Sustainable Financing NewsletterEdition 4 – April 2017

2

News RoundupSustainability Finance Newsletter 1Q 2017 – Review

Record Green Bond Issuance in 2016

2016 was comfortably a record year for issuance in the global green

bond market. According to the most recent research published by

HSBC, issuance last year more than doubled to $90.2 billion1. Much of

this expansion was driven by rising issuance from Chinese borrowers

in general, which accounted for 35% of volume, and by Chinese

financial institutions in particular. A sizeable share of the Chinese total

was accounted for by the jumbo 30 billion yuan ($4.35 billion) two-

tranche bond issued by Bank of Communications in November 2016.

Whether or not Chinese issuers can maintain comparable growth

this year will be one of the key determinants of the overall pace of

expansion in the global green bond universe in 2017. Views on likely

issuance volumes this year are mixed. While Moody’s is expecting

2016’s growth to be matched in 2017, with total new issuance exceeding

$200 billion, others are more cautious. HSBC, for example, has forecast

new issue volume for this year of between $90 and $120 billion.

France: lifting the Bar

Counterbalancing the potentially negative impact of recent geopolitical

developments, the early weeks of 2017 saw a number of very positive

signals about the continued long-term growth potential of the global green

bond market. Foremost among these was the ground-breaking €7 billion,

22-year benchmark issued by France in January, which generated orders

of about €23 billion.

This was not the first green bond from a European government,

with Poland having printed an €750 million issue in December. But

as the largest and longest-dated green bond ever issued, France’s

transaction was regarded as a milestone for sustainable finance

which may encourage other governments to access the market.

Moody’s, for example, has identified Bangladesh, China, Luxembourg,

Morocco, Nigeria and Sweden as potential sovereign green bond

issuers2. Aside from enhancing the global diversity and liquidity of the

market, issues from all or any of these governments would support

the growth of local investor bases and provide a benchmark for other

public and private sector borrowers in their respective markets.

An increasingly diverse Community of Corporate Borrowers

Beyond the French milestone, there have been a number of other

ContentsReview of the quarter 2

Editorial 4

Renewable Energy’s increasingly Competitive Credentials 5

Best of Both Worlds 7

HSBC Sustainable Financing Survey 8

Smart Cities 9

Green bonds come of age 11

The Energy System in 2050 14

The Quarter in Review 17

Deal Review Q1 19

1 https://www.research.hsbc.com/R/10/Nz7CqPZNtfOK2 https://www.moodys.com/research/Moodys-Global-green-bond-issuance-could-rise-to-USD206B-in--PR_360880

3

encouraging pointers for the green bond market in early

2017, both in terms of supply and demand. Corporate

borrowers in Europe continue to explore the potential

of the green capital market, with the region’s largest

private lessor of rolling stock, Alpha Trains, issuing a

€250 million private placement in January. Electricité de

France (EDF), meanwhile, has built on the diversity of the

market by becoming the first issuer to package a yen-

denominated green bond in Samurai format, accessing

Japanese investor demand for exposure to the European

sustainable finance space3. While ENEL’s EUR1.25bn

Green Bond was the first Italian corporate Green Bond.

European banks also continue to add to the supply of green

bonds. A notable recent debut was the €500 million issue

announced in February by SEB, a long-time champion of

the green bond market in its capacity as an intermediary.

Progress in North America and Emerging Markets

Supply has also continued to gather momentum in North

America. In Canada, Ontario announced its third and largest

green bond issue in January and Province of Quebec

launched their inaugural CAD500 million Green Bond,

while an important recent development in the US has been

the release of a report by John Chiang, State Treasurer of

California, expressing his unequivocal support for the green

capital market. “I am determined to boost green bond

issuance and acceptance both here in California and across

the country,” Chiang declares in this publication, which is an

encouraging commitment, given that less than one-tenth of

one per cent of US bonds are currently labelled as green.

Supply of green bonds has also continued to gather

momentum in emerging markets. New borrowers

accessing the market in India this year have included

Jain Irrigation, with a debut $200 million offering. In

China, meanwhile, press reports4 have suggested that

the government may accelerate approvals for green

bond issuance, and is looking at the possibility of

introducing tax incentives for investors in the market.

Elsewhere in the emerging market world, corporate borrowers

such as Brazil’s Fibria Celulosa have announced plans to add

to the growing roster of green bond issuers in Latin America.

Another significant trend in the supply of issuance in

the broader sustainable finance market has been its

continued expansion away from conventional, plain vanilla

bond issuance. Diversification in the global green capital

market has been supported by developments such as

the release by the Climate Bonds Initiative (CBI) of its

Climate Bonds Standard V2.1 which expands the range

of debt instruments certifiable under the standard.

The corporate sector, for its part, has also become

increasingly innovative in its use of the global green capital

market. January, for example, saw the first issue of a fixed

rate loan to finance a solar lease business model, from

Germany’s Strasser, which combines elements of a whole

business securitisation with traditional lease techniques.

Investor Initiatives

Given the magnitude of the financing that needs to be

raised if the world is to deliver on the pledges made at the

COP21 talks in Paris in December 2015 and reiterated at

COP22 in Marrakech, it is essential that innovative structures

such as these are encouraged and nurtured by borrowers,

intermediaries and investors. According to OECD studies5,

annual debt issuance to support Sustainable Financing

projects, will need to reach between $620 and $720 billion

by 2035 – more than 6-7 times total 2016 issuance – if the

two degree target agreed under COP21 is to be reached.

Against this backdrop, it is encouraging that there have been

a number of recent announcements of new ESG investment

initiatives from some of the world’s largest asset managers.

In January, PIMCO announced the launch of a dedicated

ESG investment platform globally, “offering a range of fixed

income solutions to investors seeking attractive return

potential while making a positive social impact6.” As part of

this programme, PIMCO said that it had enhanced two of its

socially responsible funds in the US to incorporate a wider

range of ESG considerations into the investment process.

Other notable recent initiatives from the buy-side have come

from Lombard Odier Investment Managers and Affirmative

Investment Management, which have jointly established a new

fund “designed to combat climate change in a verifiable way7.”

3 For details, see www.globalcapital.com January 26 20174 For example, Bloomberg, January 16 20175 Reuters, January 12 20176 www.pimco.com January 19 20177 http://www.affirmativeim.com/news/2017/1/19/aim-lombard-odier-investment-management-annouce-partnership January 19 2017

4

Newsletter EditorialWill 2017 be the year that sustainable finance becomes more mainstream? It certainly seems that way, following recent growing trends such as: solar power development in the Middle East; oil companies acquiring windfarms; investors increasingly taking ESG factors into account in their investment decisions; and an increasing number of consumers prepared to pay more for ethically sourced goods. In short, the ‘green’ agenda’ could now be considered to be affect a wider group of corporates and investors from a wider group of countries.

At HSBC we see four main drivers

for this change.

First, public policy and regulation.

COP21 required countries to develop

their own national plans to meet

the global targets agreed there - the

‘Independent Nationally Determined

Contributions’. As these are developed,

we should expect to see policy and

regulatory change progress. To give

some examples, the UK is setting

out its Emissions Reduction Plan in

the Spring1, while China has already

published its guidelines for establishing

a “Green Financial System”2 and

plans for a carbon tax by 2020. At

the global level, the FSB Taskforce

on Climate Financial Disclosures3

has published its recommendations

on the information publicly-listed

companies should disclose on

climate risks and opportunities.

The second driver is change in business

and consumer behaviour. While this

differs from country to country some

common themes are emerging. Oil and

gas companies are seeking to diversify

in order to manage the “transition

risk” they face. For example, Absul

Latif Jameel recently entered the solar

industry with its purchase of Fotowatio

Renewable Ventures (FRV) in Australia4.

While a HSBC survey of consumer

opinion in the UK found that 72 per

cent of those buying ethical products

are willing to pay a premium for them.

The third driver is changes in investor

and public opinion. Companies cannot

ignore the increasing interest investors

are taking in the ESG agenda. 30 per

cent of investable assets globally –

or USD20 trillion – now incorporate

ESG factors into their investment

analysis5. These assets have grown

an estimated 33 per cent in the US

alone since 2014 according to the

Forum for Sustainable and Responsible

Investments6. A HSBC survey found

that 75 per cent of investors planned

to make low carbon or climate-related

investments. Public opinion is also

an important factor. A majority in

all 40 nations polled in 2015 by Pew

Research Centre found a majority saying

climate change is a serious problem

and a global median of 54 per cent

believing it is a very serious problem.

The fourth driver of change may well

be technology. Some of the advances

we have seen in recent years have been

phenomenal. The cost of utility-scale

solar power is down 85 per cent since

20097. The cost of wind power has fallen

by 66 per cent over the same. Electric

vehicles are expected to change the face

of the car industry. The development of

smart, sustainable cities could transform

the lives of millions in urban centres.

