbon sector will record global annual earnings of US$ 2 trillion up to 2020. In Brazil, the Corporate Sustainability and the Legal Entity areas have been strongly working towards levering the production of bioenergy and nuclear, solar and wind energies, as well as developing energy ecoefficiency and energy storage projects, infrastructure, agriculture and water adaptations against the impacts originated from climate changes, besides financing low carbon markets and capital and insurance investments. Some of the related studies are publicly available at the following

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documents: “Building a green recovery” – http:// www.hsbc.com/1/PA_esfca-app-content/content/ assets/sustainability/090522_ green_recovery.pdf, “Climate confidence monitor 2010” – http://www.hsbc.com/1/PA_ esf-ca-app-content/content/ assets/sustainability/101026_ hsbc_climate_confidence_ monitor_2010.pdf and “Sizing the climate economy” – http://www.research.hsbc. com/midas/Res/RDV?ao =20&key=wU4BbdyRmz &n=276049.PDF&bcsi_scan_ 0195B4DE4092149C=F5An2I tfohk6lqoExZV4ouaO0WAWA AAAUllvNw. The bank also makes available its global environment, sustainability and climate change strategy at “The World in 2050” - http://www. research.hsbc.com/midas/ Res/RDV?p=pdf&key=ej73gS SJVj&n=282364.PDF EC3 Coverage of the organisational benefit plan HSBC offers its employees the HSBC Platinum private pension plan, split in two different types: basic contributions – mandatory to employees who are not allowed to receive the complimentary contribution; and the complimentary contribution based on voluntary participation and not restricted to specific positions, on the condition that the employee earns more than R$ 3.5 thousand monthly. The bank contributes with 0.5% of the employee’s

annual wage, divided into 13 monthly instalments, with no charge whatsoever to the employee. As for the complimentary contributions, employees may choose to invest in accordance with their remuneration. On its turn, the bank invests a proportional value ranging from 100% to 140%, taking into account the length of time the employee has been working in the company. The complimentary contribution offers three fund options: the Fixed Income Fund, in which 100% of resources from employees are directed

to the fixed income; the Conservative Fund, where 35% of resources are designed to the variable income and 65% to the fixed income; and the Aggressive Fund, in which 49% of resources are directed to the variable income and 51% to the fixed income. HSBC’s both basic and complimentary contributions are directed to the fixed income, regardless the choice of the employee. In 2011, the bank directed R$ 8 million to the basic contribution and R$ 6.8 million to the complimentary contribution. By the end of 2011, the total asset of the fund had reached R$ 123.9 million.

Employee’s wage value (R$)

Percentage

Up to 5,000

0.50%

From 5,001 through 8,000

3.00%

From 8,001 through 14,500

5.00%

From 14,501 through 30,000

7,00%

Over 30,000

9.00%

Employee’s length of time in the company

HSBC contribution

Up to 4 years

100%

From 5 to 14 years

120%

Over 15 years

140%

EC4 Significant financial assistance received from government As of 2011, HSBC had not received any significant

governmental financial assistance. There is no governmental participation in the bank’s sharehold structure either.

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EC5 Ratio of standard entry level wage as compared to local minimum wage TAll 8-hour working period employees receive monthly wages that exceed the established sector’s base salary. 75.7% of employees who work 6 hours a day earn

Aspect Market presence Disclosure On Management Approach See the Responsible Profits, Performance in 2011, Corporate Governance and Suppliers sections.

the minimum wage legally indicated, in accordance with the functional level. The table below depicts the lowest salary paid in related units, in comparison with the current national minimum wage in 2011 (R$ 545), thus complying with Law 12.382 from 25th February 2011.

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Lowest proportional wage paid by the company in comparison proportional withLowest the current national wage paid by the company in comparison with the current national minimum wage % 400 350 300 250 200 150

0

2009

2010

2011

São Paulo

2009

2010

2011

Rio de Janeiro

2009

2010

8 hours

6 hours

8 hours

6 hours

8 hours

6 hours

8 hours

6 hours

8 hours

6 hours

8 hours

6 hours

8 hours

6 hours

8 hours

6 hours

8 hours

50

6 hours

100

2011

Paraná

* The São Paulo, Rio de Janeiro and Paraná units are highlighted as they encompass the majority of HSBC’s employees.

EC6 Policy, practices, and proportion of spending on locally based suppliers at significant operational sites HSBC does not own a formal system aimed to prioritising the hiring process of local suppliers. In spite of that, only national companies – exceptions are not significant – can afford to become partners of the bank. Purchase processes take

into account criteria such as qualification, quality, technical experience, as well as commercial and agreed contract conditions. Procedures also encompass HSBC’s code of ethics and conduct.

EC7 Local hiring HSBC does not have any specific policy or

practice aimed to prioritise local residents in hiring processes. However, local community members are generally appointed to work in the bank’s network of branches. High management professionals work at the company’s major administrative centres Curitiba, São Paulo and Rio de Janeiro – and the majority of them live in these cities.

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Invested resources Aspect Indirect economic impacts Disclosure On Management Approach See the Corporate Governance and Instituto HSBC Solidariedade sections. EC8 Development and impact of investments in infrastructure and service offering, in particular in public benefits Public benefit investments are carried out by the Instituto HSBC Solidariedade (IHS). Resources result both from the IHS Credit Card and from fiscal incentives (HSBC’s Child and Adolescent Trust Fund – R$ 1.7 million). The fund provides support to projects P18 focusing on education, community income generation and environment. Throughout the year, HSBC launches several bidding processes aimed to promote initiatives that comply with these project lines. In 2011, IHS invested R$ 19,854,172.73 in 236 projects, thus impacting 197,087 people. The bank does not have a structured procedure aimed to assess the social need of each community and/or region where it operates or where support is provided to a given project. For further information, see the Instituto HSBC Solidariedade section. EC9 Indirect economic impacts HSBC does not monitor any indirect economic impact resulting from its operations.

Invested resources

Community (8%) Environment (26%) Education (66%)

Impacted areas Impacted areas

Community (18%) Environment (9%) Education (73%)

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Environmental performance Aspect Material

in the consumption of paper between 2010 and 2011. If the number of full-time employees is taken into account, the reduction reaches 8.6%. Launched in the end of 2010, the Thinclient Project started releasing digital versions of managerial reports to branch employees. After the initiative, the bank was capable of reducing the emissions of nearly 18 million paper pages per year. The company has also focused on the awareness of employees, thus generating an estimate reduction of 29 million pages in 2011. The production of paper-based invoices was also interrupted, although customers may still require this type of correspondence.

Disclosure On Management Approach See the Sustainability Vision, Environment, Other Initiatives, and the Sustainable Constructions sections, as well indicators EN1 and EN2.



EN1 Materials used by weight or volume EN2 Percentage of recycled materials used Paper is HSBC’s major used input, as the company operates in the banking services area. Initiatives developed in recent years allowed for a 5% reduction

HSBC has also consolidated a policy in which the use of the FSC (Forest Stewardship Council) certificate is mandatory. In 2010, 53% of the paper used in the company was certified by the FSC; in 2011, this number increased to 86%. The remainder 14% is comprised of thermal paper, that is, a type of paper that can not be certified. The bank prioritises the use of certified inputs. Recyclable materials are only acquired when they can also be certified. Examples are mainly seen in the envelopes used in the branches. It is estimated that the use of certified recycled envelopes reached over 100 tons in 2012. See further information in the Environment section.

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P19

Paper consumption (tons)* Paper consumption (tons)*

Percentage of recycled paper used by the bank Percentage of recycled paper

used by the bank 3.5%

3,000

2,959 2,819

3.3%

2,813

3.0%

2,500 2.5%

2,000

2.0%

2%

2%

1.5%

1,500

1.0%

1,000 0.5%

0,500

0

0.0%

2009

2010

2011

* Materials used at HSBC are considered as indirect assets, as they are not inserted into the bank’s final product – service rendering.

2009

2010

2011

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Indirect energy HSBC employs diesel oil as a direct energy source. The material is used to power the generators that are activated whenever the electric energy supply network is for any reason interrupted. The recorded increase in the consumption of diesel oil is associated with two major factors: the enhancement in the number of installed generators (from 17 in 2010 to 21 in 2011), and the alteration in the test protocol related to these systems. The test was previously carried out in a monthly basis; now, it is performed once a week. Operational procedures were also changed in the Curitiba’s Xaxim and Kennedy administrative centres, as a way to prevent electric network instability and sudden blackouts. At the bank’s Training Centre (CETRE), located in São José dos Pinhais, the water heating process takes place by the use of liquefied petroleum gas (LPG). The installation of solar panels allowed for a significant reduction in the consumption of LPG.

Direct energy The total amount of electric energy consumed by the bank showed a slight decreased of 1.5% in the last two years. Comparative figures related to 2009 and 2011 show a 3.9% reduction. The consumed energy per full-time employee, on its turn, presented a 0.8% reduction in the same period. Close to 100% of the bank’s consumed energy is purchased in the energy distribution companies registered in the National Integrated System. Three branches in the State of Maranhão, which purchase thermoelectric energy (1,810 GJ of the total amount) are exceptions to this rule. According to the National Energy Review (having 2010 as a basis), 86% of consumed energy in Brazil stems from renewable sources.

