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Fund centre

Fund factsheets, performance data, prices and other information about HSBC funds

 

Important notice

The documents presented on this website may include transaction fees based on an incomplete data set and are therefore subject to change. This incomplete data has no impact on the calculation of the net asset value and the performance of the UCI. Updated figures will be provided in due course.

 

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Fund Name Category Investment region KID Factsheet Brochure Prospectus Past
Performance
Equity Growth Fund Class B Acc EUR Active Equities Global Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance
Maltese Assets Fund Accumulator EUR Multi Asset Malta Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance
Maltese Assets Fund Income EUR Multi Asset Malta Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance
International Bond Fund Accumulator EUR Fixed Income Global Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance
International Bond Fund Income EUR Fixed Income Global Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance
International Bond Fund Accumulator GBP Fixed Income Global Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance
International Bond Fund Income GBP Fixed Income Global Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance
Malta Bond Fund Accumulator EUR Fixed Income Malta Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance
Malta Bond Fund Income EUR Fixed Income Malta Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance
Malta Government Bond Fund Accumulator EUR Fixed Income Malta Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance
Malta Government Bond Fund Income EUR Fixed Income Malta Download KID Download Factsheet Download Brochure Download Prospectus Download Past Performance

HSBC Malta Funds SICAV P.L.C. - All Fund Reports

Fund Name Semi Annual Report Annual Report
Equity Growth Fund Class B Acc EUR Download Semi Annual Report Download Annual Report
Maltese Assets Fund Accumulator EUR Download Semi Annual Report Download Annual Report
Maltese Assets Fund Income EUR Download Semi Annual Report Download Annual Report
International Bond Fund Accumulator EUR Download Semi Annual Report Download Annual Report
International Bond Fund Income EUR Download Semi Annual Report Download Annual Report
International Bond Fund Accumulator GBP Download Semi Annual Report Download Annual Report
International Bond Fund Income GBP Download Semi Annual Report Download Annual Report
Malta Bond Fund Accumulator EUR Download Semi Annual Report Download Annual Report
Malta Bond Fund Income EUR Download Semi Annual Report Download Annual Report
Malta Government Bond Fund Accumulator EUR Download Semi Annual Report Download Annual Report
Malta Government Bond Fund Income EUR Download Semi Annual Report Download Annual Report
Fund Name Category Investment region KID Factsheet Brochure Prospectus
HSBC Portfolios - World Selection Fund 1 Class ACHEUR Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 1 Class ACHGBP Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 1 Class ACUSD Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 2 Class ACHEUR Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 2 Class ACHGBP Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 2 Class ACUSD Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 3 Class ACHEUR Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 3 Class ACHGBP Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 3 Class ACUSD Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 4 Class ACHEUR Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 4 Class ACHGBP Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 4 Class ACUSD Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 5 Class ACHEUR Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 5 Class ACHGBP Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Portfolios - World Selection Fund 5 Class ACUSD Multi Asset Global Download KID Download Factsheet Download Brochure Download Prospectus
Fund Name Category Investment region KID Prospectus Factsheet Brochure
HSBC Select Moderate EUR (A) Multi Asset Global Download KID Download Prospectus Download Factsheet Download Brochure
HSBC Select Balanced EUR (A) Multi Asset Global Download KID Download Prospectus Download Factsheet Download Brochure
HSBC Select Dynamic EUR (A) Multi Asset Global Download KID Download Prospectus Download Factsheet Download Brochure
HSBC Select Equity EUR (A) Multi Asset Global Download KID Download Prospectus Download Factsheet Download Brochure
HSBC Select Flexible EUR (A) Multi Asset Global Download KID Download Prospectus Download Factsheet Download Brochure

HSBC Select - All Fund Reports

Fund Name Semi Annual Report Annual Report
HSBC Select Moderate EUR Download Semi Annual Report Download Annual Report
HSBC Select Balanced EUR Download Semi Annual Report Download Annual Report
HSBC Select Dynamic EUR Download Semi Annual Report Download Annual Report
HSBC Select Equity EUR Download Semi Annual Report Download Annual Report
HSBC Select Flexible EUR Download Semi Annual Report Download Annual Report
Fund Name Category Investment region KID Prospectus Factsheet Brochure
HSBC RIF SRI BALANCED Multi Asset Global Download KID Download Prospectus Download Factsheet Download Brochure
HSBC RIF SRI DYNAMIC Multi Asset Global Download KID Download Prospectus Download Factsheet Download Brochure
HSBC RIF SRI MODERATE Multi Asset Global Download KID Download Prospectus Download Factsheet Download Brochure
HSBC RIF SRI EURO BOND AC Multi Asset Global Download KID Download Prospectus Download Factsheet
HSBC RIF SRI EURO BOND AD Multi Asset Global Download KID Download Prospectus Download Factsheet