For all of these reasons, at HSBC we are

excited about the pace of change. Our

aim is to support our clients manage this

transition, allowing them to profit from

opportunities and manage the risk. At the

end of last year Samir Assaf, HSBC’s CEO

Global Banking and Markets decided

to create a new Sustainable Finance

Unit. Located within the business,

the SFU will work to support frontline

bankers and relationship managers in

their engagement with our clients on

this important topic. We believe, for the

reasons above, that the sustainability

agenda will become increasingly relevant

to more and more of our clients. We

plan to anticipate these trends and

provide the best support for them.

1https://www.desmog.uk/2017/01/23/uk-government-delays-publication-emissions-reduction-plan-again2http://www.unepfi.org/psi/establishing-chinas-green-financial-system/3https://www.fsb-tcfd.org/publications/recommendations-report/4http://reneweconomy.com.au/opec-nations-turn-to-sun-as-saudi-firm-buys-australia-big-solar-projects-87764/5http://www.gsi-alliance.org/members-resources/global-sustainable-investment-review-2014/6http://www.ussif.org/files/Infographics/Overview%20Infographic.pdf7https://www.bloomberg.com/news/articles/2015-11-17/lower-cost-wind-and-solar-will-drive-energy-storage-technology

5

Renewable Energy’s increasingly Competitive Credentials“Given the installed costs and the performance of today’s

renewable technologies, and the costs of conventional

technologies, the fact is this: renewable power generation is

increasingly competing head-to-head with fossil fuels, without

financial support,” noted the UN Chronicle in late 20151.

The increasingly compelling economics of renewable

energy sources is becoming especially notable in the solar

power sector. According to a report published recently by

Germany’s Fraunhofer Institute for Solar Energy Systems,

the investment costs for PV power plants have fallen by

an average of 13% per year, or by a total of 75%, since

2006. The result is that solar energy has, for the first time,

become a cheaper source of new electricity than wind2.

The trend towards lower costs of electricity generation

from renewable energy was highlighted once again

in the most recent Levelized Cost of Energy Analysis

(LCOE 10.0) published by Lazard’s in December 20163.

The tenth version of the annual study, which compares

the cost of generating energy from conventional and

alternative technologies, found that over the last seven

years, wind and solar PV have become increasingly cost-

competitive with conventional generation technologies on

an unsubsidized basis. This has been driven principally by

“material declines in the pricing of system components

(e.g. panels, inverters, racking, turbines, etc) and other

dramatic improvements in efficiency, among other factors.”

While the general trend is clearly towards reduced costs

of alternative energy generation, Lazard’s observes that

in areas such as onshore wind, geothermal and biomass,

these declines are slowing, which is a reflection both of the

maturing of technology in these areas and a relatively low

level of investment. The Lazard’s analysis also reports that

some areas of renewable energy generation still have some

way to go to become competitive. For example, although

the median cost of generating energy from offshore wind

continues to fall, it remains “substantially more expensive

than onshore wind facilities, especially in the US.”

There are also a number of important local influences on the

competitiveness of alternative energy generation, with some

of the survey’s conclusions based on local tax regimes. In the

US, for example, tax subsidies are an important component of

the economics of alternative energy generation technologies.

The competitiveness of renewables also varies depending

on factors such as population density. “Setting aside

legislatively-mandated demand for solar and other

alternative energy resources, utility-scale solar is becoming

a more economically viable peaking energy product in

many key, high population areas of the US, and, as pricing

declines, could become economically competitive across

a broader array of geographies,” the study explains.

Globally, meanwhile, other key variables in assessing the

relative cost of energy include its sensitivity to fuel prices

together with the availability and cost of capital. Lazard’s

explains that its analysis primarily reflects an illustrative global

cost of capital of 8% for debt and 12% for equity. The study

recognises, however, that these costs may be “somewhat

elevated” relative to OECD and US figures currently

prevailing in the market for utility-scale assets/investment.

1 https://unchronicle.un.org/article/how-renewable-energy-can-be-cost-competitive 2 Bloomberg New Energy Finance (BNEF), December 15 20163 https://www.lazard.com/perspective/levelized-cost-of-energy-analysis-100/

“ Utility-scale solar is becoming a more economically viable peaking energy product in many key, high population areas of the US, and, as pricing declines, could become economically competitive across a broader array of geographies. ”

Although the trajectory of costs for alternative energy

generation is promising, Lazard’s points out that there

is no immediate prospect of traditional sources being

replaced by renewable energy, which will play an

increasingly complementary role in countries’ energy

mix. “Even though alternative energy is increasingly cost-

competitive and storage technology holds great promise,

alternative energy systems alone will not be capable of

meeting the baseload generation needs of a developed

economy for the foreseeable future,” the report concludes.

“Therefore, the optimal solution for many regions of the

world is to use complementary traditional and alternative

energy resources in a diversified generation fleet.”

Nevertheless, the increasingly competitive credentials of

alternative power sources are underpinning a long-term rise

in flows of investment into clean technology. Although total

inflows in 2016 were down from their record of almost $330bn

in 2015, much of this may have reflected declining demand

for power in China. Between 2004 and 2015, according to

numbers published by Bloomberg New Energy Finance4,

dollar investment in clean energy grew almost six-fold.

This suggests that many governments’ ambitious targets

for the share of renewable sources in their overall energy

mix may be well within their grasp. The EU, for one,

has said that it is on track to meet its target of ensuring

that 20% of gross final energy consumption comes

from renewables by 2020, up from 16.4% in 2015. The

Paris Agreement of 2015 calls for renewable energy to

account for 27% of the EU’s energy use by 20305.

The EU comments that its 2030 strategy for energy and

climate “sends a strong signal to the market, encouraging

private investment in new pipelines, electricity networks,

and low-carbon technology”. This, twinned with

empirical evidence in the Lazard’s study of the increased

competitiveness of alternative energy generation, also

has important, constructive implications for the long term

development of the global green capital market. According

to data published by Moody’s, allocations of green bond

proceeds to renewable energy and energy-efficient projects

accounted for more than 50% of total issuance in 2016.

More broadly, the increasing financial viability of alternative

energy sources is expected to lead to an expansion in

the global community of industrial and portfolio investors

channelling resources into technology aimed at countering

climate change. As Moody’s noted in a recent briefing

on the impact of US government policy on climate

change, “strong institutional investor demand for greater

sustainability and transparency, coupled with rising climate

awareness and changing consumer preferences and

technological change, will encourage more private sector

companies to pursue explicit climate change strategies6.”

6

4 Bloomberg New Energy Finance (BNEF), January 14 20165 https://ec.europa.eu/energy/en/topics/renewable-energy6 www.moodys.com February 16 2017 “Future US climate policy shifts would not stall global

emissions reduction efforts”

7

The Best of Both Worlds?A significant recent landmark for

the Environmental, Social and

Governance (ESG) movement

was the launch in November 2016

of a new initiative which is an

innovative fusion of two increasingly

popular investment techniques.

The first is the construction of indices

and portfolios that are compatible with

increasingly demanding environmental,

social and governance (ESG) standards.

Driven by a conviction that climate

change presents a formidable threat

to future generations, products that

invest in line with green principles have

been gaining traction for several years,

especially among younger savers.

The second factor is smart beta

investing, a transparent, rules-based

and generally low-cost means of

constructing portfolios based on the

identification of fundamental drivers of

value, which may include size, value,

momentum, quality and low volatility.

In November, HSBC Bank Pension Fund

Trustees, alongside Legal and General

Investment Management (LGIM), FTSE

Russell and the investment consultant,

Redington, announced the launch

of the Legal & General Future World

Fund, a factor-weighted, passive global

equity strategy. The four performance

measures used in the strategy are value,

quality, size and low volatility, while

climate change tilts are embedded

into the benchmark index [the FTSE

All World (ex Controversial Weapons)

Climate Balanced Factor Index] through

the exclusion of companies in

sectors contributing directly to global

warming, such as coal miners. The

component companies in this index

have 69% fewer carbon reserves,

28% fewer carbon emissions and

105% more green revenue than those

in the FTSE All World benchmark.

Investment performance does not

necessarily need to be negatively

impacted by any of these tilts. This is

critical, because although investors

are increasingly demanding that funds

are allocated responsibly, they are not

necessarily prepared to compromise

on performance as a trade-off for

sustainable investment. A recent

LGIM survey of savers found that

while most expressed a commitment

to support responsible companies

through their investments, 33% of

respondents indicated that they

were not prepared to sacrifice 1% of

annual returns in order to do so1.

Empirical evidence suggests that

factor-based strategies are capable

of delivering superior risk-adjusted

returns to passive index-tracking

products, but this is not guaranteed.

The FTSE All World (ex Controversial

Weapons) Balanced Factor Index on

which the LGIM strategy is based,

outperformed the FTSE All World

Index between September 2001 and

March 2016, returning 9.69% p.a.

gross, compared with 7.05% p.a.

gross and with lower volatility of

14.8% p.a. compared to 16.2% p.a.

of the traditional market capitalisation

index. N.b. Past Performance is not a

reliable indicator of Future returns.