Aspect Energy Disclosure On Management Approach See the Environment, Environmental Footprint and Sustainable Constructions sections, as well indicators EN3, EN4, EN5, EN6 and EN7. EN3 Direct energy consumption by primary energy source (in GJ) EN4 Indirect energy consumption by primary source (in GJ) EN5 Energy saved due to conservation and efficiency improvements EN6 Initiatives to provide energy-efficiency based products and services EN7 Initiatives to reduce indirect energy consumption and reductions achieved P20

P20

Energy consumption (GJ)*

Energy consumption (GJ)* 2000

Purchased electric energy (GJ) Energy consumption (GJ)* 500000

1995

400000

1500

415,810

406,786

400,623

2010

2011

300000 1072

1000

200000

842

766

500

0

Diesel

*GJ: giga-joule

GLP

100000 98

2011

2010

2009

2011

2010

2009

285

0

2009

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Conservation and saving procedures In accordance with HSBC’s estimates, nearly 2,000 GJ of electric energy were saved in 2011 as a result of the bank’s conservation and efficiency initiatives. A total amount of 98 air-conditioning equipments were replaced in the branches, thus contributing to a reduction of 485 MWh. Moreover, the Palácio Avenida and the Xaxim Administrative Centres in Curitiba had their central air-conditioning systems replaced in the end of 2011. An energy reduction of 70 MWh is forecast for 2012. Old lamps were also replaced for more efficient models, and the Xaxim and Kennedy datacentres were upgraded. As part of a pilot plan, LED lamps were installed at the Alto da XV branch (Curitiba), thus generating a 60% consumption reduction in comparison with previously used lamps. The branch recorded a total energy reduction of over 15%. One of the bank’s highlights in 2011 was the innauguration of the Renascença Branch in São Luís (MA). Part of the energy used in the building is produced by a wind power generator installed in the facility. All above-mentioned initiatives aimed either to assist customers at the branches or to upgrade the company’s datacentres allow HSBC to operate with lower energy demands.

As per the consumption of indirect energy, reduction actions focused on employee displacement processes. Besides the Webex (presentation sharing programmes), HSBC installed video and audio conference devices as a way of minimising displacement demands. By the end of the year, 56 video conference rooms and over 600 video conference devices had already been installed. The use of these resources resulted in the performance of over 1,500 video conferences. The bank estimates that 12 million kilometres of air trips were avoided in 2011, thus generating a 23% reduction in comparison with 2010. Additionally, a large portion of the company’s road fleet was replaced by ethanol powered vehicles. Presently, 85% of HSBC’s fleet is powered only by this type of fuel, thus contributing to the reduction of emissions. Despite the current disadvantageous price of the fuel in the Brazilian market, the bank decided to maintain the use of ethanol. Nonetheless, an increased use of cars, as well as the enhancement in the amount of businesses, brought about a 4% rise in the final numbers of covered kilometres.

Next steps HSBC will trigger a new phase in monitoring the environmental impacts produced by its operations in 2012. Consequently, new goals have been established to the period between 2012 and 2020. The consumption of direct energy originated from renewable sources – which must increase from 24% to 40% - is listed among these new targets. Another strong commitment is the absolute reduction of 10% in energy consumption patterns. The HSBC Group has also set the goals of producing at least 5% of all locally consumed energy based on renewable sources, and enhancing the energetic efficiency of its datacentres in up to 1.5 Power Usage Effectiveness1. Triggered in 2012, the planning also includes the replacement of six other cooling devices in the Administrative Centres of São Paulo and Curitiba. Energy consumption reduction is expected to reach a yearly amount of 1,400 MWh. As for the indirect energy consumption, the established goal is to reduce in 10% the amount of trips. The result will be accomplished by upgrading the use of the bank’s video conference tools. In 2012, seven other video conference rooms will be launched. The Group will be monthly provided with travel data reports, in order to follow up the development of such initiatives.

1 Power Usage Effectiveness is a methodology used to measure the energetic efficiency of datacentres. The model aims to measure how much energy is effectively used in data processing procedures, without taking into account the costs stemming from equipment cooling processes and other general expenses.

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Aspect Water Disclosure On Management Approach See the Environment, Environmental Footprint, Sustainable Constructions and Next Steps sections. EN8 Total water by source EN9 Water sources significantly affected by removal of water EN10 Percentage and total volume of water recycled and reused All water used by HSBC comes from public supply systems. These systems are subject to legal collection restrictions and do not generate significant impacts in water sources. In the last two years, the bank reached a 9% reduction in water consumption patterns – 2.7% between 2010 and P23

2011. Full-time employees recorded an individual 2% drop. The result leads HSBC to outrun the goal of reducing 0.7% in water consumption per full-time employee established for 2011. These outcomes clearly point out the awareness initiatives developed with employees, as well as the new ecoefficiency standards adopted by the bank. In 2010, for instance, 57 branches had their hydraulic systems restored and received low consumption metal and ceramic fixtures, generating a direct impact in the results achieved in 2011. The idea for 2012 is to replicate the same methodology into other restoration procedures. The Porto Alegre Administrative Centre, on its turn, installed water flow reducers and closed coupled cisterns for sanitary toilet bowls, following the model adopted at the Curitiba and São Paulo Administrative Centres in 2008 and 2009, respectively.

Water Consumption (m³)

Water Consumption (m³) 350000

347,582 324,586

300000

315,858

250000 200000 150000 100000 50000 0

2009

2010

2011

HSBC does not own any water reuse method in its operations. However, a treatment system for domestic effluents has been tested at the CETRE. The system foresees the reuse of water to be sprinkled at the facility’s gardens. At the site, rain water will also be collected and used in the sanitary toilet bowls. Aspect Biodiversity Disclosure On Management Approach See the Insurance and HSBC Climate Partnership sections. EN11 Location and size of protected areas EN12 Significant impacts of activities on biodiversity EN13 Habitats protected or restored EN14 Strategies for managing impacts on biodiversity EN15 Number of species with habitats in areas affected by operations HSBC does not operate in protected areas and as such does not produce significant negative impacts on biodiversity. In spite of that, HSBC Insurance has a partnership with the Society for Wildlife Research and Environmental Education (SPVS). In 2011 the bank invested R$ 3.67 million to the conservation of 3,216 hectares – 120 in Bahia, 450 in Santa Catarina, and 2,646 in Paraná. For mnformation, see the Insurance section.

17

Aspect Emissions, effluents and waste Disclosure On Management Approach See the Environment, Environmental Footprint, Sustainable Constructions, HSBC Climate Partnership as well as indicatiors EN16, EN17, EN18, EN19, EN20 and EN22. EN16 Total direct and indirect greenhouse gas emissions EN17 Other relevant indirect greenhouse gas emissions EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved EN19 Emissions of ozone-depleting substances EN20 NOx, SOx, and other significant air emissions by type and weight HSBC develops a series of practices aimed at minimising the impacts of its operations in the environment. The adopted alternative to prevent the displacement of the bank’s executives, and consequently the excessive consumption of fuel, can be quoted as a fine example. The company’s major operational units provide rooms equipped with video conference, audio conference and

Webex devices that offer employees with the chance of making online real-time presentations. Throughout 2011, these rooms were used 1,500 times, thus generating a reduction of 39.1 tons of CO2 emissions. The goal for 2012 is to launch seven other similar rooms. HSBC has also adopted crucial actions aimed to enhance energy efficiency levels. Such actions allowed for the reduction of 45 tons of CO2 emissions in 2011. Combined with its other strategies, the company helped cut 84.1 tons of CO2 emissions throughout the year. For further information on the bank’s energy efficiency programmes, see the energy indicators. Regarding the ozone layer’s depleting gases, HSBC’s operations record no significant emission. Exceptions are located either in air-conditioning equipments or in eventual leakages during maintenance procedures; in this

case, however, a specific device is employed to block the release of gases. Other emissions, such as the NOx and SOx, are not deemed to be meaningful due to the type of operations carried out by the bank. Greenhouse effect gas emissions showed an increase between 2010 and 2011. Nonetheless, taking the bank’s performance in the last two years into account, a 3.7% reduction was recorded. The vast majority – 98% - of the 9,213 tons of CO2 have been indirect emissions resulted from energy purchase processes. Direct emissions occurred due to the power generators used to supply eventual energy failures. The sustainability strategy designed by HSBC for coming years – between 2012 and 2020 – foresees annual investments reaching US$ 5 million in projects aimed to reduce CO2 emissions.

Indirect emissions (Type 3) in tons of CO2

2009

2010

2011

Employee transportation

2,237

2,473

2,480

Business trips

3,854

5,727

5,006

Total

6,091

8,200

7,485

18 P25

Greenhouse effect gases* - Types 1 and 2 in tons of CO2

Greenhouse effect gases* Types 1 and 2 in tons of CO2

10000 9,573

9,192

9,213

8000

6000

4000

2000

0

2009

EN21 Total water discharge by quality and destination Only domestic effluents are produced by HSBC; the wastewater is directed to the public sanitation network available in the cities where the bank operates. The only exception is the Training Centre located in São José dos Pinhais, which treats effluents prior to discharge. In this case, approximately 5 thousand m³ are treated every year. EN22 Total weight of waste by type and disposal method There has been a significant reduction in the volume of non-hazardous waste generated by HSBC. The waste produced by civil construction activities, which represent the largest portion, is forwarded to land fills. However, if these materials are taken out of

2010

2011

the calculations, the bank records a 14.7% increase in the generation of non-hazardous waste. The figure rose from 978 to 1,122 tons. Residues destined to incineration also showed a meaningul rise. The major reason was the launch of a process in 2010 that determines the burn of classified materials. The volume related to 2011, therefore, covers previous periods. Hence, a reduction in the volume of recyclable waste was recorded. The decrease was also influenced by the bank’s efforts towards reducing the amount of printing processes. The following items are considered by HSBC as hazardous waste: airconditioning filters and discarded cells and batteries whenever the system is updated. In 2011, employees from the Curitiba, São Paulo and Rio de Janeiro Administrative Centres took part in the collection of cells and batteries, thus enhancing the

* Calculations are based on the recommendations of the Department of Environment, Food and Rural Affairs (DEFRA) and the International Energy Agency (IEA).

total generated volume of these materials. The installation of selective collection garbage bins in over 268 branches is a highlight among the bank’s waste management initiatives. Cooperatives that are responsible for correctly disposing the collected waste were inserted into the process. Waste data collection procedures were also upgraded. In some units, estimated information was replaced by controlled data. This alteration effectively resulted in the increase of the total waste volume. Had the previous methodology been applied, the outcome would have pointed to a reduction. HSBC’s sustainability strategy goals for 2012-2020 establish that 100% of generated waste will be directed to recycling processes. For this plan to be fulfilled, a centralised management process will be created. Another associated goal is the 20% reduction in the total amount of waste generated up to the end of this period.