HSBC Responsible Investment Funds - All Fund Reports

Fund Name Semi Annual Report Annual Report
HSBC RIF SRI BALANCED Download Semi Annual Report Download Annual Report
HSBC RIF SRI DYNAMIC Download Semi Annual Report Download Annual Report
HSBC RIF SRI MODERATE Download Semi Annual Report Download Annual Report
HSBC RIF SRI EURO BOND Download Semi Annual Report Download Annual Report

ESG and Pre-contractual information

Fund Name Precontractual disclosure SFDR periodic report
HSBC RIF SRI BALANCED Download pre-contractual information Download SFDR periodic report
HSBC RIF SRI DYNAMIC Download pre-contractual information Download SFDR periodic report
HSBC RIF SRI MODERATE Download pre-contractual information Download SFDR periodic report
HSBC RIF SRI EURO BOND Download pre-contractual information Download SFDR periodic report

ESG Information

HSBC RIF SRI BALANCED

Summary


No sustainable investment objective

1. This product promotes environmental or social characteristics, but it does not have a sustainable investment goal.

2. The subfund's sustainable investments are assessed against the “do no significant harm” (DNSH) principle to ensure that they do not cause significant harm to environmental or social objectives. The DNSH principle applies only to the subfund's underlying sustainable investments. The assessment includes consideration of the principal adverse impacts (PAIs). The PAIs are a selection of environmental and social indicators including greenhouse gas (GHG) emissions, water discharges and gender pay gaps.

(a) All mandatory PAIs as defined in Table 1 of annex 1 of the Regulatory Technical Standards for Regulation 2019/2088 are used to assess that the subfund's sustainable investments do not cause significant harm to environmental or social objectives. To carry out the DNSH assessment, absolute and relative minimum thresholds were established for the 14 mandatory PAIs.

In the event of disagreement with data provided by an external data provider, or where the data is insufficient, a qualitative or quantitative assessment may be carried out by the investment teams, in collaboration with the Responsible Investment team, in order to reach a final decision. Where an issuer is found to be causing or contributing to significant harm, the security may still be held in the subfund, but will not count towards the subfund's "sustainable investment" allocation.

The description of HSBC Asset Management's sustainable investment methodology as applied by HSBC Global Asset Management (France) is available on the management company's website: www.assetmanagement.hsbc.fr/fr/retail-investors/about-us/responsible-investing/policies.

(b) An external data provider is used to monitor issuers and detect controversies that may indicate potential breaches of the United Nations Global Compact (UNGC) principles. These principles are aligned with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The ten UNGC principles include the assessment of non-financial risks such as human rights, working conditions, the environment and the fight against corruption. The description of HSBC Asset M Issuers reported for potential breaches of the UN Global Compact principles are excluded, unless they have been subject to enhanced ESG analysis (ESG Due Diligence) establishing that they are not in breach of these principles.
HSBC Asset Management is also a signatory to the United Nations Principles for Responsible Investment.


Environmental or social characteristics of the financial product

The subfund promotes E, S, and G characteristics by investing in international equity and fixed-income markets with a euro bias by selecting securities issued by companies or countries in a universe of issues that meet Environmental, Social, and Governance (ESG) and financial quality criteria.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on Environmental, Social, and Governance (ESG) criteria defined by the SRI label framework, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

This initial investment universe consists of securities selected on the international equity markets of developed countries with a euro bias and euro-denominated rates.

As such, this initial investment universe consists of issuers from:

  • An investment sub-universe composed of equities of eurozone countries, represented by the MSCI Emu, a benchmark given for information purposes;
  • An investment sub-universe composed of international equities, represented by the MSCI World, a benchmark given for information purposes;
  • An investment sub-universe composed of euro-denominated bonds, represented by the Bloomberg Euro Aggregate 500MM index, a benchmark given for information purposes. The weight of non-government issues in the above-mentioned index is adjusted to reflect the target sector weightings of the investment sub-universe in the event of significant deviations. The above-mentioned index, reduced to non-government issues and adjusted in terms of weighting, is a comparative element to monitor the sub-universe’s non-financial performance.