HSBC Bank UK Pension Scheme

has transitioned the £1.85bn

equity component of its defined

contribution (DC) default

investment strategy to the new

LGIM Future World Fund.

Mark Thompson, the Chief

Investment Officer, of the HSBC

Bank UK Pension Scheme, was

a key driver in the creation of

the new indices and Fund.

Thompson said, “We believed that

investing in the Future World Fund

was in best long term interest of

our members for three reasons:

– It aims to provide a better

risk adjusted return than

for a conventional market

capitalisation index.

– The inclusion of the climate factor

tilts, which gives our members

greater exposure to companies

which could be at less risk from

climate change in the future. This

is especially important as 60%

of our members are under 40

years old and will be invested in

the fund for decades to come.

– Due to the enhanced company

engagement that LGIM will offer

through its climate impact pledge.”

LGIM’s commitment to engagement

with the corporate sector through

its climate impact pledge was

covered in FTfm in November

2016. “LGIM is planning to use

its clout as the UK’s largest

investment manager to vote against

the chairmen of companies that

perform poorly on its environmental

scores across all its funds.”1 www.pensions-expert.com, November 9 2016

8

HSBC Sustainable Financing Survey

Key findings:

Corporate Issuers:

E Globally, nearly one in two corporate issuers already

possess an environmental impact reduction strategy –

48.7%. The figure is higher in Europe/UK issuers – 75.7%

and in the US – 52.8%, but lower in Asia – 36% and

MENA – 26.5%

E Disclosure limited to 37% worldwide, with UK leading

at 54%, Asia behind at 19.4% and MENA last at 15.4%.

Although 34.1% are aiming to disclose their strategy in

the coming year, however 52.9% remain unsure if they

will or not. Interestingly stakeholder pressure (86.6%) and

regulation (79.8%) are viewed as the underpinning reasons

for increases in disclosure

E Environmental requirements are infrequently extended

down the supply chain (only 34.1%), although it’s higher in

the US at 44.7%

Institutional Investors:

E 58.7% of investors affirmed that they had a strategy in place

for reducing the environmental impact of their operations

E Companies ESG performance is integrated as an investment

factor into the portfolio of 44.6% of investors globally

E 84.1% of investors view current disclosure of climate

related risks face by businesses as ‘highly inadequate’

or ‘inadequate’

E Sustainable financing momentum seems to be building

promisingly, with 65.2 percent of investors planning to

increase low carbon investments. Barriers to further

investment are noted as market depth/credible investment

opportunities, poor research, standardised sector definitions

Further Information:

E You can read an executive summary of the report and

press release on the HSBC Sustainable Financing Hub –

under latest news

E Based on the findings of the survey, two new thought

leadership pieces have been produced:

– Climate and ESG attitudes: Surveying Global Trends from our HSBC Research team – click here

– Sustainable Financing: Carrot or Stick for the Corporate World? – click here

In Q4 2016, HSBC commissioned a global survey of 593 issuers, investors and NGOs in over 20+ countries. Conducted anonymously by East & Partners, a leading banking research and advisory firm, the findings of the survey provided a strong indication of the growing appetite among investors and issuers to deepen their current engagement with the sustainable financing market. It did, however, also highlight the need for advice, knowledge and expertise to ensure that they are able to make the best decisions based on their own sustainable agendas and requirements.

9

Smart Cities – at the forefront of the climate change battle?Graham Smith and Rongrong Huo are part of the new HSBC Sustainable Financing Unit (SFU) and are looking at smart and sustainable cities. They work with the public sector on how to plan and finance measures to make cities more environmentally sustainable, as well as working with key private sector suppliers of clean technology. Here, they answer questions on why and how cities need to be part of the fight against climate change.

Why are cities relevant to climate change?

Graham Smith (GS): Hundreds of millions of people

worldwide will move from the countryside to urban

areas over the next few decades. According the United

Nations, about 54 per cent of the global population

live in cities today: by 2050, 66 per cent will1.

So to create a low-carbon future, cities must be part of

the solution. Good urban design and the application of

green technology can help people to live more sustainably

and curb carbon emissions for years to come.

What can be done to make cities greener?

Rongrong Huo (RH): Because cities are dense

concentrations of businesses and households

consuming energy and goods, they tend to have a

big environmental footprint. There are many different

things that can be done to make cities greener – but

they need to be tailored to local circumstances.

Cities in developed countries are often well-established,

with infrastructure that has been in place for years. Parts of

London’s underground train system are more than 150 years

old, for example. The challenge is finding ways to upgrade

and improve existing systems to make them more efficient.

In emerging economies, by contrast, there are cities

that haven’t even been built yet where planners

are literally starting with a blank slate. This is an

opportunity to plan strategically and include high

environmental standards from the beginning.

While digital solutions are often front of mind, we

think cities need to make the most of both physical

infrastructure and soft infrastructure, and this is

especially relevant for emerging market countries.

What might a sustainable city look like in 20 years’ time?

GS: From water pipes and power cables, to vehicles and

streetlights, progress has meant that they can operate

more efficiently today than five years ago. Individual

technologies will continue to improve and to be adopted

more widely, which will likely see an ongoing trend of

change. For example, perhaps in developed markets,

local delivery vehicles carrying groceries and parcels will

use electric drives as standard, possibly leapfrogging

the adoption of electric vehicles by private users.

1 http://www.un.org/en/development/desa/news/population/world-urbanization-prospects-2014.html

1010

RH: Bringing different technologies together is often what

makes the biggest difference. A number of cities now run

bus systems which integrate several elements of advanced

hardware and software. A modern bus can have hybrid

engines that can run on diesel fuel or be battery-powered. A

GPS-linked programme automatically ensures that the engine

switches exclusively to electric in sensitive areas, such as

outside schools and hospitals. The same bus will have an

automatic payment system with travellers using radio-chip

smartcards to speed payment and so speed up the service.

GS: These are sophisticated solutions, but it’s important

to remember that gradual improvements can sometimes

make a valuable difference. If a city in an emerging market

doesn’t have the money to install hybrid engines in its

buses, it can still reduce harmful emissions and improve the

local environment by investing in better exhaust filters. Or

it can help operators invest in better engine management

software which allows different fuels to be blended together

to make them burn more cleanly. Realistically, in some

places, building green cities will be a staged process.

Who can make the changes that need to happen, happen?

GS: National governments give a lead and set a framework.

But because all cities are different, with their own

circumstances and challenges, city-level leadership is crucial.

Policymakers in many countries recognise this and are

starting to devolve powers and budgets to mayors or city

councils. There is a great deal of international cooperation

between cities, who share their experience and expertise.

And private business has a role to play supporting them.

What is the role of banks in building sustainable cities?

RH: Infrastructure and technology often require significant

amounts of capital. Banks can help public authorities

plan and evaluate the various risks and different ways

of raising funds, such as debt issuance or a public-

private partnership agreement. With public-private

agreements, it is vital that the risks and responsibilities

are well balanced so as to attract investors at the same

time as delivering the results that the city needs.

International banks have a further potential role to play. Broadly

speaking, the biggest opportunities to make cities greener

are in emerging markets, while innovative firms creating new

devices and software are often based in developed markets.

Bringing them together can deliver significant benefits for both.

Green Bonds come of ageAfter rapid expansion, slower growth should ensure a sounder marketBy Michael Ridley, Green Bonds Analyst

Green bond issuance more than doubled in 2016 to

a record $90.2bn. The market is now ten years old

and $166bn of green bonds are outstanding. But it

still needs to be substantially larger if it is to channel

significant funds towards climate-change mitigation.

At worst, issuance could be flat this year, at best

increase to $120bn, on our estimates. But although

we want the market to be many times larger, this

slower level of growth should be sufficient.

The market needs to grow in line with the verifiers’ ability

to assess environmental standards. Too rapid growth

might encourage ‘greenwash’ – bonds that fail to put

their proceeds into environmental projects. Or it could

embolden a wave of regulation that slows market growth.

If and when policy practitioners do want to speed

market growth, we proposed three measures in

our report: Global Green Bonds – Outlook for 2017:

The end of the beginning (11 January 2017. https://

www.research.hsbc.com/R/10/Nz7CqPZNtfOK)

E A single metric to measure the environmental impact

of green bonds. This should be tonnes of CO2 emission

reduction achieved per $1,000 of bond outstanding and it

should apply to both green and non-green bonds

E Incentivisation of green loans: accelerating issuance could

lead to more green bonds as the loans are refinanced in the

green-bond market

E Public authorities could pay credit-rating or green-bond

review fees

The largest green-bond issuers in 2016 were financials

(up from 22.9% to 41.8% of the total), corporates

(up from 22.1% to 28.2%) and multilaterals, despite

their share falling from 33.3% to 16.2%.

Some 55% of 2016’s issues had some form of verification

– less than the 61% of all green bonds outstanding

because only about 40% of the large number of emerging-

market issues were accompanied by any verification. By

comparison, 95.2% of European green bonds were verified.