19

Non-hazardous waste¹

2009

2010

2011

Recycling

945.75

1,128.61

964

Incineration

-

69.48

114

Land fill

5,215.98

4,820.76

2,385.45

Total

6,161.73

6,018.85

3,463.45

¹ Information disclosed by the hired companies assigned with the task of properly disposing the generated waste.

Hazardous waste¹

2009

2010

2011

Land fill

1.92

3.56

4.55

Total

1.92

3.56

4.55

¹ Information disclosed by the hired companies assigned with the task of properly disposing the generated waste.

EN23 Total number and volume of significant spills The activities carried out by HSBC do not generate any spill. Contention anti-spill ditches have been designed to assist all operations where diesel oil generators are used, as a way of preventing leakage risks. In 2011, the bank did not record any incidence of such nature. EN24 Weight of transported waste deemed hazardous HSBC contracts outsourced providers to transport any hazardous waste generated by its operations. Such residues are treated and forwarded to land fills. In 2011, 4.55 tons of hazardous waste (air-conditioning filters, cells and batteries) were decontaminated and transported to landfills. The company neither imported nor exported any type of waste.

EN25 Water bodies significantly affected by discharges of water and runoff Only domestic effluents are produced by HSBC; all wastewater is directed to the public sanitation network available in the cities where the bank operates. Water is originated in supply companies bound to environmental legislations. Impacts on hydrical resources, therefore, are not meaningful. Aspect Products and services Disclosure On Management Approach See the Corporate Governance, Products, Environmental Footprint and Sustainable Constructions sections.

EN26 IInitiatives to mitigate environmental impacts of products and services Aiming to reduce environmental impacts on products and services, HSBC now provides customers with recycled paper envelopes at ATM machines; furthermore, the bank stopped printing invoices – thus preventing the printing of 2.47 million pages – and started manufacturing the Instituto HSBC Solidariedade credit cards with recycled PET bottles. In addition, the bank created the Sustainability Guide for Construction Works, which brings sustainable guidelines towards branch restoration processes. A selective collection system has also been launched in 268 branches. For further information, see the Environmental Footprint section.

20

EN27 Percentage of products sold and packaging materials thatare reclaimed Incoming checks, as well as any classified paperwork are forwarded to companies specialised in correctly disposing such materials for recycling. Besides, interoffice mail bags are directed to companies that produce canvas-based souvenirs; these materials are later given to employees as gifts.

Aspect Compliance Disclosure On Management Approach See the Sustainable Vision and Corporate Governance sections. EN28 Significant fines and sanctions for noncompliance with environmental laws and regulations No fines or sanctions were incurred in 2011.

The major environmental impact here is associated with the transportation of employees. The guidelines of the Department for Environment, Food and Rural Affairs (DEFRA) calculate the amount of emissions produced by employee displacement processes (reported in EN17). Most of the times, HSBC chooses to use ethanol as alternative fuel. Whenever this it not possible, carbon credits are acquired in order to neutralise generated emissions. Aspect Overall Disclosure On Management Approach See the Sustainability Vision, Corporate Governance, Insurance, Environment, Environmental Footprint and HSBC Climate Partnership sections.

Aspect Transport

Environmental protectionrelated investments and expenses (in million reais)

Disclosure On Management Approach See the Environment and Environmental Footprint sections, as well as indicator EN7.

Waste treatment and disposal

EN29 Significant environmental impacts from transportation of products and workforce

EN30 Total environmental protection expenditures and investments Major actions in 2011 were the installation of Cleaner Technologies at the Training Centre located in São José dos Pinhais; the installation of a wind turbine at the Renascença Branch; the replacement of the coolers at the Administrative Centres; and the installation of selective garbage bins. After years of operation, one of the branches was found to have a soil contamination. HSBC contacted the Environmental Sanitation Technology Company (CETESB) and triggered the decontamination procedure. The cost of the operation performed in 2011 reached R$ 483,000. For further information on the initiatives aimed to minimise the environmental impacts at the Training Centre (CETRE) and at the Renascença Branch, see the Sustainable Constructions section.

2009

2010

2011

1.9

2.5

2.7

Education and training personnel

0.1

0.1

0.2

Extras expenses aimed to the installation of cleaner technologies

-

7

4.9

Remediation-related expenses

-

-

0.5

Total

2

9.6

8.3

21

Social performance – labour practices Aspect Employment

The majority of employees (85%) work in the southern and southeastern regions of the country. Outsourced workers represent 25% of HSBC’s employees and they operate in areas such as building maintenance, IT, security, cleaning and some extraordinary services. In 2011, 42 temporary workers were hired. The turnover rate results from the difference between the number of dismissed employees and the total amount of employees. Throughout 2011, 3,300 employees were dismissed, resulting in a 14.2% turnover rate.

Disclosure On Management Approach See the Responsible Profits, Corporate Governance, Employee Development, Work Environment and Selection and Remuneration sections. LA1 Total workforce by employment type, employment contract, and region LA2 Total number and employee turnover rate LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees

This figure has been balanced between men and women and is more representative in the southern and southeastern regions, as well as in the age group between 30 and 50 years old. In addition to that, all employees are offered a benefits package, including meal vouchers, transport vouchers, life insurance, healthcare plan, disability insurance, paid maternity and paternity leaves, private pension plan, and stock option plan. For further information on HSBC’s relationship with its employees, see the Professional Development section.

Employees by functional level1

2009

2010

2011

Directors

179

193

178

1st line managers

491

583

561

2nd line managers

1,599

1,734

1,573

Technician/Supervisors

7,611

8,553

8,893

Operational/Administrative

13,562

13,152

12,262

Total – Direct employees2

23,442

24,215

23,467

Outsourced

7,287

8,234

8,123

Total – Direct employees + Outsourced

30,729

32,449

31,590

Temporary workers are not listed in the table, since no contract of such type was in force in the end of December. 2 All direct employees have open-end contracts.

1

22

P31

Employees by Employees type of job by type of job 25000 23,467

24,215

23,442

23,431

24,201

20000

23,418

2009 2010 2011 15000

10000

0

Full-time

36

14

24

5000

Half-time

Total

Employees by region

2009

2010

2011

North

649

656

636

Northeast

1,288

1,234

1,295

Central-West

1,672

1,701

1,679

Southeast

10,161

10,501

10,516

South

9,672

10,123

9,341

Total

23,442

24,215

23,467

P31

Dismissals

Dismissals 4000 3500

3,549 3,330

3000

3,065

2500 2000 1500 1000 500

0

2009

2010

2011

23

2009

2010

2011

Turnover by genre

Dismissals

Turnover

Dismissals

Turnover

Dismissals

Turnover

Men

1,581

7%

1,363

6%

1,657

7%

Women

1,968

8%

1,702

7%

1,673

7%

2009

2010

2011

Turnover by age group

Dismissals

Turnover

Dismissals

Turnover

Dismissals

Turnover

< 30 years

1,375

6%

1,250

5%

1,082

5%

>30 and 50 years

1%

147

1%

229

1%

213

2009

2010

2011

Turnover by region

Dismissals

Turnover

Dismissals

Turnover

Dismissals

Turnover

North

110

0%

104

0%

110

0%

Northeast

247

1%

221

1%

191

1%

Central-West

246

1%

231

1%

234

1%

Southeast

1,667

7%

1,419

6%

1,554

7%

South

1,279

5%

1,090

5%

1,241

5%

Aspect Labour/management relations Disclosure On Management Approach See the Sustainability Vision and Corporate Governance, as well as indicators LA9 and HR5. LA4 Percentage of employees covered by collective bargaining agreements LA5 Minimum notice period(s) regarding operational changes, including when the procedure is specified in collective agreements All of HSBC’s employees are covered by collective agreements. However, none of the agreements

establishes a minimum term for relevant operational notifications. Aspect Labour/management relations Disclosure On Management Approach See the indicators LA6, LA7, LA8 e LA9. LA6 Percentage of total workforce represented in formal joint management–worker occupational health and safety committees LA7 Rates of injury, occupational diseases, lost days, absenteeism,

and total number of work-related fatalities, by region LA8 Education, training, counselling, prevention, and risk-control programmes LA9 Health and safety topics covered in formal agreements with trade unions. The following HSBC’s Administrative Centres are certified by SA8000: Palácio Avenida, Vila Hauer, Xaxim and 24 de Maio (Paraná); Tower Faria Lima, Morumbi and São Paulo (São Paulo); and Caemi