Then, based on the SRI universe, the portfolio consisting of “equities” segments and a “bonds” segment is determined:

1. For non-government issues:

  • Taking into account two specific sustainability indicators: an environmental indicator (greenhouse gas (GHG) intensity) and a social indicator (lack of human rights policy indicator).
    For these two sustainability indicators, for each of its segments, the subfund commits to obtaining a better ESG performance than that of each of the above-mentioned benchmarks.
    In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
  • By also including an analysis of issuers' ESG criteria.
    Using a rating improvement approach, the subfund selects, for each of its segments the securities enabling the portion of the portfolio excluding government exposures to have an ESG rating higher than that of each of the above-mentioned benchmark indicators, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and on the basis of the exclusions applied by the subfund.

2. For government issues and exposures:

By using an ESG Selection approach to select the countries with a minimum ESG rating according to the external ESG data provider ISS ESG from among euro-denominated issuing countries.

In addition, at least 80 per cent of investments must meet minimum E, S and G and ESG ratings.

The subfund is actively managed and does not track a benchmark. There is no benchmark representative of our management philosophy and therefore of our investment universe. The MSCI Emu, MSCI World and Bloomberg Euro Aggregate 500MM indices are the benchmark indices for the subfund's investment sub-universes and are used to compare certain E/S characteristics of the subfund, as described in the section on sustainability indicators in the subfund's SFDR appendix.


Investment strategy

(a) The HSBC RESPONSIBLE INVESTMENT FUNDS – SRI BALANCED subfund is a profiled subfund within a multi-asset SRI range composed of several profiles.

With a strategic allocation consisting of 50 per cent equities on average, it constitutes an investment with a moderate exposure to equity market risk. The minimum non-financial analysis rate is 90 per cent of the subfund's eligible assets.

Thes subfund may directly hold up to 10 per cent of its assets in issues not rated according to ESG criteria.

The process of selecting securities, consisting of two successive, independent steps, is based on non-financial and financial criteria.

The integration of non-financial criteria into the securities analysis and selection process begins with determining the SRI universe of the subfund based on an initial investment universe.

This initial investment universe consists of issues selected on the international equity markets of developed countries with a euro bias and euro-denominated rates.

  • An investment sub-universe composed of equities of eurozone countries, represented by the MSCI Emu, a benchmark given for information purposes;
  • An investment sub-universe composed of international equities, represented by the MSCI World, a benchmark given for information purposes;
  • An investment sub-universe composed of euro-denominated bonds, represented by the Bloomberg Euro Aggregate 500MM index, a benchmark given for information purposes. The weight of non-government issues in the above-mentioned index is adjusted to reflect the target sector weightings of the investment sub-universe in the event of significant deviations.

The above-mentioned index, reduced to non-government issues and adjusted in terms of weighting, is a comparative element to monitor the sub-universe’s non-financial performance.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on Environmental, Social, and Governance (ESG) criteria defined by the SRI label framework, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

A detailed description of the subfund’s exclusions is presented in the section detailing the binding elements defined in the investment strategy in the SFDR appendix to the prospectus.

HSBC Asset Management’s responsible investment policies applied by HSBC Global Asset Management (France) are available on the management company’s website at www.assetmanagement.hsbc.fr.

Then, based on the SRI universe, the portfolio consisting of “equities” segments and a “bonds” segment is determined:

1. For non-government issues:

  • Taking into account two specific sustainability indicators: an environmental indicator (greenhouse gas intensity) and a social indicator (lack of human rights policy indicator).
    For these two sustainability indicators, for each of its segments, the subfund commits to obtaining a better ESG performance than that of each of the above-mentioned benchmarks.
    In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
  • By also including an analysis of issuers' ESG criteria
    Using a rating improvement approach, the subfund selects, for each for each of its segments the securities enabling the portion of the portfolio excluding government exposures to have an ESG rating higher than that of each of the above-mentioned benchmark indicators, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and on the basis of all the exclusions applied by the subfund.
    In addition, at least 80 per cent of investments must meet minimum E, S and G and ESG ratings.