China’s first green bond was issued as recently as July

2015 but a 33-fold increase last year lifted issuance

to $33.6bn, making that the most prolific region. It

was followed by Europe, with $23bn (up 27.9% on

2015), and North America on $13.5bn (up 8.8%).

Indian green-bond issuance commenced in February

2015 and is much smaller than China’s. Issues

totalled $2.1bn last year – $1bn higher than 2015.

Green bonds make sense for India, given its call for $1,500bn

of investment over the next decade and its plan to raise

its renewable-energy capacity from 37GW to 175GW

by 2020. India also wants to generate at least 40% of its

energy from clean power such as wind and solar by 2030.

But there has been little progress is ‘adaptation

bonds’, despite the green-bond principles’ categories

including adaptation – adjusting to climate change –

as well as reducing the effect through mitigation.

In theory, many green-building bonds are adaptation

bonds or combine mitigation and adaptation by focussing

on emission reduction and climate resilience. But the

appropriate modelling has not always accompanied these

projects: for example, many green buildings are in areas that

could be subject to flooding caused by climate change.

However, adaption is gaining support. For example, credit-

rating agency Standard & Poor’s is to evaluate adaptation

bonds as well as mitigation bonds, assessing the value of

damage avoided relative to the outstanding value of the bond.

11

12

Disclosure and disclaimerAnalyst Certification

The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Michael Ridley

Important disclosures

Fixed income: Basis for financial analysis

This report is designed for, and should only be utilised by, institutional investors. Furthermore, HSBC believes an investor’s decision to make an investment should depend on individual circumstances such as the investor’s existing holdings and other considerations.

HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, which depend largely on individual circumstances such as the investor’s existing holdings, risk tolerance and other considerations.

Given these differences, HSBC has three principal aims in its fixed income research: 1) to identify long-term investment opportunities based on particular themes or ideas that may affect the future earnings or cash flows of companies in corporate credit and based on country-specific ideas or themes that may affect the performance of these bonds in the case of covered bonds, in both cases on a six-month time horizon; 2) to identify trade ideas on a time horizon of up to three months, relating to specific instruments and segments of the yield curve, which are predominantly derived from relative value considerations or driven by events and which may differ from our long-term credit opinion on an issuer. Buy or Sell refer to a trade call to buy or sell that given instrument; 3) to express views on the likely future performance of sectors, benchmark indices or markets in our fixed income strategy products. HSBC has assigned a fundamental recommendation structure, as described below, only for its long-term investment opportunities.

HSBC believes an investor’s decision to buy or sell a bond should depend on individual circumstances such as the investor’s existing holdings and other considerations. Different securities firms use a variety of terms as well as different systems to describe their recommendations. Investors should carefully read the definitions of the recommendations used in each research report. In addition, because research reports contain more complete information concerning the analysts’ views, investors should carefully read the entire research report and should not infer its contents from the recommendation. In any case, recommendations should not be used or relied on in isolation as investment advice.

HSBC Global Research is not and does not hold itself out to be a Credit Rating Agency as defined under the Hong Kong Securities and Futures Ordinance.

Definitions for fundamental credit and covered bond recommendations from 22 April 2016

Overweight: For corporate credit, the issuer’s fundamental credit profile is expected to improve over the next six months. For covered bonds, the bonds issued in this country are expected to outperform those of the other countries in our coverage over the next six months.

Neutral: For corporate credit, the issuer’s fundamental credit profile is expected to remain stable over the next six months. For covered bonds, the bonds issued in this country are expected to perform in line with those of the other countries in our coverage over the next six months.

Underweight: For corporate credit, the issuer’s fundamental credit profile is expected to deteriorate over the next six months.

For covered bonds, the bonds issued in this country are expected to underperform those of other countries in our coverage over the next six months.

Prior to this date, fundamental recommendations for corporate credit were applied on the following basis:

Overweight: The credits of the issuer were expected to outperform those of other issuers in the sector over the next six months.

Neutral: The credits of the issuer were expected to perform in line with those of other issuers in the sector over the next six months.

Underweight: The credits of the issuer were expected to underperform those of other issuers in the sector over the next six months.

Distribution of fundamental credit and covered bond recommendations

As of 09 January 2017, the distribution of all independent fundamental credit recommendations published by HSBC is as follows:

All Covered issuers Issuers to whom HSBC has provided Investment Banking in the past 12 months

Count Percentage Count Percentage

Overweight 77 23 18 23

Neutral 174 52 66 38

Underweight 84 25 17 20

Source: HSBC

For the distribution of non-independent ratings published by HSBC, please see the disclosure page available at

http://www.hsbcnet.com/gbm/financial-regulation/investment-recommendations-disclosures.

Recommendation changes for long-term investment opportunities

To view a list of all the independent fundamental recommendations disseminated by HSBC during the preceding 12-month period, and the location where we publish our quarterly distribution of non-fundamental recommendations, please see the disclosure page available at www.research.hsbc.com/A/Disclosures.

HSBC & Analyst disclosures

Disclosure checklist

Company Disclosure

APPLE INC 6, 7

EXPORT-IMPORT BANK OF IND 6

GOVERNMENT OF POLAND 1, 5, 6, 7, 11

INTERNATIONAL FINANCE CORPORAT 1, 5, 6

NEDERLANDSE WATERSCHAPSBANK 1, 5, 6

SUZANO 5

Source: HSBC

1 HSBC has managed or co-managed a public offering of securities for this company within the past 12 months.

2 HSBC expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months.

3 At the time of publication of this report, HSBC Securities (USA) Inc. is a Market Maker in securities issued by this company.

4 As of 31 December 2016 HSBC beneficially owned 1% or more of a class of common equity securities of this company.

5 As of 30 November 2016, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of investment banking services.

6 As of 30 November 2016, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of non-investment banking securities-related services.

7 As of 30 November 2016, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of non-securities services.

8 A covering analyst/s has received compensation from this company in the past 12 months.

9 A covering analyst/s or a member of his/her household has a financial interest in the securities of this company, as detailed below.

10 A covering analyst/s or a member of his/her household is an officer, director or supervisory board member of this company, as detailed below.

11 At the time of publication of this report, HSBC is a non-US Market Maker in securities issued by this company and/or in securities in respect of this company

12 As of 04 January 2017, HSBC beneficially held a net long position of more than 0.5% of this company’s total issued share capital, calculated according to the SSR methodology.

13 As of 15 December 2016, HSBC beneficially held a net short position of more than 0.5% of this company’s total issued share capital, calculated according to the SSR methodology.

HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments, both equity and debt (including derivatives) of companies covered in HSBC Research on a principal or agency basis.

Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking, sales & trading, and principal trading revenues.

Whether, or in what time frame, an update of this analysis will be published is not determined in advance.

Economic sanctions imposed by the EU and OFAC prohibit transacting or dealing in new debt or equity of Russian SSI entities.

This report does not constitute advice in relation to any securities issued by Russian SSI entities on or after July 16 2014 and as such, this report should not be construed as an inducement to transact in any sanctioned securities.

For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research. In order to find out more about the proprietary models used to produce this report, please contact the authoring analyst.

13

Additional disclosures

1. This report is dated as at 11 January 2017.

2. All market data included in this report are dated as at close 06 January 2017, unless a different date and/or a specific time of day is indicated in the report.

3. HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC’s analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC’s Investment Banking business. Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.

4. You are not permitted to use, for reference, any data in this document for the purpose of (i) determining the interest payable, or other sums due, under loan agreements or under other financial contracts or instruments, (ii) determining the price at which a financial instrument may be bought or sold or traded or redeemed, or the value of a financial instrument, and/or (iii) measuring the performance of a financial instrument.

