AmazonScience/document-haystack

1Principal strategic decisions2The Board operates having regard to the duties of the Directors, including the relevant matters set out in section 172(1)(a)-(f) of the Companies Act 32006. A key focus for the Board is setting, and monitoring execution against, the Group strategy. Principal decisions taken by the Board consider 4how the decision furthers the Group purpose, and aligns with one or all of the strategic pillars: ‘Focus’, ‘Digitise’, ‘Energise’ and ‘Transition’.5The following examples demonstrate how the Board operated having regard to the duties of the Directors. Good governance practices adopted by 6the Board facilitate its key decision taking. Governance features as an agenda item at all scheduled Board meetings. Papers presented to the Board 7for consideration are expected to follow a template to help ensure that Directors get the right level of information to take informed decisions in 8keeping with their duties. The template requests authors to, among others things, describe the extent to which relevant stakeholders are engaged 9with, or impacted by, the matter under consideration, and whether this has influenced the recommendation to the Board.10The Board is responsible for the oversight of the 11Group’s sustainability and ESG strategy setting 12and delivery, and monitors progress against 13execution of our net zero ambitions. Key 14outcomes are reviewed regularly by the Board. 15Directors also received training on ESG-related 16matters as part of their ongoing development. 17The Board’s understanding of the progress 18against the Group’s ESG strategy was informed 19by the ESG dashboard. The data provided in 20this dashboard included key metrics that help 21the Board to monitor progress against the 22Group’s ESG ambitions, including the transition 23to net zero, building inclusion and resilience, 24and acting responsibly. Additional details were 25provided on metrics relating to the roll-out of 26the Group’s supplier code of conduct, female 27entrepreneurship and gender diversity in  28senior roles.29In 2023, the Board gave the Group Executive 30Committee feedback on the need to better 31define core areas of the Group’s sustainability 32execution programme, a Group-wide 33programme to enable the delivery of our 34sustainability agenda. The core areas 35included accountability, governance, 36capability, investment in infrastructure and 37data. Governance was enhanced by the 38establishment of the Sustainability Execution 39Committee, with responsibility to oversee 40delivery of the sustainability execution 41programme. This committee reports to the 42Group Executive Committee which receives 43regular updates on progress towards 44fulfilment of our net zero ambitions. It takes 45into account key stakeholder considerations 46and potential impacts on the Group’s strategic 47direction for sustainability, and reports these 48to the Board, helping Directors take relevant 49decisions. In addition, three non-executive 50Directors participated in climate advisory 51panel meetings with external subject matter 52experts to discuss sustainability, including the 53Group’s net zero transition plan. 54Appreciating the importance of the Group’s 55commitment to publish a net zero transition 56plan, the Board took the decision to establish 57a dedicated sub-group with responsibility 58for overseeing its finalisation, taking into 59consideration the implications for all our 60stakeholders and communication of the plan 61to the market. This sub-group included four 62non-executive Directors, the Group Chief 63Executive and the Group Chief Financial 64Officer, as well as other members of senior 65management. It took into consideration the 66short-term consequences on stakeholders, 67particularly for customers and investors, and 68balanced these against long-term benefits for 69the Group, the society in which we live, and 70the success of the company as a whole for 71the long term. Recommendations made to the 72Board by the sub-group, including stakeholder 73impacts, helped to inform the Board’s 74deliberations, leading to its final approval of 75the net zero transition plan, published  76in January 2024.77As part of the Board’s responsibility to set, 78and monitor execution against, HSBC’s 79strategy, Directors take into consideration 80the Group’s strategies across the global 81businesses and legal entities. The Board 82continued to oversee the progression of the 83Group’s divestment of non-core operations 84while targeting select acquisitions. One 85such principal decision taken during the year 86was the acquisition by HSBC UK Bank plc 87of SVB UK. In considering this opportunity, 88the Board took into account the views of 89key stakeholders, including UK regulators 90and the government. It also considered 91the potential impact of the acquisition on 92SVB UK customers, principally that their 93banking services would be maintained, 94backed by the strength, safety and security 95of HSBC. The Board also considered how 96the acquisition would enhance shareholder 97value, strengthen our CMB franchise, and 98further its ability to serve innovation and 99fast-growing firms in the technology and 100life sciences sectors, supporting our ‘Focus’ 101strategic pillar. Following the acquisition 102of SVB UK, HSBC Innovation Banking was 103launched in June 2023. Senior management 104embarked on a programme of communication 105and interactions with customers, employees 106and investors by way of townhalls and Q&A 107sessions to help key stakeholders understand 108the rationale for the transaction and reiterate 109HSBC’s support for its customers. 110The Board continued its monitoring and 111oversight of the impacts flowing from its 112principal strategic decisions taken in the 113current and previous years, in particular the 114sale of the retail banking operations in France 115and the planned sale of the banking business 116in Canada. The Board met in order to agree 117amended terms to complete our France 118business sale. It was updated regularly, and 119provided input as appropriate, on actions 120required to ensure the successful completion 121of these transactions. It also liaised with 122relevant stakeholders such as governments, 123regulators, work councils, employees and 124customers, as necessary. 125In this way, the Board effectively carried out 126its duties and assured itself that the principal 127strategic decisions taken were, and continue 128to be, most likely to promote the long-term 129success of the company. 130During the course of the year, the Board 131continued a targeted focus on receiving 132relevant and succinct management 133information, including key metrics and 134data, to help demonstrate progress against 135strategic areas of interest. The Board 136considered how it should be informed, in 137the most transparent way, on the evolution 138of the Group’s strategy from transformation 139to one focused on growth. The Board has 140agreed key performance indicators to 141help keep it informed on relevant areas of 142strategic progress, all of which are focused 143on four overarching perspectives: external 144commitments/key outcomes; key business 145drivers; sustainable financial performance; and 146the ability to transform and license to operate. 147These indicators will also be used to foster a 148culture of performance and discipline across 149the organisation and will be factored into 150executive Directors’ scorecards.151Sustainability 152Group strategy 15322 HSBC Holdings plc Annual Report and Accounts 2023154Strategic report | Board decision making and engagement with stakeholders