2. For government issues and exposures:

By using an ESG Selection approach to choose from among euro-denominated issuing countries those with a minimum ESG rating according to the external ESG data provider ISS ESG.

A) Non-government issues:

The ESG rating of issuers, used in the rating improvement approach, is constructed from an E rating, an S rating, a G rating, and an ESG aggregate rating.

The ratings of the pillars (E, S, and G) are provided by external ESG rating agencies that assess the non-financial aspects of the business sector to which the rated company belongs.

For each E, S, and G rating, several aspects are assessed, such as:

  • Environmental aspects are connected with the nature of the company’s activity and its particular sector. In extractive industries, utilities and air transport, for example, the release of CO2 emissions directly related to the company’s activity is of paramount importance: not measuring or controlling these emissions can represent a major industrial risk and result in major financial penalties and/or reputational damage. For example, if a cement or energy company is highly exposed to climate risk and does not take adequate mitigation measures, it may maximise its risk of sanctions or production disruptions in the event of major climate events for which it is not prepared.
  • The second pillar, Social, covers concepts related to relations with civil society, personnel management, compensation and training policy, respect for trade union rights, occupational health and safety policy. The very nature of the company's business will strongly influence the nature and relative importance of these practices. In sectors where there is a proven risk of accidents, such as construction and mining, for example, workplace accident prevention and compliance with safety standards are priority criteria.
  • Lastly, with regard to Governance, aspects such as the structure and representation of the Board of Directors, the attendance and independence of directors, the robustness of audit and control processes and respect for minority shareholder rights are systematically analysed. The assessment of the company's performance in these areas will also take into account the country in which the company is based, the country in which it is listed and/or the country in which it has its registered office, for example.

The relative weight of each of the three pillars in the final rating is at least 20 per cent and varies according to the specific features of the company’s sector of activity. The sector groupings are based on the GICS level 1 and level 2 classification, which is then aggregated into 12 economic “macro-sectors”. The weighting of each of the E, S, and G pillars within these 12 macro-sectors reflects the perspective of the ESG investment and research teams regarding ESG risks and opportunities. These sector weightings are available online in the subfund’s Transparency Code (www.assetmanagement.hsbc.fr).

The selection of securities based on these ESG criteria is thus based on an internal ESG analysis model with data supplied by external providers and in-house research.

B) Government issues and exposures:

Euro-issuing countries are ranked according to their overall “ESG” rating, which is based 50 per cent on the Environmental (E) pillar and 50 per cent on the Social/Governance (S/G) pillar.

The Social and Governance pillar includes the analysis of the political and governance system, human rights and fundamental freedoms, and social conditions. The Environmental pillar includes the analysis of natural resources, climate change and energy, production, and sustainable consumption.

The scores, resulting from the analysis by the external data provider ISS ESG, range from A+ to D-. The SRI strategy consists of selecting from among issuing countries those that have a minimum ESG rating. Thus:

  • for countries rated between A+ and B-, there are no investment limits.
  • for countries rated C+, the weight of these States in the portfolio cannot exceed the representative weight of these countries in the Bloomberg Capital Euro Aggregate 500MM index.
  • for countries classified between C and D-, investments are not permitted.

The rating of issuing countries is reviewed on an annual basis.

An exhaustive list of external providers of ESG data is available in the section on the subfund’s ESG information online at www.assetmanagement.hsbc.fr

The subfund also uses an “engagement” approach. This approach is implemented through an engagement policy established by the Management Company, which involves maintaining a presence with companies through one-on-one meetings, engagement actions, and exercising voting rights attached to the securities held in the portfolio.

The engagement policy and the voting policy are available on the management company’s website at www.assetmanagement.hsbc.fr.

Information on the social, environmental, and quality of governance criteria in this subfund’s investment policy is available on the management company’s website and in the subfund’s annual report.

(b) The subfund's investments are assessed to determine whether they comply with minimum standards of good governance, taking into account compliance with the UNGC principles. In addition, corporate governance practices are examined through ESG and Pillar G ratings. Governance is assessed on the basis of criteria including ethics, culture and values, corporate governance and anti-corruption measures. Companies considered to have an inadequate governance framework are reviewed and may be subject to further analysis, which may involve specific engagement action. The HSBC Asset Management Stewardship team meets regularly with issuers to gain a better understanding of their business and strategy and to promote best practices. HSBC Asset Management believes that good corporate governance ensures that companies are managed in the long-term interests of investors. Issuers that meet sustainable investment criteria are identified based on minimum governance ratings and the absence of exposure to severe ESG controversies.