5. As of 30 Dec 2016 HSBC owned a significant interest in the debt securities of the following company(ies): GOVERNMENT OF POLAND, INTERNATIONAL FINANCE CORPORAT, NEDERLANDSE WATERSCHAPSBANK

Production & distribution disclosures

1. This report was produced and signed off by the author on 10 Jan 2017 11:33 GMT.

2. In order to see when this report was first disseminated please see the disclosure page available at

https://www.research.hsbc.com/R/34/Nz7CqPZ

Legal entities as at 1 July 2016

‘UAE’ HSBC Bank Middle East Limited, Dubai; ‘HK’ The Hongkong and Shanghai Banking Corporation Limited, Hong Kong; ‘TW’ HSBC Securities (Taiwan) Corporation Limited; ‘CA’ HSBC Bank Canada, Toronto; HSBC Bank, Paris Branch; HSBC France; ‘DE’ HSBC Trinkaus & Burkhardt AG, Düsseldorf; 000 HSBC Bank (RR), Moscow; ‘IN’ HSBC Securities and Capital Markets (India) Private Limited, Mumbai; ‘JP’ HSBC Securities (Japan) Limited, Tokyo; ‘EG’ HSBC Securities Egypt SAE, Cairo; ‘CN’ HSBC Investment Bank Asia Limited, Beijing Representative Office; The Hongkong and Shanghai

Banking Corporation Limited, Singapore Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch; HSBC Securities (South Africa) (Pty) Ltd, Johannesburg; HSBC Bank plc, London, Madrid, Milan, Stockholm, Tel Aviv; ‘US’ HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler AS, Istanbul; HSBC México, SA, Institución de Banca Múltiple, Grupo Financiero HSBC; HSBC Bank Australia Limited; HSBC Bank Argentina SA; HSBC Saudi Arabia Limited; The Hongkong and Shanghai Banking Corporation Limited, New Zealand Branch incorporated in Hong Kong SAR; The Hongkong and Shanghai Banking Corporation Limited, Bangkok Branch

Issuer of report

HSBC Bank plc

8 Canada Square

London, E14 5HQ, United Kingdom

Telephone: +44 20 7991 8888

Fax: +44 20 7992 4880

Website: www.research.hsbc.com

In the UK this document has been issued and approved by HSBC Bank plc (“HSBC”) for the information of its Clients (as defined in the Rules of FCA) and those of its affiliates only. It is not intended for Retail Clients in the UK. If this research is received by a customer of an affiliate of HSBC, its provision to the recipient is subject to the terms of business in place between the recipient and such affiliate. HSBC Securities (USA) Inc. accepts responsibility for the content of this research report prepared by its non-US foreign affiliate. All U.S. persons receiving and/or accessing this report and wishing to effect transactions in any security discussed herein should do so with HSBC Securities (USA) Inc. in the United States and not with its non-US foreign affiliate, the issuer of this report.

In Singapore, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch for the general information of institutional investors or other persons specified in Sections 274 and 304 of the Securities and Futures Act (Chapter 289) (“SFA”) and accredited investors and other persons in accordance with the conditions specified in Sections 275 and 305 of the SFA. This publication is not a prospectus as defined in the SFA. It may not be further distributed in whole or in part for any purpose. The Hongkong and Shanghai Banking Corporation Limited Singapore Branch is regulated by the Monetary Authority of Singapore. Recipients in Singapore should contact a “Hongkong and Shanghai Banking Corporation Limited, Singapore Branch” representative in respect of any matters arising from, or in connection with this report.

In Australia, this publication has been distributed by The Hongkong and Shanghai Banking Corporation Limited (ABN 65 117 925 970, AFSL 301737) for the general information of its “wholesale” customers (as defined in the Corporations Act 2001). Where distributed to retail customers, this research is distributed by HSBC Bank Australia Limited (AFSL No. 232595). These respective entities make no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient.

This publication has been distributed in Japan by HSBC Securities (Japan) Limited. It may not be further distributed, in whole or in part, for any purpose. In Hong Kong, this document has been distributed by The Hongkong and Shanghai Banking Corporation Limited in the conduct of its Hong Kong regulated business for the information of its institutional and professional customers; it is not intended for and should not be distributed to retail customers in Hong Kong. The Hongkong and Shanghai Banking Corporation Limited makes no representations that the products or services mentioned in this document are available to persons in Hong Kong or are necessarily suitable for any particular person or appropriate in accordance with local law. All inquiries by such recipients must be directed to The Hongkong and Shanghai Banking Corporation Limited. In Korea, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch (“HBAP SLS”) for the general information of professional investors specified in Article 9 of the Financial Investment Services and Capital Markets Act (“FSCMA”). This publication is not a prospectus as defined in the FSCMA. It may not be further distributed in whole or in part for any purpose. HBAP SLS is regulated by the Financial Services Commission and the Financial Supervisory Service of Korea. This publication is distributed in New Zealand by The Hongkong and Shanghai Banking Corporation Limited, New Zealand Branch incorporated in Hong Kong SAR.

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. HSBC has based this document on information obtained from sources it believes to be reliable but which it has not independently verified; HSBC makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. The opinions contained within the report are based upon publicly available information at the time of publication and are subject to change without notice. From time to time research analysts conduct site visits of covered issuers. HSBC policies prohibit research analysts from accepting payment or reimbursement for travel expenses from the issuer for such visits.

Nothing herein excludes or restricts any duty or liability to a customer which HSBC has under the Financial Services and Markets Act 2000 or under the Rules of FCA and PRA. A recipient who chooses to deal with any person who is not a representative of HSBC in the UK will not enjoy the protections afforded by the UK regulatory regime. Past performance is not necessarily a guide to future performance. The value of any investment or income may go down as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of investments for which there is no recognised market it may be difficult for investors to sell their investments or to obtain reliable information about its value or the extent of the risk to which it is exposed.

In Canada, this document has been distributed by HSBC Bank Canada and/or its affiliates. Where this document contains market updates/overviews, or similar materials (collectively deemed “Commentary” in Canada although other affiliate jurisdictions may term “Commentary” as either “macro-research” or “research”), the Commentary is not an offer to sell, or a solicitation of an offer to sell or subscribe for, any financial product or instrument (including, without limitation, any currencies, securities, commodities or other financial instruments).

HSBC Bank plc is registered in England No 14259, is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is a member of the London Stock Exchange. (070905)

© Copyright 2017, HSBC Bank plc, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Bank plc. MCI (P) 094/06/2016, MCI (P) 085/06/2016 and MICA (P) 021/01/2016

14

The Energy System in 2050Peak oil comes early and all cars are electric in our scenario for a 2°C worldBy Ashim Paun, Director, Climate Change Strategy

Could oil demand peak in 2030 – a decade earlier than

is commonly forecast? And might all cars be electric by

2050? Such potentially dramatic outcomes feature in

a new scenario analysis from HSBC’s Climate Change

Centre of Excellence using data generated by University

College London Energy Institute’s energy-system model

of how the world might meet climate-change targets

The 197 countries that ratified the Paris Agreement

last year have committed to cap the rise in global

temperatures at 2°C by 2100. Their current pledges

limit the increase only to between 2.7 and 3.4°C, so

our analysis assumes that global policy efforts will be

ratcheted up from 2030 to meet the 2°C target.

A multitude of factors will determine how energy systems

develop, including the age of existing energy infrastructure,

regional economics of energy sources and technology shifts,

economic output, population growth and regulation.

Our new scenario, called ACCEL21, looks forward to the

middle of the century. This is scenario analysis, not the

HSBC base case, but it looks at a cost-optimally re-aligned

energy system and so considers the future demand for

oil and power, and how costs for clean technologies –

solar, onshore and offshore wind, battery-storage and

electric vehicles – will fall, driving increased adoption.

When added together, the potential of these technologies

to lower emissions from the energy system as a whole is

substantial under ACCEL2. Our calculations suggest that

decarbonising power, cars and light-goods vehicles alone

would reduce total global emissions by almost two fifths.

In transport, the Paris country climate plans mean that overall

sectoral energy consumption could increase by 40% to

2030. However, the need to limit warming to 2°C before 2100

then sees the sector’s oil consumption quickly replaced by

low-carbon alternatives: oil is projected to fall from today’s

98% of transport fuel consumption to 31% by 2050, as gas

(20%), hydrogen (15%) and electricity (22%) take share.

For cars, our scenario analysis suggests that oil could

drop from 99% of the fuel feedstock to 85% in 2030

and then plunge to zero in an entirely electrified

fleet in 2050. This is despite the distances driven

expected to rise 2.5-fold by mid-century.

Total fossil fuels used in the economy grow 22% before

2030 in our scenario, but then fall back to 25% below

2015 levels by 2050 as a more constraining climate policy

and cheaper clean-technology make a greater impact.

Oil use increases by 18% before 2030 but drops back to

19% below current levels by 2050 – an important supply-

side feature of the low-carbon transition, in our view.

Coal, however, quickly exits power generation between

2030 and 2050, allowing the sector to be virtually

decarbonised as renewables take 60% of global 2050

generation capacity. By mid-century, coal may be used

only in industry, particularly in steel-making. New capacity

additions will be dominated by solar and gas in 2030,

followed by onshore wind and coal. And by 2050, the

scenario sees no new coal-fired power being built and very

little coal used in the generation mix, making a substantial

contribution to meeting emissions reduction targets.

1 ACCEL2 is a ‘scenario’ for Climate change, which has been developed by HSBC Research using University College London’s TIAM-UCL energy system model

15

Disclosure and disclaimerAnalyst Certification

The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Ashim Paun

Important disclosures

This document has been prepared and is being distributed by the Research Department of HSBC and is intended solely for the clients of HSBC and is not for publication to other persons, whether through the press or by other means.

This document is for information purposes only and it should not be regarded as an offer to sell or as a solicitation of an offer to buy the securities or other investment products mentioned in it and/or to participate in any trading strategy. Advice in this document is general and should not be construed as personal advice, given it has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on the advice, consider the appropriateness of the advice, having regard to their objectives, financial situation and needs. If necessary, seek professional investment and tax advice.