24

(Rio de Janeiro). Nearly 7,000 employees, including trainees, apprentices and outsourced workers work in these facilities. In 2012, the bank aims to certify the Kennedy Administrative Centre in Curitiba (PR), thus encompassing 1.1 thousand other employees. SA8000 is an international norm aimed at preventing the occurrence of child labour, slave labour, discrimination or any disciplinary practice. The norm also guarantees that workers have all their rights preserved – among them the access to health and safety, freedom of association, right to collective bargaining, as well as proper time schedule and remuneration. The norm finally demands the existence of a management system that safeguards the application of such recommendations. All employees are represented by the Internal Accident Prevention Committee (CIPA), in compliance with Law 6,514 and NR-5, aimed at accident and occupational disease prevention, thus preserving life and providing workers with healthcare. Health and safety are also dealt with at the level of the unions. Governance body members and workers comprise several formal committees. Employees take part in health and safety inspections, audits and accident investigations. They are also granted access to the company’s compliance process regarding the norms of the International Labour Organisation, participating in problem-solving and conflict prevention processes. Additionally, even without formal signed agreements, HSBC

ensures that employees wear individual protection equipments and have access to training and education programmes in health and safety-focused fields. The bank decided to map out all labour-related health and safety procedures. Such analysis did not pinpoint those activities that present a high incidence or a high risk of specific diseases. HSBC also develops initiatives encompassing counseling, risk prevention and control, education and training actions, as well as treatment of serious diseases (by means of healthcare plans made available to employees and their families). Here are some of those initiatives: • Health fairs/SIPAT The major objective of the fair is to provide employees and their families with information on well-being, quality of life and self-esteem. The Internal Week for Labour Accident Prevention (SIPAT) also promotes a reflection on the healthy balance of body and mind. Over 70 thousand people took part in this event. For the 8th edition planned for 2012, 22 events are scheduled to take place. • Well-being moments Employees are stimulated to improve their daily work by means of postural advices, physical activities and new lifestyles. One of the benefits can be observed at the organisational environment. 323 units are assisted, encompassing 4,700 employees. For 2012,

330 events, reaching 4,400 employees, are scheduled to take place. • E-learning Online coaching on posture, the Internal Accident Prevention Committee (CIPA), and quality of life. Employee participation is mandatory. • Environmental Risk Prevention Programme The programme aims to identify existing risks in the work environment, proposing mitigating actions and measures in each unit. It is based on the environmental and ergonomic reports. In 2011, 930 reports were issued as part of the programme. For 2012, 757 mapping processes will be carried out. • Occupational Health Medical Control Programme This healthcare-based promotion programme is aimed at assisting employees. The programme is carried out by means of occupational medical exams. In 2011, nearly 30,000 exams were carried out. • Healthcare Promotion Programme in the Work Environment Ill employees, or those undergoing a readaptation phase after returning from health leaves, are followed up. A multidisciplinary team - including doctors, psychologists, physiotherapists and speech therapists - carries out the programme, made available to the following areas: Direct Channels (since 2007); Service Delivery (since 2010);

25

and the branch network in Rio de Janeiro (since 2008). In 2011, the programme was also launched in the Billing and IT areas located in Curitiba. • Personal Support Programme It supports and orients employees undergoing stress, accident, fatality, losses, marital separation, traumas, relationship conflicts, crisis management, chemical dependence, family and marital problems, families

with disabled children, psychosomatic diseases, care of aged people, anxiety, anguish, fear, panic, and other emotion-oriented problems. The team was created in 2005 and is comprised of doctors, psychologists, social assistants, physiotherapists and nutritionists, carrying out an average of 3,000 assistance processes a month. In 2011, 255,000 assistance processes were recorded. For 2012, the

Health and safety committees

programme is intended to assist 100% of the required demand. • Postural Gymnastics Employees are encouraged towards the practice of physical exercises, aiming to prevent the injury of the most used body parts while working. The programme is carried out in 432 units and encompasses 12,939 employees. For 2012, new initiatives will be sought in order to widen employee participation.

2009

2010

2011

Internal Accident Prevention Committee (CIPA)

100%

100%

100%

SA8000

7.9%

26.3%

30.8%

Health and safety indicators¹

2009

2010

2011

Injury rate²

0.88%

1.04%

0.76%

Lost days³

107

81

97

Absenteeism

845,6

636,6

562,0

Fatalities

0

0

0

¹ Indicators refer to direct employees. Figures for outsourced employees are not available.² All injuries and diseases causing partial loss in the work capacity were considered. ³ Consecutive days (including paid time). 4 Values from 2010 have been changed due to calculation adjustments.

Health and safety indicators per region (2011)¹ North

Northeast

Central-West

Southeast

South

Injury rate²

0.01%

0.17%

0.03%

0.40%

0.15%

Lost days³

1

21

3

53

19

Absenteeism rate

1.3

122.2

17.2

314.2

107.1

¹ Indicators refer to direct employees. Figures for outsourced employees are not available. ² All injuries and diseases causing partial loss in the work capacity were considered. ³ Consecutive days (including paid time).

26

Aspect Training and Education Disclosure On Management Approach See the Corporate Governance, Employee Development, Education for Sustainability and Work Environment sections. LA10 Average hours of training per year LA11 Programmes for skills management and on-going learning

HSBC does not hold any formal programme aimed at guaranteeing employability and managing employees’ end-ofcareer processes; however, the bank strongly invests in training and qualification programmes as a way of contributing towards the improvement of their competencies. In 2011, the bank offered 336,585 training hours to 23,467 employees, an average of 14.4 hours per person. Get to know more information on training programmes in the Professional Development section.

Every year, HSBC carries out a performance analysis process with employees, divided into three stages: in the onset of the year, employees are handed the goals to be achieved; immediately after the first half of the year, the goals are reviewed and a partial assessment is carried out; at the end of the year, formal assessments are performed counting on advices related both to the bank’s performance and eventual improvement opportunities. In the last three years, 97% of employees have taken part in the process.

LA12 Percentage of employees receiving regular performance development reviews

Average training time per employee by category*

2009

2010

2011

Directors

10.5

11.2

12.0

1st line managers

22.4

21.6

21.4

2nd line managers

34.3

24.2

21.6

Technicians/Supervisors

23.2

27.0

17.7

Operational/Administrative

14.5

21.1

10.7

Total

18.8

23.4

14.3

* Data were based on the total number of employees in the end of 2011. Data from 2010 have been changed, since they were based on the full number of trained employees throughout the year, including dismissed ones.

27

Aspect Diversity and Equal Opportunity Disclosure On Management Approach See the Sustainability = People and Diversity sections. A13 Diversity (gender, age group, minority group) in governance bodies and breakdown of employees At HSBC, the number of women overcomes the number of men. However,

the presence of male workers is more prominent in leadership positions (directors, 1st line and 2nd line managers). A large portion of employees (66%) is between 30

and 50 years old; their age enhances according to the hierarchical level. Further information can be seen in the Diversity section.

P37

Gender ratio by functional Gender level ratio by functional level 100

80

60

40

55%

45%

64%

36%

51%

49%

31%

69%

27%

73%

15%

85%

20 Men Women Total

Operational/Administrative

Technicians/Supervisors

2nd line managers

1st line managers

Directors

0

Total

Operational/Administrative

Technicians/Supervisors

2nd line managers

1st line managers

0%

0%

4%

66%

30%

2%

56%

42%

5%

75%

20%

13%

79%

8%

10%

88%

2%

23%

77%

Ratio of employees by group age P38

Directors

Total

Operational/Administrative

Technicians/Supervisors

2nd line managers

1st line managers

Directors

4%

7%

7%

7% 9%

5%

6%

2%

7%

1%

5%

0%

28

Ratio ofP37 black employees by functional level Ratio of black employees by functional level 10%

8%

6%

4%

2% Men

0% Women

Ratio of employees by group age

100%

80%

60%

40%

20%

Lower than 30

30-50

Over 50

29

Ratio of disabled employees P38

Ratio of disabled employees

10%

8%

6%

4%

2% 0%

1%

1%

Directors

1st line managers

2nd line managers

0%

LA14 Ratio of basic remuneration of women and men by employee category In average, all functional categories show that women earn lower wages as compared to men. The most

P38

9%

1%

Technicians/ Operational/ Supervisors Administrative

significant difference (13%) can be observed in the technician/ supervisor functions. This calculation was made by comparing each function’s average salary per gender. Final

5%

Total

results show a yet more sharply distinction. Such imbalance occurs mainly in the highest functional and remuneration levels. Here, men predominate.

Ratio between average salaries for men as compared to women

Ratio between average salaries for men as compared to women

80%

70%

64%

65%

61%

60%

2009

2010

2011

30

Ratio between average salaries for men as compared to women P39(by functional level) Ratio between average salaries for men as compared to women (by functional level) 120%

100% 97% 95%

96%

102%

100%

90% 92%

90%

80%

2009

2010

80%

2011

2009

2010

2011

st

Directors

1 line managers

100%

100% 96%

99%

98% 96%

89%

90%

80%

87%

2009

2010

2nd

80%

2011

2009

Technician/Supervisor

line managers

100%

92%

93%

89%

80%

2010

2009

2010

2011

Operational/ Administrative

2011

31

Social performance – human rights Aspect Procurement Processes Disclosure on Management Approach See the Suppliers sections. HR1 Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening All companies that hold significant investments are monitored by HSBC and must comply with global guidelines established to human rights’ aspects and operations. For all other types of investment, HSBC urges companies to adopt the Group’s policies and standards as a way of leading these businesses towards the adoption of good practices. HR2 Percentage of significant business partners that have undergone human rights screening HSBC does not make any distinction between significant and non-significant suppliers. All contracts cover specific human rights clauses. In 2011, no supplier violated those clauses.

HR3 Employee training on policies and procedures concerning aspects of human rights HSBC carries out internal presence-based or remote training programmes on the SA8000 norm related to human rights issues, among other aspects. In 2011, 2,523 training hours were offered to direct employees. Since 2007, when the bank triggered the certification process for the norm, 8,500 employees have already been trained, representing approximately 35% of the company’s current workforce. Aspect Non-discrimination Disclosure on Management Approach See the Sustainability = People and Diversity, Work Environment and Diversity sections. HR4 Total number of incidents of discrimination and corrective actions taken HSBC has a specific channel to assist those employees who wish to present any whistleblowing against discrimination cases in the work

environment, called Active Voice. In 2011, no case of such nature was recorded. For more information, see the Work Environment section. Aspect Freedom of Association Disclosure on Management Approach See indicators LA4, LA5 e LA9. HR5 Right to exercise freedom of association and actions taken to support these rights HSBC ensures employees’ freedom of association and collective bargaining in all its operations. The bank sees to the prevention of violations to such rights. Twice a month, the bank receives representatives of the Banking Workers Unions, who have the opportunity to present their activities and promote employee affiliation processes. Nearly 50% of HSBC’s employees are unionised. The company carries out engagement activities of suppliers, as a way to motivate them into the adoption of practices aligned with HSBC’s values, including the freedom of association. This guideline is also inserted into the sectorial policies towards loan concession analyses.