Proportion of investments

The subfund’s strategic allocation is composed on average of 50 per cent equities and 50 per cent fixed-income investments. The portfolio will be invested in international equity and fixed-income markets with a euro bias by selecting securities issued by companies or countries in a universe of issues that meet Environmental, Social, and Governance (ESG) criteria.

The manager may invest in UCIs managed or distributed by an HSBC Group entity. These UCIs must meet the defined financial and non-financial objectives.

The SRI strategies of the UCIs or investment funds that may be selected by the fund manager (excluding UCIs/investment funds managed by the Management Company) may use ESG indicators and/or different SRI approaches independent of the subfund.

The minimum proportion of investments used to attain the environmental or social characteristics promoted by the subfund is 70 per cent. The remaining 30 per cent of investments is detailed in the section entitled "What investments are included in category #2 ‘Other’” below.

Although the subfund does not have sustainable investments as an objective, it commits to a minimum proportion of 15 per cent of its assets in sustainable investments.

The fund commits to investing a minimum of 15 per cent in sustainable investments with an environmental objective that are not aligned with the EU Taxonomy.

What investments are included in category “# 2 Others”:

The subfund may hold cash, derivatives, and investments that do not meet the minimum ESG ratings or for which non-financial analysis could not be carried out due to the unavailability of ESG data. The use of derivatives will not help attain the fund’s environmental or social characteristics. Derivatives are used for portfolio risk adjustment (exposure, hedging).


Monitoring of environmental or social characteristics

All subfunds must have strong and/or improving E/S characteristics at the issuer and overall portfolio level.

The management teams conduct ongoing monitoring. Funds are monitored to ensure that the portfolios meet the non-financial criteria and, where applicable, internally established thresholds (such as the portfolio’s average ESG score or exclusions) We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

First-level controls are also performed by independent management teams:

  • Contractual non-financial investment restrictions are currently set according to the same methodology as the financial ratios;
  • Environmental, Social, and Governance performance indicators identified according to the fund’s strategy are monitored on a monthly basis by the risk department.

In addition, the subfund may undergo occasional and periodic fund compliance checks, which will ensure, in particular, that sectoral exclusions are respected.

Lastly, in connection with labels, controls are conducted by auditors outside the management company.


Methodologies

HSBC relies on a proprietary ESG analysis model with data supplied by non-financial rating agencies and the management company’s internal research. HSBC Asset Management verifies the data used.


Data sources and processing

(a) Our investment team relies on the information available in the ESG Global Research intranet tool, which is populated by data from the following providers: MSCI ESG Research, ISS ESG, S&P Trucost, Sustainalytics, RepRisk, FTSE Green Revenues, Carbon4, Iceberg Datalab (IDL), GAIA Research, Equileap and Denominator.

(b) HSBC Asset Management verifies the data used.

(c) For the portfolio’s ESG rating, the data are weighted by coefficients reflecting our analysis of the various business sectors and their respective ESG impacts.

(d) Such data, if not communicated by companies, are estimated by our external data providers.


Limitations to methodologies and data

(a) The management company relies on non-financial data providers. As a result, the company is subject to certain operational and data quality risks associated with reliance on third-party service providers and data sources. Furthermore, data coverage may be limited depending on the type of issuer (small caps, certain high-yield issuers) and by the geographical area of the issuer (particularly for emerging countries). When non-financial data are not available in our suppliers’ databases, we initiate a qualitative analysis and possibly exchanges with the company to supplement our assessment of E/S characteristics.

(b) HSBC Asset Management is not aware of any methodological limitations likely to prevent the attainment of the E/S characteristics pursued by the subfund. The subfund may invest in derivatives. Sustainability risks are therefore more difficult to take into account because the subfund does not invest directly in the underlying asset. As of the date of the prospectus, no ESG integration methodology can be applied to derivatives.


Due diligence

As part of our investment process, we carefully monitor and analyse all companies and other issuers held in actively managed portfolios before and during the investment period. Our monitoring, by the analysts, the management teams, investment restrictions, and the risk department, is quantitative and qualitative and includes strategy, financial and non-financial performance and constraints, risks, capital structure, social and environmental impact, and corporate governance. For this monitoring, we use our own in-house research and the research of brokers and other independent research providers.