Certain investment products mentioned in this document may not be eligible for sale in some states or countries, and they may not be suitable for all types of investors. Investors should consult with their HSBC representative regarding the suitability of the investment products mentioned in this document and take into account their specific investment objectives, financial situation or particular needs before making a commitment to purchase investment products.

The value of and the income produced by the investment products mentioned in this document may fluctuate, so that an investor may get back less than originally invested. Certain high-volatility investments can be subject to sudden and large falls in value that could equal or exceed the amount invested. Value and income from investment products may be adversely affected by exchange rates, interest rates, or other factors. Past performance of a particular investment product is not indicative of future results.

HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments, both equity and debt (including derivatives) of companies covered in HSBC Research on a principal or agency basis.

Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking, sales & trading, and principal trading revenues.

Whether, or in what time frame, an update of this analysis will be published is not determined in advance.

For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research. In order to find out more about the proprietary models used to produce this report, please contact the authoring analyst.

Additional disclosures

1. This report is dated as at 07 February 2017.

2. All market data included in this report are dated as at close 02 February 2017, unless a different date and/or a specific time of day is indicated in the report.

3. HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC’s analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC’s Investment Banking business. Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.

4. You are not permitted to use, for reference, any data in this document for the purpose of (i) determining the interest payable, or other sums due, under loan agreements or under other financial contracts or instruments, (ii) determining the price at which a financial instrument may be bought or sold or traded or redeemed, or the value of a financial instrument, and/or (iii) measuring the performance of a financial instrument.

Production & distribution disclosures

1. This report was produced and signed off by the author on 03 Feb 2017 15:38 GMT.

2. In order to see when this report was first disseminated please see the disclosure page available at

https://www.research.hsbc.com/R/34/CW9rCSt

Legal entities as at 1 July 2016

‘UAE’ HSBC Bank Middle East Limited, Dubai; ‘HK’ The Hongkong and Shanghai Banking Corporation Limited, Hong Kong; ‘TW’ HSBC Securities (Taiwan) Corporation Limited; ‘CA’ HSBC Bank Canada, Toronto; HSBC Bank, Paris Branch; HSBC France; ‘DE’ HSBC Trinkaus & Burkhardt AG, Düsseldorf; 000 HSBC Bank (RR), Moscow; ‘IN’ HSBC Securities and Capital Markets (India) Private Limited, Mumbai; ‘JP’ HSBC Securities (Japan) Limited, Tokyo; ‘EG’ HSBC Securities Egypt SAE, Cairo; ‘CN’ HSBC Investment Bank Asia Limited, Beijing Representative Office; The Hongkong and Shanghai

Banking Corporation Limited, Singapore Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch; HSBC Securities (South Africa) (Pty) Ltd, Johannesburg; HSBC Bank plc, London, Madrid, Milan, Stockholm, Tel Aviv; ‘US’ HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler AS, Istanbul; HSBC México, SA, Institución de Banca Múltiple, Grupo Financiero HSBC; HSBC Bank Australia Limited; HSBC Bank Argentina SA; HSBC Saudi Arabia Limited; The Hongkong and Shanghai Banking Corporation Limited, New Zealand Branch incorporated in Hong Kong SAR; The Hongkong and Shanghai Banking Corporation Limited, Bangkok Branch

Issuer of report

HSBC Bank plc

8 Canada Square

London, E14 5HQ, United Kingdom

Telephone: +44 20 7991 8888

Fax: +44 20 7992 4880

Website: www.research.hsbc.com

In the UK this document has been issued and approved by HSBC Bank plc (“HSBC”) for the information of its Clients (as defined in the Rules of FCA) and those of its affiliates only. It is not intended for Retail Clients in the UK. If this research is received by a customer of an affiliate of HSBC, its provision to the recipient is subject to the terms of business in place between the recipient and such affiliate.

HSBC Securities (USA) Inc. accepts responsibility for the content of this research report prepared by its non-US foreign affiliate. All U.S. persons receiving and/or accessing this report and wishing to effect transactions in any security discussed herein should do so with HSBC Securities (USA) Inc. in the United States and not with its non-US foreign affiliate, the issuer of this report.

In Singapore, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch for the general information of institutional investors or other persons specified in Sections 274 and 304 of the Securities and Futures Act (Chapter 289) (“SFA”) and accredited investors and other persons in accordance with the conditions specified in Sections 275 and 305 of the SFA. This publication is not a prospectus as defined in the SFA. It may not be further distributed in whole or in part for any purpose. The Hongkong and Shanghai Banking Corporation Limited Singapore Branch is regulated by the Monetary Authority of Singapore. Recipients in Singapore should contact a “Hongkong and Shanghai Banking Corporation Limited, Singapore Branch” representative in respect of any matters arising from, or in connection with this report.

In Australia, this publication has been distributed by The Hongkong and Shanghai Banking Corporation Limited (ABN 65 117 925 970, AFSL 301737) for the general information of its “wholesale” customers (as defined in the Corporations Act 2001). Where distributed to retail customers, this research is distributed by HSBC Bank Australia Limited (AFSL No. 232595). These respective entities make no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient.

This publication has been distributed in Japan by HSBC Securities (Japan) Limited. It may not be further distributed, in whole or in part, for any purpose. In Hong Kong, this document has been distributed by The Hongkong and Shanghai Banking Corporation Limited in the conduct of its Hong Kong regulated business for the information of its institutional and professional customers; it is not intended for and should not be distributed to retail customers in Hong Kong. The Hongkong and Shanghai Banking Corporation Limited makes no representations that the products or services mentioned in this document are available to persons in Hong Kong or are necessarily suitable for any

particular person or appropriate in accordance with local law. All inquiries by such recipients must be directed to The Hongkong and Shanghai Banking Corporation Limited. In Korea, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch (“HBAP SLS”) for the general information of professional investors specified in Article 9 of the Financial Investment Services and Capital Markets Act (“FSCMA”). This publication is not a prospectus as defined in the FSCMA. It may not be further distributed in whole or in part for any purpose. HBAP SLS is regulated by the Financial Services Commission and the Financial Supervisory Service of Korea. This publication is distributed in New Zealand by The Hongkong and Shanghai Banking Corporation Limited, New Zealand Branch incorporated in Hong Kong SAR.

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. HSBC has based this document on information obtained from sources it believes to be reliable but which it has not independently verified; HSBC makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. The opinions contained within the report are based upon publicly available information at the time of publication and are subject to change without notice. From time to time research analysts conduct site visits of covered issuers. HSBC policies prohibit research analysts from accepting payment or reimbursement for travel expenses from the issuer for such visits.

Nothing herein excludes or restricts any duty or liability to a customer which HSBC has under the Financial Services and Markets Act 2000 or under the Rules of FCA and PRA. A recipient who chooses to deal with any person who is not a representative of HSBC in the UK will not enjoy the protections afforded by the UK regulatory regime. Past performance is not necessarily a guide to future performance. The value of any investment or income may go down as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of investments for which there is no recognised market it may be difficult for investors to sell their investments or to obtain reliable information about its value or the extent of the risk to which it is exposed.

In Canada, this document has been distributed by HSBC Bank Canada and/or its affiliates. Where this document contains market updates/overviews, or similar materials (collectively deemed “Commentary” in Canada although other affiliate jurisdictions may term “Commentary” as either “macro-research” or “research”), the Commentary is not an offer to sell, or a solicitation of an offer to sell or subscribe for, any financial product or instrument (including, without limitation, any currencies, securities, commodities or other financial instruments).

HSBC Bank plc is registered in England No 14259, is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is a member of the London Stock Exchange. (070905)

© Copyright 2017, HSBC Bank plc, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Bank plc. MCI (P) 094/06/2016, MCI (P) 085/06/2016 and MCI (P) 062/02/2017

[549608]

16

17

The Quarter in Review Q1 20172017 has begun strongly with 50% year on year growth in terms of number of deals (44% in terms of USD volume)1, helped in part by the arrival of the French sovereign green bond. Impressively we now see over a dozen sovereigns developing green bond guidelines/regulation/ legislation and a similar number publicly declaring interest as issuers2.

Simultaneously, as the Green Bond market develops without

defined criteria or disclosure regulation, there are increasing

drives for improved quality of disclosure through e.g. the

FSB task force. This is also evident in the wider trends to

increase ESG/SRI investing, as seen by the Task Force on

Climate-related Financial Disclosure (TCFD), the London Stock

Exchange’s publication of its own ESG guidance. Growing

investor activism is also playing a part in the increased

pressure (most notably from members of sustainability

advocacy group Ceres) to increase environmental disclosures.

TCFD expected to bolster shareholder climate

resolutions in 2017 according to Environmental

Finance, Ceres and CalPERS pension fund3.

The Financial Stability Board’s (FSB) Task Force on

Climate-related Financial Disclosure (TCFD) is expected

to support shareholder resolutions on climate change in

2017 according to statements from CalPERS (California

Public Employees’ Retirement System’s) investment

director of sustainability Anne Simpson and data from

Ceres. The combination of greater support for climate

resolutions and the ratification of the Paris Agreement, as

of November 2016, creates strong potential to increase

the likelihood of resolutions associated with climate

reporting on a 2°C transition scenario being passed.