32

Aspect Child Labour Disclosure on Management Approach See the Work Environment and Suppliers sections. Aspect Forced And Compulsory Labour Disclosure on Management Approach See the Work Environment and Suppliers sections. HR6 Operations and significant risk for incidents of child labour and measures taken HR7 Operations and significant risk for incidents of forced or compulsory labour and measures taken

Taking all of HSBC’s activities into account, the credit area, the investment area and the supplier management area are the ones that present the highest risk for the occurrence of child and forced labour. In any engagement process, the bank seeks to disseminate its practices to suppliers, including the eradication of any activity of such nature. Sectorial policies may hinder loan concession processes to companies that display any of these types of practices. Aspect Security Practices Disclosure on Management Approach See indicator HR8.

HR8 Percentual do pessoal de segurança submetido a treinamento nas políticas ou nos aspectos de direitos humanos que sejam relevantes às operações There is no specific human rights programme for the security team. Aspect Indigenous Rights Disclosure on Management Approach See indicator HR9. HR9 Total number of incidents of violations involving rights of indigenous people and actions taken No confirmed discrimination incidents were recorded.

33

Social performance – society

Aspect Community Disclosure on Management Approach See the Instituto HSBC Solidariedade section and indicator EC8. SO1 Practices in evaluation and management of impacts of operations in communities HSBC does not have structured programmes to assess the impacts of its operations in communities. However, the bank invests in social-based financial resources by means of the Instituto HSBC Solidariedade, as a way of positively influencing the communities where it operates. Further information can be seen in indicator EC8 and in the Instituto HSBC Solidariedade section. Aspect Corruption Disclosure on Management Approach See the Corporate Governance,

Values and Principles, Education for Sustainability, as well as indicators SO2, SO3 e SO4. SO2 Business units analysed for risks related to corruption SO3 Percentage of employees trained in the organisation’s anticorruption policies and procedures SO4 Actions taken in response to incidents of corruption No case of corruption involving either employees or partners was recorded in 2011. Any occurrences must be reported every quarter to Latin America’s regional governance bodies. HSBC monitors corruption risks in the areas where a Local Compliance Officer is located. In July 2011, the bank also started monitoring the following areas: Private Banking (High Income segment); Asset Management

(Investments); Brokerage House (Security and Real Estate Broker); HSBC Securities Services; Global Banking and Markets (major Corporate, Institutional and Governmental customers); Retail Banking and Wealth Management (Branch Network, Insurance Group, Property Finance, Consortium, Payroll Loan, Legal Entity segment, Individual Entity segment, Exchange and International Services, Segments/Sales Strategy/Premier and Foreign Trade); Human Resources; Corporate Sustainability; Procurement/Purchasing (Purchase & Payable Accounts); Finance; and Marketing. Such assessment encompasses units mostly exposed to corruption risks and represent approximately 80% of employees. In 2011, results achieved by a sample identified a satisfactory level of knowledge on HSBC’s anticorruption practices among employees. HSBC’s training programmes -

34

currently reaching 92.5% of employees - are one of the major tools used to control the number of corruption occurrences. The guideline points out that 95% of employees should attend these programmes. Every month, the percentage of trained employees in each area is presented to managers; whenever an area does not meet the minimum level it is encouraged to elaborate on the issue. Despite the fine results, the survey revealed some points to be improved by means of specific action plans. This task will be followed up by the Compliance area. In 2012, HSBC plans to carry out quarterly reviews and implement pinpointed improvement procedures. Additionally, the Compliance area is expected to promote reviews, audits and development of an awareness work among employees on the adherence to the Group’s policies and norms.

Aspect Public Policies Disclosure on Management Approach See the Commitments section SO5 Public policy positions and participation in public policy development See the Commitments section SO6 Contributions to political parties and related institutions HSBC’s Legal and Compliance Functional Instruction Manual prohibits any type of sponsorship or financial contribution to either politicians or political parties.

Aspect Anti-Competitive Behavior Disclosure on Management Approach See the Corporate Governance section

SO7 Legal actions for anti-competitive behaviour, anti-trust, and monopoly practices HSBC has not been the target of any lawsuit resulting from anti-competitive behaviour, anti-trust or monopoly practice. Aspect Compliance Disclosure on Management Approach See the Corporate Governance section SO8 Significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations In 2011, R$ 1.6 million was directed to the payment of fines - R$ 1.2 million responded to products and services; R$ 408,000 reffered to municipal, state and federal fines regarding labour, transit and other public departments.

35

Social performance – product responsibility Aspect Customer Health and Safety Disclosure on Management Approach See the Products section. PR1 Life cycle stages in which health and safety impacts of products and services are assessed PR2 Number of incidents of non-compliance with regulations concerning health and safety impacts of products and services 100% of HSBC’s new products are previously assessed for the purpose ascertaining the financial literacy of customers, opportunities to reduce environmental impacts, the turning points of sustainability, the products’ alignment with sustainability risk policies and the Principles for Responsible Investments (PRI). There was no record of specific non-compliance incidents throughout the year. The assessment also takes iinto account customers’ health and insurance-related

issues.The sustainability area is assigned the mission of reformulating products. In critical incidents, the area may even veto the launch of noncompliant products. There was no record of non-compliance incidents in 2011. For further information on the approval of products and services, see the Products section. Aspect Product and Service Labelling Disclosure on Management Approach See the Financial Literacy, Products and Customers section. PR3 Procedures for information and labelling of products and services PR4 Non-compliance with regulations concerning product and service information and labelling There was no noncompliance record in 2011. Communication and labeling of all products and services offered by HSBC comply with in-force legislations that set the

adoption of criteria aimed to guarantee the consumer’s full understanding of products. Training processes are carried out by the bank with employees and outsourced workers who deal with these stakeholders in order to provide them with clear and transparent information. As HSBC operates in the banking services area, the bank deems the financial literacy of customers to be a crucial step towards the adequate use of products. Pertinent information on this issue is disclosed in the company’s website. Additionally, a partnership with the Junior Achievement NGO orients children and teenagers on conscientious consumption and personal finance practices. Further information is available in the Financial Literacy section. PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction In order to assess the satisfaction level of customers, HSBC carries

36

out two surveys. The first one takes place every month and evaluates the assistance rendered by Relationship Managers (RMs) and branches. Since the launch of the survey (January 2011), all units have already been assessed. The second survey is carried out every six months and assesses the effectiveness of the bank’s assistance channels. The surveys are made of interviews and subsidise eventual alterations in HSBC’s procedures. Such processes brought about an improved perception of customers concerning the services rendered by the bank. Positive reports rose from 37% to 61% in the surveys. The internet banking services, the time for transactions at ATMs, and the transparency of the Call Centre services are listed among observed improvements. For further information, see the Customers section. Aspect Marketing Communication Disclosure on Management Approach See the Products and Customers section. PR6 Programmes for compliance to legislation, standards, and voluntary codes HSBC’s communication channels fully comply with the norms of the National Advertising Selfregulating Council (CONAR), the Consumer Protection Code, and specific norms of the

financial segment. In addition to the norms established by these institutions, published materials must show coherence and consistency, as they are able to directly impact HSBC’s image and reputation. All external communication materials are assessed by the Compliance, Customer Experience and Legal areas, aiming to safeguard the compliance of the materials to in-force rules and norms. In case products display any risk exposure – such as those related to some types of investment funds customers are advised prior to the purchase process. PR7 Total number of incidents of non-compliance with regulations concerning marketing communications There was no record of non-compliance with norms related to HSBC’s communication procedures in 2011. Aspect Customer Privacy Disclosure on Management Approach See the Values and Principles and Customers section. PR8 Complaints regarding breaches of customer privacy In 2011, three complaints from customers were recorded regarding data privacy violation. The incidents took place due to

the reuse of paper in one of the branches of the network. HSBC develops procedures aimed to prevent customer privacy violation processes; whenever they occur, however, all pertinent information is assessed, the source of the failure is sought, responsible people are identified and new prevention methods are implemented. If the source of the failure is found to be located outside the bank, the Legal department works towards listing eventual criminal procedures. In case the deviant conduct is internally located, the Compliance area elaborates a report on the procedures that generated the failure. Later on, improvement and prevention suggestions are drawn by the area. Aspect Compliance Disclosure on Management Approach See the Products and Customers section. PR9 Significant fines for noncompliance with laws and regulations concerning the provision and use of products and services In 2011, R$ 1.2 million were directed to the payment of fines related to the supply of products and services. Nearly 70% of this amount paid for the fines related to the Security and Exchange Commission; the remainder paid for fines and charges of other institutions.

37

Sector indicators Aspect Product Portfolio Disclosure on Management Approach See tindicators FS1, FS2, FS3, FS4 and FS5 as well as the Corporate Governance, Risk Management, Economic Development, Responsible Loan Concession, Investments, Products and Financial Literacy sections. FS1 Policies with specific environmental and social components applied to the business lines. FS2 Procedures for assessing and screening environmental and social risks in the business lines FS3 Processes for monitoring customers’ implementation of and compliance with environmental and social requirements included in agreements or transactions

HSBC counts on specific procedures that assess sustainability risks in loan concession processes. In addition to the Equator Principles, the bank adopts five global Sectorial Policies encompassing activities deemed to be critical to HSBC: Chemical Industry, Energy, Forestry and Forestry Products, Fresh Water Infrastructure, and Mining and Metals. In such sectors, HSBC will not provide direct support to the operations of customers located in sites considered by UNESCO as World Heritage or Humid Zones, or to activities

that do not comply with the minimum standards established by the bank’s policies. These guidelines also specify the types of businesses designed as either “prohibited” (not supported by HSBC) or “restricted” (HSBC is cautious about). Credit approval procedures are also foreseen by the Environment and Operational Sustainability Risk Local Policies. Customers’ risk analyses are also supported by a sustainability risk rating tool. The tool takes environmental and social aspects into account, assesses the impacts generated by customers’ activities, as well as their level of compliance with HSBC’s sector policy criteria.