We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

Lastly, our teams in charge of voting and shareholder engagement activities can support the investment teams in the ESG assessment of issuers.

For more details on internal and external controls, please refer to the information provided in the “Monitoring of environmental or social characteristics” section.


Engagement policies

Our approach to shareholder engagement incorporates several levers for action including 1) direct dialogue with companies about their consideration of environmental and social issues to ensure that they are able to face the future and maintain long-term financial viability, 2) the exercising of voting rights by which we express our support for positive development initiatives or, conversely, our disagreement when directors do not meet our expectations, and 3) a gradual escalation procedure with companies when the ESG risks or controversies to which they are exposed are not managed.

Our management and analyst teams meet regularly with the companies in which we invest (or may invest) to better understand their business and strategy, demonstrate our support and/or express our concerns, and promote best practices.

We prioritise dialogue and interaction with companies in which we have significant positions, but also depending on the importance of the environmental or social issues identified. If a company is identified as being at risk on these issues at the end of our ESG analysis, we still favour dialogue over selling the security, but the lack of satisfactory progress or responses by the company in a timely manner that we consider reasonable to implement the desired changes may result in the exclusion of the security from our portfolios.

Lastly, every year, we define engagement themes that we consider to be key. These include climate change, biodiversity conservation, respect for human rights, diversity issues, equity and inclusion, the importance of just transition, and access to healthcare. As signatories to the Net Zero Asset Managers initiative and in keeping with our commitment to contribute to the goal of carbon neutrality for all our assets under management by 2050, we primarily engage in dialogue with companies involved in thermal coal. In practice, we are in contact with companies whose revenues were more than 20 per cent from coal mining as of the end of 2021. As we support a just transition imperative, we engage with companies to assess how their carbon neutrality transition plans take into account impacts on employees, supply chains, communities, and consumers. In terms of diversity, we have set ambitious targets for the number of women of boards of directors. For example, in Continental Europe, we have set a threshold of 40 per cent women in the composition of the boards of directors of large caps, 35 per cent for mid-caps, and 30 per cent for the small caps.

For our full Engagement Policy and Voting Policy, please visit: www.assetmanagement.hsbc.com/about-us/responsible-investing/policies


Designated reference benchmark

Not applicable

HSBC RIF SRI DYNAMIC

Summary


No sustainable investment objective

1. This product promotes environmental or social characteristics, but it does not have a sustainable investment goal.

2. The subfund's sustainable investments are assessed against the “do no significant harm” (DNSH) principle to ensure that they do not cause significant harm to environmental or social objectives. The DNSH principle applies only to the subfund's underlying sustainable investments. The assessment includes consideration of the principal adverse impacts (PAIs). The PAIs are a selection of environmental and social indicators, including greenhouse gas (GHG) emissions, water discharges and the gender pay gap.

(a) All mandatory PAIs as defined in Table 1 of Annex 1 of the Regulatory Technical Standards for Regulation 2019/2088 are used to assess that the subfund's sustainable investments do not significantly harm environmental or social objectives. To carry out the DNSH assessment, absolute and relative minimum thresholds were established for the 14 mandatory PAIs.

In the event of disagreement with data provided by an external data provider, or where the data is insufficient, a qualitative or quantitative assessment may be carried out by the investment teams, in collaboration with the Responsible Investment team, in order to reach a final decision. Where an issuer is found to be causing or contributing to significant harm, the security may still be held in the subfund, but will not count towards the subfund's "sustainable investment" allocation.

The description of HSBC Asset Management's sustainable investment methodology as applied by HSBC Global Asset Management (France) is available on the management company's website: www.assetmanagement.hsbc.fr/fr/retailinvestors/about-us/responsible-investing/policies.

(b) An external data provider is used to monitor issuers and detect controversies that may indicate potential breaches of the United Nations Global Compact (UNGC) principles. These principles are aligned with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The ten UNGC principles include the assessment of non-financial risks such as human rights, working conditions, the environment and the fight against corruption. Issuers reported for potential breaches of the United Nations Global Compact principles are excluded, unless they have been subject to enhanced ESG analysis (ESG Due Diligence) establishing that that they are not in breach of these principles.