There have already been over 129 climate-related shareholder

resolutions to date this year according to the NGO Ceres4,

showing the significant potential to progress the transition

to carbon neutral economies through investor activism.

Last quarter TCFD members received and returned their

comments on the draft of the phase II report. As part

of the FSB’s 2017 workplan, this quarter updates to the

Phase II report are due to be presented to the meeting

of G20 finance ministers in the first quarter of 2017.

Last year’s Q4 update covered the progress of the TCFD

so far, please see: (The Quarter in Review Q4 2016)

In January, eighteen European institutional investors, with

assets totalling GBP2.07trn (USD2.6trn) (including the Church

of England Pensions Board & Swedish National Pension Fund

(AP4)) launched an initiative to support the TCFD’s call for

investors to assess whether their portfolio companies are

positioning themselves to transition to a low-carbon economy5.

London Stock Exchange Group publishes ESG guidance6

Reflecting the increasing involvement of shareholders in

fostering better disclosure from issuers, the London Stock

Exchange Group (LSEG) has launched a guide on company

ESG reporting to investors to encourage more consistent

reporting of data. The guide was released on the 9th February

with a launch event at the London Stock Exchange.

The report was produced by three of the Group’s

companies: London Stock Exchange, Borsa Italiana

and FTSE Russell, after consultation with their

listings, asset owners and asset managers.

This publication is a sign of the growing importance of

disclosure for ESG markets and LSEG’s ambitions to

lead the global harmonisation of ESG information with

guidance that can be replicated by indices across the

world and across asset classes held on the LSE.

1 Source: HSBC database: compiled from Dealogic, Bloomberg & the CBI (Climate Bonds Initiative)2 https://www.climatebonds.net/2017/02/lagos-conference-set-stage-nigeria-sovereign-green-bond3 https://www.environmental-finance.com/content/news/tcfd-to-bolster-shareholder-climate-resolutions.html4 Ceres shareholder resolutions database5 https://www.environmental-finance.com/content/news/investors-with-assets-worth-over-2trn-back-transition-to-low-carbon-economy.html6 http://www.lseg.com/resources/media-centre/press-releases/london-stock-exchange-group-launches-guidance-esg-reporting

18

Investor activism

Post the election of President Trump we have seen

increased investor activism in the US, calling for

improved disclosure and responsible investing.

Whilst President Trump’s administration continues with plans

of strengthening the US fossil fuel industry and reversing

recent leadership in international climate change initiatives

(plans to revitalise the US fossil fuel industry clearly outlined

in the President’s “America First Energy Plan”7 and Trump

advisor Myron Ebell’s statement that the US will change

course on climate policy are two of the commonly cited

contentious statements), US investor groups have made

increasing independent announcements to support a

swift transition to a low-carbon economy, these include:

E Framework for U.S. Stewardship and Governance. Under

the banner of the Investor Stewardship Group a group of

USD17trn of institutional investors including BlackRock,

CalSTRS, Florida State Board of Administration (SBA),

GIC) have unveiled the ‘Framework for U.S. Stewardship

and Governance’8. The goal is to “codify the fundamentals

of good corporate governance” and establish baseline

expectations for corporations and their institutional

shareholders.

The group is calling on “every institutional investor and

asset management firm” investing in the the USA to sign

up to the framework

E Eaton Vance Corp (AUM USD343bn) announced

acquisition of responsible investment firm Calvert (AUM

USD12.3bn) with the former’s CEO stating “It’s an entry

into one of the most attractive areas of investing today”9

E New York City Pension Funds Comptroller Scott Stringer,

in speaking to The Responsible Investor, affirmed that the

city’s pension fund will continue to use its investment to

respond “to the reality of climate change”10

To come after this publication/early next quarter we expect

to see greater involvement in the Green Bond market

from sovereigns, notably Nigeria has stated publically that

they could launch their Green Bond as early as March/

April 2017; this would be the first sovereign Green Bond

issuance from an African nation. Projected Use of Proceeds

could reportedly include a broad range of climate-related

initiatives such as mass transit, land re-afforestation,

remediation and solar projects . In fact, according to the CBI,

Governments could be expected to take up a 10% share of

Green Bonds issuance this year according to Bloomberg

New Energy Finance and the Climate Bonds Initiative ,

with the most common Use of Proceeds predicted to be

(government infrastructure projects supporting) renewable

energy, clean transportation and sustainable agriculture.

Notably, HSBC’s fixed income research has suggested

that they favour bonds (sovereign or otherwise)

funding adaptation projects in the developed Western

countries, where climate change impacts are already

being seen (ie. river flooding in low lying, densely

populated land has significant consequences) and

mitigation projects in high CO2/GDP countries, which

are typically less developed countries. (HSBC Global

Green Bonds: The end of the beginning, Jan2017).

7 https://www.whitehouse.gov/america-first-energy8 https://www.responsible-investor.com/home/article/us_stew_code9 http://www.reuters.com/article/us-calvert-m-a-eaton-vance-idUSKCN12L2IW10 https://www.responsible-investor.com/home/article/investor_groups_react_to_us_plans_to_become_worlds_largest_energy_producer/

19

Key facts & figuresIncluding deals and state of the market2017 Q1 to date (as at February 27th), issuance has easily surpassed the same point last year with c.USD17bn equivalent from 40 transactions compared to c.USD12bn from 25 transactions for the same period in 2016 (ie. 1st Jan - 27th Feb 2016) equating to a year on year increase of 43% in terms of volume1. HSBC has acted as Green Structuring Advisor and Joint Lead Manager on several of these early 2017 deals.

January 2017 was in fact the second largest month on

record in terms of issuance volume, with c.USD14bn

coming to market (from 21 transactions in 10 currencies,

notably including France’s inaugural green OAT); the largest

month on record remains November 2016 at cUSD16bn

(from 28 transactions in 6 different currencies).

Whilst we appreciate various green bond databases exist,

our own HSBC Green Bond database (made from reconciling

Dealogic, Bloomberg, CBI and Environmental Finance)

as at 27th February reports the following statistics:

Deal Pricing Date by

Time period

Deal Value $

(Proceeds) (m)

Number of deals % rise (value

of deals)

% rise (volume

of deals)

2017 Q1to date 17,356 40 -18% 3%

2016 Q1 21,085 39 101% 63%

2015 Q1 10,515 24 18% 100%

2014 Q1 8,911 12 - -

2016 Q2 19,536 61 51% 110%

2015 Q2 12,905 29 62% 71%

2014 Q2 7,951 17 - -

2016 Q3 29,569 65 280% 171%

2015 Q3 7,791 24 11% 26%

2014 Q3 7,013 19 - -

2016 Q4 29,581 71 67% 82%

2015 Q4 17,723 39 78% 44%

2014 Q4 9,977 27 - -

2016 2H 59,149 136 46% 36%

2016 1H 40,622 100 - -

2015 2H 25,514 45 9% -15%

2015 1H 23,420 53 - -

2014 2H 18,440 46 9% -10%

2014 1H 16,862 51 - -

1 Source: HSBC database: compiled from Dealogic, Bloomberg & the CBI (Climate Bonds Initiative)

20

The charts below2 show SRI bond issuance progress

across sectors, currencies and by region.

HSBC recorded 2016FY Green Bond issuance at an

impressive USD99.8bn, from 236 transactions, split 35%

corporate, 36% FIG, and 29% SSA respectively. 96% 2016FY

issuance was from USD, EUR, GBP, CNY, SEK combined.

2017 Q1 to date (as at February 27th) predominant currencies

are: USD (17%), EUR (62%) and SEK (5%), with issuance

from 15 different countries including: Brazil, China, France,

India, Italy, Spain, the Netherlands, Sweden and the

United States (all of which produced issuers in 2016).

2 HSBC Green, Social, Sustainability Bond database – based on Dealogic, CBI, Bloomberg, as of 27 Feb 2017

3%

14%

9%

4%

37%

33%

12

Corporate

2013

$80bn

$100bnUSD USD

$60bn

$40bn

$20bn

02014 2015 2016 2017 YTD

Financial SSAAfrica Americas Asia-Pacific Europe

Issuance progression by sector1

Green/Social issuance by sector1

Issuance progression by region1

Green/Social issuance by currency1

12

2013

$80bn

$100bn

$60bn

$40bn

$20bn

02014 2015 2016 2017 YTD

(includes Middle East)

Corporate

Financial

Multi-Lateral

Sovereign/Regional

Corporate

Financial

Multi-Lateral

Sovereign/Regional

All Green, Social, Sustainability Bonds YTD Green, Social, Sustainability Bonds

34%

24%

19%

23% 28%

8%

10%

55%

All Green, Social, Sustainability Bonds YTD Green, Social, Sustainability Bonds

17% 16%

62%

5%

USD

EUR

GBP

CNY

SEK

Other

USD

EUR

SEK

Other

21

We have seen a number of predictions for 2017FY issuance

volume varying between USD90bn and USD206bn;

consensus falls around the USD120bn mark. Moody’s lofty

expectations of USD206bn are largely driven their expectation

for China to continue to play a large role in this market.