38

Sector Policies

Chemical Industries

Energy

Forestry and Forestry Products

Fresh Water Infrastructure

Mining and Metals

The improper use of chemical products may impact both the enrivonment and communities. Customers in this sector must comply with pre-determined standards, such as the Stockholm and the Rotterdam Conventions. Regarding thermoelectric companies, HSBC settles clear emission limits for coal thermoelectric plants (850 g of CO2/ kWh in developing countries and 550 g of CO2/kWh in developed countries). The policy includes the institutional and technical support to nuclear plants counting on a good safety history and with no involvement with arms, besides the careful analysis of customers dealing with oil extraction in tar sands. HSBC restricts loan concession processes to wood-related customers who do not present at least 70% of certified operations.

The construction of hydropower plants has significant impacts. They can dislodge communities and meaningfully impact the environment. HSBC only supports projects developed in compliance with the World Commission on Dams’ reference system.

HSBC does not support customers who do not comply with minimum standards, such as those referred to the final disposition of waste, or those related to health and safety. Additionally, the bank does not support customers that extract uranium for military purposes, or who are charged of credible claims of human rights violation.

• Assessment procedures HSBC imposes special requirements for the approval or renewal of loan concession processes, taking into account the segment in which customers operate. In specific cases, contractual terms are established and an independent consulting agency is hired in order to monitor the process. Action plans, progress reports, corrective actions and technical visits can also be determined. Whenever a procedure is subject to the Equator Principles analysis, the bank will count on the support of independent auditors and consultants for the identification of high risk events. Customers’ rating is eventually reassessed in accordance with their developed practices. For the Global Banking and the Local Large Corporates areas, risk assessment and requirement monitoring processes are carried out annually. On its turn, the Middle Market Enterprises area counts on bi-annual assessments. HSBC opens the dialogue whenever any of the requirements are not complied with. The extent and gravity of the incident may cause the bank to reposition its relationship with the customer, including the advanced payment of debts, credit limit freeze-ups and, in certain specific conditions, the removal of the customer from the bank’s portfolio.

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• Responsible areas The adherence to such policies rests under the responsibility of the Local Sustainability Risk Manager, who directly responds to the Risk Director. Whenever necessary, the Risk Director reports to the HSBC Group’s Global Sustainability Risk Area. This body carries out all approvals, renewals, recommendations and monitoring of sustainability risks and is steadily supported by the Business and Loan Concession areas. The Commercial area forwards sustainability risk rating proposals and submits the risk assessment form. The Group must endorse all loan concession processes required by high risk (A – high) rated companies, or the ones that present US$ 15 million+ contracts. • Future perspectives For 2012, HSBC aims to improve its sustainability risk management practices. The bank’s Environment and Operational Sustainability Risk Local Policies are expected to be reviewed and published. A new mandatory segment table towards sustainability risk approval processes will also be published; additionally, Upper segment customers will be inserted into the procedures. Sector policies are disclosed at http://www.hsbc.com/1/2/ sustainability/sustainable-finance. A compact version in Portuguese can also be accessed at http:// www.hsbc.com.br/1/2/portal/ pt/sustentabilidade/negociossustentaveis/negociossustentaveis-para-o-hsbc. At http://www.hsbc.com/1/2/ sustainability

there is a list of assessed projects based on the Equator Principles. For further information on HSBC’s loan concession processes, see the Responsible Loan Concession section. FS4 Processes for improving staff competency in implementing environmental and social policies and procedures applied to the business lines As a way of guaranteeing qualification for the development of sustainability risk policies procedures, HSBC carries out training programmes directed to employees who work in areas related to such issue. In 2011, 7,065 employees from the Commercial and Loan Concession areas attended an e-learning programme on the bank’s sectorial policies. A sustainability training programme, attended by 918 employees, was specifically launched in Brazil. Additionally, 61 other employees from the Risk, Business, Insurance, Compliance and Legal areas attended presencebased training processes. Participation is not mandatory. The bank also makes use of HSBC Brazil’s intranet to keep employees informed on the policies.

FS5 Interaction with customers/ investments/ business partners as regards environmental and social risks and opportunities Business-related environmental risks and opportunities are enlisted in HSBC’s agenda with several strategic partners. Together with the FEBRABAN, the bank provides support to the Green Protocol, which proposes a sustainable agenda for the banking services sector. The bank also takes part in the fora promoted by the Sustainable Finance Technical Chamber, the Brazilian Business Council for Sustainable Development, and the workshops promoted by the Fundação Getúlio Vargas’ Study Centre on Sustainability. The Sustainability area is directly involved in those initiatives as a way of inserting sustainability into all processes carried out in the financial sector. The Suppliers section shows HSBC’s developed initiatives aimed to make commercial partners aware of the best sustainability practices.

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Aspect Product Portfolio FS6 Percentage of the portfolio for business lines by specific region, size (e.g. micro/small and mid/large) and by sector The vast majority of HSBC’s credit portfolio is located in the Southeast and South regions of Brazil. Between

2010 and 2011, the Southeast region recorded a 4% expansion; the South region, 121%; and the Central-West region, 67%. As per the bank’s business lines, 47% belongs to the Commercial area (Legal Entity Segment); 34.6% refers to the Retail Banking and Wealth 2 Management ; 18.3% is

related to the Global Banking and Markets (large corporate, institutional and governmental customers); and 0.1% belongs to the Private Banking (high net worth segment). The definition of risk sectors complies with the sectorial policies mentioned in indicator FS1.

P52

Portfolio byPortfolio Regionby Region

Offshore (2%) North (2%) Northeast (5%) Central-West (9%) South (40%) Southeast (42%)

Portfolio by Regiont

2009

2010

2011

North

971,868

1,124,309

1,228,852

Northeast

2,277,527

2,470,213

2,689,319

Southeast

23,657,372

24,788,301

24,602,107

Central-West

3,016,379

3,834,060

5,034,531

South

10,544,265

16,770,293

23,307,057

Offshore

1,062,569

643,668

1,437,421

Total

41,529,980

49,630,844

58,299,287

2 RBWM offers banking and financial services such as checking accounts, savings account, property finance, financing, insurance, credit cards, consortium, loan concession, investments, asset management and local and international custody for individual and autonomous customers.

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Portfolio by Sector

2009

2010

2011

Industry

8,142,288

11,363,222

14,821,106

Food and beverage

2,433,809

2,771,190

3,763,512

Chemistry and petrochemistry

1,428,328

1,862,769

2,601,912

Machinery and equipment

685,249

1,287,839

1,862,386

Paper and celulosis

570,189

546,463

736,040

Textile and garments

721,228

873,898

1,184,741

Steel and metal works

580,558

877,550

830,372

Electricity, gas and water

80,277

358,714

450,236

Electroelectronics

327,532

501,952

434,187

Wood and furniture

294,960

319,446

314,236

Automotive

363,193

637,354

806,716

Oil and natural gas

178,390

512,417

312,943

Other industries

178,575

813,630

1,523,825

Commerce

6,344,836

8,605,991

10,172,064

Services

4,387,398

5,014,969

6,805,721

Finance

1,371,032

819,299

1,004,146

Transportation

1,143,070

1,583,298

2,207,966

Education, health and other social services

533,748

693,043

856,525

Telecommunication

180,548

108,221

482,482

Other services

1,159,000

1,811,108

2,254,602

Construction and property

2,975,335

4,560,952

6,119,772

Individual Entity

1,050,330

1,843,429

3,091,278

Legal Entity

1,925,005

2,717,523

3,028,494

Primary Sector

430,691

467,466

739,430

Agriculture and cattle raising

377,878

396,870

655,226

Mining

52,813

70,596

84,204

Other individual entities

19,249,432

19,618,244

19,641,194

FS7 Monetary value of products and services designed to deliver a specific social benefit for each business line broken down by purpose FS8 Monetary value of products and services designed to deliver a specific environmental benefit for each business line broken down by purpose. HSBC develops products aimed to produce social-environmental benefits. Individual Entities are provided with the Instituto HSBC Solidariedade Credit Card. Together with the Solidarity Credit Card (not anymore delivered), this product accounts for the donation of R$ 9.9 million, representing 8% of the cards issued by HSBC. The bank also offers this category the DI Solidarity Fund, the HSBC Global Investment Funds and the Social Responsible Investment Fund, which comprise 0.3% of the company’s net revenue. Additionally, the bank also offers the Benefits Club; the donation of added points resulting from the bank’s loyalty programmes raised an amount of R$ 21.1 thousand. For further information, see the Products section. In partnership with the Banco do Nordeste, HSBC provides Legal Entities with credit for small businesses, now representing 0.17% of the total portfolio. The Insurance area, on its turn, dedicates part of its products to environmental protection actions. In 2011, R$ 3.67 million were donated

42

to the Society for Wildlife Research and Environmental Education (SPVS) and the Worldwide Fund for Nature (WWF).

Market Enterprises segment was inserted into the audit approval process. In 2012, auditing processes will be kept in-force by HSBC.

social screening processes. See the Investments section in order to get to know the guiding processes towards outsourced resource management.