Notable deals this quarter include:

France became the second sovereign to issue a Green

Bond in January with a EUR7bn 22yr OAT at FRTR+13bps

On 24th January 2017 France joined Poland as only the

second Sovereign to issue a Green Bond. The deal was

well prepared and included both a European and Asian

roadshow. Final orderbook of over EUR23.5bn permitted

price tightening from FRTR+15 area to FRTR+13bps. The

Use of Proceeds will fund climate related improvements

for project areas including Buildings, Transport, Energy,

Living resources, Adaptation, Pollution control and eco-

efficiency. France’s second opinion was provided by Vigeo.

Funding mechanisms range from conventional investment

to subsidies and tax credits, illustrating the broad potential

Use of Proceeds sovereigns can fund with a Green Bond.

SEB launches the tightest pricing Senior Unsecured 5yr

bond since the Global Financial Crisis

SEB issued a EUR500m 5yr Green Bond on the 10th February

2017. The Bank is an early promoter of the Green Bond market

with its own Green Bond fund (EUR105m as at Sept-16)

Proceeds will fund eligible projects targeting the mitigation

of and adaptation to climate change, environmental

and ecosystem improvements and investment in

dark green CICERO graded SSA green bonds.

HSBC was joint Bookrunner in the significantly oversubscribed

deal which attracted a final orderbook of EUR2.1bn and

saw price tension strong enough to warrant tightening from

initial guidance of MS+mid to high 20s to MS+20bps.

3 Moody’s Research - https://www.moodys.com/research/Moodys-Global green-bond-issuance-could-rise-to-USD206B-in--PR_360880?WT.mc-id=AM~WWFob29fRmluYW5jZV9TQl9SYXRpbmcgTmV3c19BbGxfRW5n~20170118_PR_360880

Predictions for 2017FY issuance volume

HSBC Fixed Income Research USD90bn-120bn

Bloomberg New Energy Finance USD123bn

ABN Amro USD90-USD110bn

Natixis USD144bn

Climate Bonds Initiative USD130-USD150bn

Credit Agricole USD100bn

Moody’s USD206bn

Environmental Finance (survey

of SRI market participants)

USD120bn-USD160bn

22

ReNew Power prices an innovative USD475m through

NEERG Energy SPV

On 6th February 2017, NEERG Energy Limited, an offshore

SPV issued a USD475m 5yr Green Bond following a

comprehensive global roadshow across Singapore, Hong

Kong, London, New York, Boston and Los Angeles.

The innovative structure creates an offshore SPV through

which ReNew Power can bypass Reserve Bank of India

rules restricting the sale of high yielding offshore debt by

local companies. The bond is the first of its kind in India and

allows ReNew to issue a USD denominated Green Bond for

the first time. Demand for this deal was shown by the peak

orderbook size of USD1.6bn and tightening of 37.5bps to

price with a reoffer yield of 6%. Proceeds will fund renewable

power business activities of Renew. This is in line with the

16 Indian Green Bonds issued since 2015, whose most

common Use of Proceed has been renewable energy.

Fibria Celulose issues largest Brazilian Green Bond to date

On 17th January Fibria Celulose priced an upsized USD700m

10yr Green Bond at T+335bps. Fibria is the world’s largest

market pulp producer and issued in the context of broader

initiatives to reinforce its commitment to environmental and

social sustainability. Strong investor demand saw the final

orderbook grow to over USD3.2bn and pricing tighten from

initial price thoughts of “very low 6% area” to 5.700% yield.

Use of Proceeds will be allocated to capital expenditures

necessary to sustainably manage eucalyptus forest

plantations that are certified by FSC or Cerflor (PEFC).

Enel issues the first Italian Corporate Green Bond

On 16th January Enel, a leading producer of energy and

one of the leaders of the continental European market

issued a EUR1.25bn 7yr Green Bond at MS+70bps.

Demonstrating its commitment to being a global leader in

the development of clean energy, Enel’s Green Bond was

highly sought after by SRI and general investors alike, allowing

the final orderbook to grow to an impressive EUR2.9bn

and generating enough price tension for the issuance to

tighten from MS+70/75bps guidance to MS+70bps.

Green Bond proceeds will be used to finance Eligible

Green Projects (Renewable Energy Projects and

Transmission, Distribution and Smart Grid Projects or

Other Projects which meet a set of environmental and

social criteria) or refinance Eligible Green Project

Given the successful start to 2017 and material signs

of governments utilising the powerful alignment

between Green Bond issuance and environmental

spending, there have been many reports suggesting

significant level of green bond issuance from

Sovereigns to bolster Green Bond volumes in 2017.

23

DISCLAIMER:

By accepting this document, the recipient agrees to be bound by the following obligations and limitations.

This document has been prepared by HSBC bank plc, including, where relevant, its group undertakings and affiliates) (“HSBC”).

This document is for the exclusive use of the person to whom it is provided by HSBC. The recipient agrees to keep confidential at all times this document and information contained in it or made available by HSBC in connection with it. It should be read in its entirety and shall not be photocopied, reproduced, distributed or disclosed in whole or in part to any other person without the prior written consent of HSBC, nor should any other person act on it. This document is proprietary to HSBC and the recipient agrees on request to return or, if requested, to destroy this document and all other materials received from HSBC relating to the information contained herein.

The information in this document is derived from sources that have not been independently verified by HSBC. Except in the case of fraudulent misrepresentation, no responsibility or liability is accepted by HSBC or by any of its officers, employees, affiliates or agents in relation to the accuracy, completeness or sufficiency of any information contained herein or any other written or oral information made available by HSBC in connection therewith or any data which any such information generates, or for any loss whatsoever arising from or in connection with the use of or reliance on this document and any such liability is expressly disclaimed. HSBC gives no undertaking and is under no obligation to provide the recipient with access to any additional information or to update this document or to correct any inaccuracies in it which may become apparent, and it reserves the right, without giving reasons, at any time and in any respect to amend or terminate the proposal(s) described herein. HSBC is not responsible for providing the recipient with legal, tax or other specialist advice and the recipient should make its own arrangements in respect of this accordingly. The recipient is solely responsible for making its own independent appraisal of and investigation into the products, investments and transactions referred to in this document and should not rely on the information in this document as constituting investment advice.

In particular, but without limitations, no representation or warranty, express or implied is given as to the achievement or reasonableness of and no reliance should be placed on, any projections, estimates, forecasts, targets, prospects, returns or other forward-looking statements contained herein. Any such projections, estimates, forecasts, targets, prospects, returns or other forward-looking statements are not a reliable indicator of future performance. Nothing in this document should be relied upon as a promise or representation as to the future.

The issue of this document shall not be regarded as creating any form of advisory or other relationship, and HSBC may only be regarded by you as acting on your behalf as financial adviser or otherwise following the execution of an engagement letter on mutually satisfactory terms.

This document is for information purposes only and does not constitute or form any part of (i) any invitation or inducement to engage in investment activity, or (ii) any offer, solicitation or invitation by HSBC or any of its officers, employees or agents for the sale or purchase of any securities or other investments described herein.

This document is directed only at, and is made available only to Professional Clients or Eligible Counterparties within the meaning of the Markets in Financial Instruments Directive 2004/39/EC (“MiFID”) (together, the “Relevant Clients“) and is not intended for distribution to, or use by Retail Clients. Any person who is not a Relevant Client should not act or rely upon this document or any of its contents. This document also is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution would be contrary to law or regulation.

The foregoing does not exclude or restrict any obligation that HSBC may have under the rules of the FCA, or any liability that it may incur under the FCA Rules or the Financial Services and Markets Act 2000 (or any amendment thereof) for breach of any such obligation.

Unless the securities described in this document (i) are to be admitted to trading on a market that is a regulated market for the purposes of Directive 2004/39/EC, or (ii) are to be offered to the public in a Member State (other than pursuant to one or more of the exemptions set out in Article 3.2 of Directive 2003/71/EC (as amended) (the “Prospectus Directive”)), HSBC Bank plc is not required to publish a prospectus in accordance with the Prospectus Directive and the Issuer may elect not to publish a prospectus which complies with the Prospectus Directive and Prospectus Directive Regulation (EC/809/2004) (as amended). In the event that HSBC Bank plc has either elected to prepare a prospectus in accordance with the Prospectus Directive or is required to publish a prospectus in accordance with the Prospectus Directive, a copy of the prospectus can be found at www.hsbc.com (please follow links to ‘Investor relations’, ‘Fixed income securities’ and ‘Issuance programmes’).

HSBC Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority Registered in England No. 14259

Registered Office: 8 Canada Square, London, E14 5HQ, United Kingdom. Member HSBC Group.