Aspect Auditing

Aspect Active Property

FS9 Coverage and frequency of audits to assess implementation of environmental and social policies and risk assessment procedures Internal auditing processes ensure that the Sustainability Risk Policy will be fulfilled. Audits take place once a year and take into account the social-environmental risk analysis inserted into any loan concession process, the review of credit limits, and the adherence of companies to sectorial policies. The auditing processes also guarantee that the Loan Concession Policy, as well as the bank’s norms and internal standards (Credit Functional Instruction Manual and Business Instruction Manual) are complied with. Noncompliance cases are dealt with individually. Depending on the gravity level, HSBC either presents an action plan aimed to safeguard the adherence to the norms or requires the given company to formally leave the project. In 2011, there was no annotation pointing to the requirement of an action plan. The sustainability risk assessment of the Middle

FS10 Percentage and number of companies which have interacted with the company on environmental and social issues Prior to the commercialisation of its products, HSBC performs customer risk assessments. The bank currently counts on 358,419 customers; the number of already assessed companies, however, is unknown. In 2011, together with some customers, the organisation worked towards raising R$ 1.2 million aimed to assist seven projects from six different companies. The bank also provided support to NGOs by means of the Instituto HSBC Solidariedade and partnerships with SPVS and WWF.

FS12 Voting policies applied to environmental or social issues for shares over which the reporting organisation holds the rights to vote shares or advises on voting The bank does not count on a specific voting policy that deals with sustainability criteria. Nonetheless, whenever HSBC is in a position of influencing decision-making processes – such as in advisory positions in given operations or in private equity investments – it ensures that the norms and policies of the Group are complied with. In this sense, HSBC adopts the Social-environmental Risk Policy - including the bank’s sectorial policies and the Equator Principles – and the Environment and Operational Sustainability Risk Local Policies. Whenever possible, HSBC seeks to influence other businesses to adopt similar guidelines.

FS11 Percentage of assets subject to positive and negative environmental or social screening HSBC is unaware of the percentage of assets subject to positive or negative environmental or

FS13 Access points in low populated or economically disadvantaged areas HSBC does not map out such indicator. The creation of access points depends upon the commercial feasibility of the process.

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FS14 Initiatives to improve access to financial services for disabled people. HSBC develops several activities towards improving the access of disabled people into the financial services. Online courses – such as Diversity in assistance procedures, Brazilian Sign Language (LIBRAS), and Disabled People – aimed to improve the competencies of employees on the issue supply basic information on in-force legislations and provide relationship tips aimed to improve the understanding of the bank’s professionals concerning the Brazilian Sign Language. The table on the right shows a series of products and services directed to disabled people:

Accessibility in the branches

LIBRAS assistance

Adapted telephone assistance at the SAC (Customer Assistance Service) and the Ombudsman Office (0800 701 59 34)

Auto Special Insurance

Universal ATM

Global relationship contract

Checking account statements Branch and ATM Locator

My HSBC (mobile banking)

The action offers access to any person into all areas of the branch, with no restriction whatsoever to any type of audience. Currently, four branches still have to be adapted. The process will be finished in 2012.

The initiative makes possible the assistance to hearing-impaired people at the branches.

Adapted telephone devices and keyboards allow for the communication between the hearing-impaired customer and the employee.

Compensations offered by the insurance is based on the FIPE parameter table (excluding the tax exemption deduction that disabled people have the right to). The insurance also covers vehicle adaptation processes and courtesy car endowed with hydraulic steering and automatic gear shift. Additionally, the insurance provides assistance services, such as taxis, to people who had to leave their cars for repairment, tyre change, deliver of claim forms, home repair services, among others. The telling machine has differentiated height and counts on ear phones. It provides assistance to visual impaired customers and wheeled chair users, as well as people with short stature. This contract is available to both customers and employees in the Braille language. The service is available in Rio de Janeiro. Checking account statements are also available in the Braille language. This website device allows for the location of branches. The service allows for remote transactions, preventing customer displacements to branches.

Credit and Debt Card Holder

The cardholder counts on Braille details in order to offer the possibility of distinguishing between either the credit or the debt card.

Speaking Token

The device allows for visual impaired people to access my HSBC Internet.

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FS15 Policies for the good financial product and service design and sale In 2011, HSBC implemented a new process for the approval of new products. Besides assessing the customer’s financial literacy levels, the process also evaluates the opportunities towards reducing environmental impacts, the sustainability turning points, as well as the customer’s alignment to the sustainability risk policy and the Principles for Responsible Investment. The Sustainability area leads such analyses. Approval processes are assessed by the Customer Experience area, which provides customers with assistance, and also by the Compliance area, which adequates and verifies eventual conflicts of interest between customers and the organisation. In addition to that, the Customer Experience area seeks to catalogue the major needs of customers by continually monitoring the most valued aspects concerning the relationship between people and financial institutions, as well as HSBC’s performance in these aspects and customer satisfaction levels. Such analysis is measured by the Customer Recommendation Index, a mandatory process that is part of the Balanced Scorecard in all countries where the bank operates.

HSBC makes its best efforts to ensure that the creation of all products take into account pertaining sustainable issues. The product approval model is comprised of internal standards, mandatory readings and online training programmes. These are mandatory steps to all employees. The Sustainability Report is the bank’s channel to disclose such procedures. For further information on the product’s approval flow, see the Products section. FS16 Initiatives to enhance financial literacy by type of beneficiary Aware of its role as a financial institution, HSBC develops initiatives to expand the literacy limits of customers, employees and the community. In partnership with the Junior Achievement NGO, the bank provides support to the More Than Money programme. Counting on the participation of 98 employees, the programme positively impacted 1,115 students in 2011, overrunning the forecast goal in 17%. For further information, see the Financial Literacy section. In the Loan and Finance link located at the bank’s website – http:// www.hsbc.com.br/1/2/

campanhas/cartilhaconsciente-de-credito?WT. ac=HBBR_PVEFDS101, customers are granted access to a guiding manual on the “Conscientious use of credit”. The company recorded 36,962 accesses in 2011. For further information, see the Sustainability = People section. Employees, on their turn, count on an electronic guide on “Financial Management” in the bank’s intranet.

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GRI Index Profile 1. Strategy and Analysis Indicador

Description

Reported

1.1

Message

Partial

1.2

Description of major impacts, risks and opportunities.

Partial

Page/ Online PDF

03

Comments

Unsuccessful initiatives and the perspective about the bank’s performances regarding the goals were not recorded in this text.

03

The text does not describe major impacts of the organisation on sustainability and stakeholder-related effects.

Page/ Online PDF

Comments

2. Organisacional Profile Indicator

Description

Reported

2.1

Name of the organisation

Completed

03

2.2

Main brands, products and services.

Completed

03

2.3

Operational structure of the Organisation.

Completed

03

2.4

Location of organisational headquarters.

Completed

03

2.5

Number of countries where the organisation operates, and names of countries with major operations.

Completed

03

2.6

Nature of establishment and form of ownership.

Completed

03

2.7

Markets served

Completed

05

2.8

Scale of the organisation

Completed

05

2.9

Significant changes during the reporting period.

Completed

05

2.10

Awards received.

Completed

05

3. Report Paramaters Page/ Online PDF

Indicator

Description

Reported

3.1

Reporting period

Completed

05

3.2

Date of latest previous report

Completed

05

3.3

Reporting cycle

Completed

05

3.4

Contact point for questions regarding the report or its contents

Completed

05

Comments

46

3.5

Report content definition process.

Completed

05

3.6

Report scope

Completed

05

3.7

Statement of specific limitations on the scope or coverage of the report.

Completed

05

3.8

Report preparation basis.

Completed

05

3.9

Data metrics techniques and basis for calculations.

Completed

05

3.10

Re-statements of information provided in earlier reports, and the reasons for such re-statement.

Completed

05

3.11

Significant changes from previous reports.

Completed

05

3.12

Table identifying the location of the Standard Disclosures in the report.

Completed

06

3.13

Policy and current practice with regard to seeking external assurance for the report.

Completed

06

4. Governance, Commitment and Engagement Page/ Online PDF

Indicator

Description

Reported

4.1

Governance structure of the organisation, including committees under the highest governance body.

Completed

06

4.2

Indicate whether the chair of the highest governance body is also an executive officer.

Completed

06

4.3

Number of members of the highest governance body thatare independent and/or non-executive members.

Completed

06

4.4

Mechanisms for shareholders and employees to provide recommendations.

Completed

06

4.5

Link between compensation for members of the highest governance body and organizational performance (including social and environmental performance).

Completed

06

4.6

Processes in place to avoid conflicts of interest.

Completed

06

4.7

Qualifications and expertise of the members of thehighest governance body.

Completed

06

4.8

Internally developed statements of mission or values,codes of conduct, and principles.

Completed

06

4.9

Procedures of the highest governance body for overseeing the organisation’s economic, environmental, and social policies.

Completed

07

4.10

Processes for evaluating the highest governancebody’s own performance.

Completed

07

4.11

Explanation of whether and how the precautionary approach or principle is addressed by the organisation.

Completed

07

4.12

Externally developed charters, principles, or other voluntary initiatives.

Completed

07

4.13

Meaningful participation in associations or advocacy organisations.

Completed

07

Comments

47

4.14

List of stakeholder groups engaged by the organisation.

Completed

07

4.15

Basis for identification and selection of stakeholders for engagement.

Completed

07

4.16

Approaches to stakeholder engagement.

Completed

07

4.17

Key topics and concerns that have been raised through stakeholder engagement.

Completed

07

Performance Indicators Economic Performance Indicators Indicator

Description

Reported

Page/ Online PDF

Comments

Economic EC1

Essential

Direct economic value generated and distributed.

Completed

08

EC2

Essential

Financial implications and other risks and opportunities for the organisation’s activities from climate change.

Completed

09

EC3

Essential

Coverage of the organisational benefit plan.

Completed

10

EC4

Essential

Significant financial assistance received from government.

Completed

10

Market presence EC5

Additional

Ratio of standard entry level wage as compared to local minimum wage.

Completed

11

EC6

Essential

Policy, practices, and proportion of spending on locally based suppliers at significantoperational sites.

Completed

11

EC7

Essential

Local hiring.

Completed

11

Indirect Economic Impacts EC8

Essential

Development and impact of investments in infrastructure and service offering, in particular in public benefi ts.

Completed

12

EC9

Additional

Indirect economic impacts.

Completed

12

Description

Reported

Page/ Online PDF

Environmental Performance Indicators Indicator

Materials EN1

Essential

Materials used by weight or volume.

Completed

13

EN2

Essential

Percentage of recycled materials used.

Completed

13

Comments

48

Materials EC8

Essential

Materials used by weight or volume.

Completed

14

EC9

Additional

Percentage of recycled materials used.

Completed

14

Energy EN3

Essential

Direct energy consumption by primary energy source.

Completed

14

EN4

Essential

Indirect energy consumption by primary source

Completed

14

EN5

Additional

Energy saved due to conservation and efficiency improvements.

Completed

14

EN6

Additional

Initiatives to provide energy-efficiency based products and services.

Completed

14

EN7

Additional

Initiatives to reduce indirect energy consumption and reductions achieved.

Completed

14

Water EN8

Essential

Total water by source.

Completed

16

EN9

Additional

Water sources significantly affected by removal of water.

Completed

16

Percentage and total volume of water recycled and reused.

Completed

16

EN11 Essential

Location and size of protected areas.

Completed

16

EN12 Essential

Significant impacts of activities on biodiversity.

Completed

16

EN13 Additional

Habitats protected or restored.

Completed

16

EN14 Additional

Strategies for managing impacts on biodiversity.

Completed

16

EN15 Additional

Number of species with habitats in areas affected by operations.

Completed

16

EN10 Additional

Biodiversity

Emissions, Effluents and Waste EN16 Essential

Total direct and indirect greenhouse gas emissions.

Completed

17

EN17 Essential

Other relevant indirect greenhouse gas emissions.

Completed

17

EN18 Additional

Initiatives to reduce greenhouse gas emissions and reductions achieved.

Completed

17

EN19 Essencial

Emissions of ozone-depleting substances.

Completed

17

EN20 Essencial

NOx, SOx and other significant air emissions.

Completed

17

49

EN21 Essential

Total water discharge by quality and destination.

Completed

18

EN22 Essential

Total weight of waste by type and disposal method.

Completed

18

EN23 Essential

Total number and volume of significant spills.

Completed

19

EN24 Additional

Weight of transported waste deemed hazardous.

Completed

19

EN25 Additional

Water bodies significantly affected by discharges of water and runoff.

Completed

19

Products and Services EN26 Essential

Initiatives to mitigate environmental impacts of products and services.

Completed

19

EN27 Essential

Percentage of products sold and packaging materials that are reclaimed.

Completed

20

Significant fines and sanctions for non-compliance with environmental laws and regulations.

Completed

20

Significant environmental impacts from transportation of products and workforce.

Partial

20

Total environmental protection expenditures and investments.

Completed

20

Description

Reported

Page/ Online PDF

Compliance EN28 Essential

Transportation EN29 Additional

Impacts related to cash transportation were not taken into account.

Overall EN30 Additional

Labour Practices and Decent Work Indicator

Employment LA1

Essential

Total workforce by employment type, employment contract,and region.

Completed

21

LA2

Essential

Total number and employee turnover rate.

Completed

21

LA3

Additional

Benefits provided to full-time employees that are not provided to temporary or part-time employees.

Completed

21

Labour/Governance Relations LA4

Essential

Percentage of employees covered by collective bargaining agreements

Completed

23

LA5

Essential

Minimum notice period(s) regarding operational changes, including when the procedure is specified in collective agreements.

Completed

23

Comments

50

Health and Safety LA6

Additional

Percentage of total workforce represented in formal joint management–worker occupational health and safety committees.

Essential

Rates of injury, occupational diseases, lost days, absenteeism, and total number of work-related fatalities, by region.

LA8

Essential

LA9

Additional

LA7

Completed

23

Partial

23

Education, training, counselling, prevention, and risk-control programmes.

Completed

23

Health and safety topics covered in formal agreements with trade unions.

Completed

23

Occupational diseases of outsourced workers were not reported.

Training and Education LA10

Essential

Average hours of training per year.

Completed

26

LA11

Additional

Programmes for skills management and on-going learning.

Completed

26

LA12

Additional

Percentage of employees receiving regular performance development reviews.

Completed

26

Diversity and Equal Opportunity LA13

Essential

Diversity in governance bodies and breakdown of employees.

Completed

27

LA14

Essential

Ratio of basic remuneration of women and men by employee category.

Completed

29

Description

Reported

Human Rights Indicator

Page/ Online PDF

Procurement Practices HR1

Essential

Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening.

Completed

31

HR2

Essential

Percentage of significant business partners that have undergone human rights screening.

Completed

31

HR3

Additional

Employee training on policies and procedures concerning aspects of human rights.

Completed

31

Completed

31

Completed

31

Non-discrimination HR4

Essential

Total number of incidents of discrimination and corrective actions taken.

Freedom of Association HR5

Essential

Right to exercise freedom of association and actions taken to support these rights.

Comments

51

Child Labour HR6

Essential

Operations and significant risk for incidents of child labour and measures taken.

Completed

32

Completed

32

Completed

32

Total number of incidents of violations involving rights of indigenous people and actions taken.

Completed

32

Description

Reported

Page/ Online PDF

Practices in evaluation and management of impacts

Completed

33

Forced/Compulsory Labour HR7

Essential

Operations and significant risk for incidents of forced or compulsory labour and measures taken.

Security Practices HR8

Additional

Percentage of security personnel trained in the organisation’s policies or procedures concerning aspects

Indigenous Rights HR9

Additional

Society Indicator

Comments

Community SO1

Essential

Corruption SO2

Essential

Business units analysed for risks related to corruption.

Completed

33

SO3

Essential

Percentage of employees trained in the organisation’s anticorruption policies and procedures.

Completed

33

SO4

Essential

Actions taken in response to incidents of corruption.

Completed

33

Public Policy SO5

Essential

Public policy positions and participation in public policy development.

Completed

34

SO6

Additional

Contributions to political parties and related institutions.

Completed

34

SO7

Additional

Legal actions for anti-competitive behaviour, anti-trust,

Completed

34

Significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.

Completed

34

Compliance SO8

Essential

Training programmes of managers and non-managers are not separated. Such division is not applicable at HSBC.

52

Product Responsibility Indicator

Description

Reported

Page/ Online PDF

Comments

Customer Health and Safety PR1

Essential

Life cycle stages in which health and safety impacts of products and services are assessed.

Completed

35

PR2

Additional

Number of incidents of non-compliance with regulations Completed concerning health and safety impacts of products and services.

35

Product and Service Labelling PR3

Essential

Procedures for information and labelling of products and services

Completed

35

PR4

Additional

Non-compliance with regulations concerning product and service information and labelling.

Completed

35

PR5

Additional

Practices related to customer satisfaction, including results of surveys measuring customer satisfaction

Completed

35

Marketing Communication PR6

Essential

Programmes for compliance to legislation, standards, and voluntary codes.

Completed

36

PR7

Additional

Total number of incidents of non-compliance with regulations concerning marketing communications.

Completed

36

PR8

Additional

Complaints regarding breaches of customer privacy.

Completed

36

Significant fines for non-compliance with laws and regulations concerning the provision and use of products

Completed

36

Compliance PR9

Essential

Financial Sector Indicators Page/ Online PDF

Indicator

Description

Reported

FS1

Essential

Policies with specific environmental and social components applied to the business lines.

Completed

37

FS2

Essential

Procedures for assessing and screening environmental and social risks in the business lines.

Completed

37

FS3

Essential

Processes for monitoring customers’ implementation of and compliance with environmental and social requirements included in agreements or transactions.

Completed

37

FS4

Essential

Processes for improving staff competency in implementing environmental and social policies and procedures applied to the business lines.

Completed

39

FS5

Essential

Interaction with customers / investments / business partners as regards environmental and social risks and opportunities.

Completed

39

Comments

53

Essential

Percentage of the portfolio for business lines by specific region, size (e.g. micro/small and mid/large) and by sector.

Completed

40

Completed

41

Essential

Monetary value of products and services designed to deliver a specific social benefit for each business line broken down by purpose.

Completed

41

Essential

Monetary value of products and services designed to deliver a specific environmental benefit for each business line broken down by purpose.

Completed

42

Essential

Coverage and frequency of audits to assess implementation of environmental and social policies and risk assessment procedures.

Completed

42

Essential

Percentage and number of companies which have interacted with the company on environmental and social issues.

Completed

42

FS11

Essential

Percentage of assets subject to positive and negative environmental or social screening.

FS12

Essential

Voting policies applied to environmental or social issues for shares over which the reporting organisation holds the rights to vote shares or advises on voting.

Completed

42

FS13

Essential

Access points in low populated or economically disadvantaged areas.

Not responded

42

FS14

Essential

Initiatives to improve access to financial services for disabled people.

Completed

43

FS15

Essential

Policies for the good financial product and service design and sale.

Completed

44

FS16

Essential

Initiatives to enhance financial literacy by type of beneficiary.

Completed

44

FS6

FS7

FS8

FS9

FS10

The percentage related to total assets is not available.

HSBC does not map this aspect out. Decisions on the implementation of access points are based on commercial feasibility.

54

Credits General coordination HSBC Brazil - Corporate Sustainability Editorial and Publishing Office Report Sustentabilidade – www.reportcomunicacao.com.br Graphic project and layout Agência CASA

HSBC is held totally accountable for this publication. For doubts, suggestions or comments, please contact: HSBC Brazil – Corporate Sustainability e-mail: [email protected] telephone: +55 (41) 3270-8400 Address: Av. Vicente Machado, 2100 CEP 80440-020, Curitiba-PR