HSBC Asset Management is also a signatory to the United Nations Principles for Responsible Investment.


Environmental or social characteristics of the financial product

The subfund promotes E, S, and G characteristics by investing in international equity and fixed-income markets with a euro bias by selecting securities issued by companies or countries in a universe of issues that meet Environmental, Social, and Governance (ESG) and financial quality criteria.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on Environmental, Social, and Governance (ESG) criteria defined by the SRI label reference framework, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

This initial investment universe consists of securities selected on the international equity markets of developed countries with a euro bias and euro-denominated rates.

As such, this initial investment universe consists of issuers from:

  • An investment sub-universe composed of equities of eurozone countries, represented by the MSCI Emu, a benchmark given for information purposes;
  • An investment sub-universe composed of international equities, represented by the MSCI World, a benchmark given for information purposes;
  • An investment sub-universe composed of euro-denominated bonds, represented by the Bloomberg Euro Aggregate 500MM index, a benchmark given for information purposes. The weight of non-government issues in the above-mentioned index is adjusted to reflect the target sector weightings of the investment sub-universe in the event of significant deviations. The above-mentioned index, reduced to non-government issues and adjusted in terms of weighting, is a comparative element to monitor the sub-universe’s non-financial performance.

Then, based on the SRI universe, the portfolio consisting of “equities” segments and a “bonds” segment is determined:

1. For non-government issues:

Taking into account two specific sustainability indicators: an environmental indicator (greenhouse gas (GHG) intensity) and a social indicator (lack of human rights policy indicator).
For these two sustainability indicators, for each of its segments, the subfund commits to obtaining a better ESG performance than that of each of the above-mentioned benchmarks.
In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.

By also including an analysis of issuers' ESG criteria.
Using a rating improvement approach, the subfund selects, for each of its segments the securities enabling the portion of the portfolio excluding government exposures to have an ESG rating higher than that of each of the above-mentioned benchmark indicators, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and on the basis of the exclusions applied by the subfund.

2. For government issues and exposures:

By using an ESG Selection approach to select the countries with a minimum ESG rating according to the external ESG data provider ISS ESG from among euro-denominated issuing countries.

The subfund is also committed to carefully considering environmental issues through its voting and engagement activities.

The subfund is actively managed and does not track a benchmark. There is no benchmark representative of our management philosophy and therefore of our investment universe. The MSCI Emu, MSCI World and Bloomberg Euro Aggregate 500MM indices are the benchmark indices for the subfund's sub-investment universes and are used to compare certain E/S characteristics of the subfund, as described in the section on sustainability indicators in the subfund's SFDR appendix.


Investment strategy

(a) The HSBC RESPONSIBLE INVESTMENT FUNDS – SRI DYNAMIC subfund is a profiled subfund within a multi-asset SRI range composed of several profiles.

With a strategic allocation consisting of 80 per cent equities on average, it constitutes an investment with a high exposure to equity market risk. The minimum non-financial analysis rate of 90 per cent is applied to the subfund’s eligible assets. The subfund may directly hold up to 10 per cent of its assets in issues not rated according to ESG criteria.

The process of selecting securities, consisting of two successive, independent steps, is based on non-financial and financial criteria.

The integration of non-financial criteria into the securities analysis and selection process begins with determining the SRI universe of the subfund based on an initial investment universe.

This initial investment universe consists of issues selected on the international equity markets of developed countries with a euro bias and euro-denominated rates.

As such, this initial investment universe consists of issuers from:

  • An investment sub-universe composed of equities of eurozone countries, represented by the MSCI Emu, a benchmark given for information purposes;
  • An investment sub-universe composed of international equities, represented by the MSCI World, a benchmark given for information purposes;
  • An investment sub-universe composed of euro-denominated bonds, represented by the Bloomberg Euro Aggregate 500MM index, a benchmark given for information purposes. The weight of non-government issues in the above-mentioned index is adjusted to reflect the target sector weightings of the investment sub-universe in the event of significant deviations.

The above-mentioned index, reduced to non-government issues and adjusted in terms of weighting, is a comparative element to monitor the sub-universe’s non-financial performance.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on Environmental, Social, and Governance (ESG) criteria defined by the SRI label framework, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

A detailed description of the subfund’s exclusions is presented in the section detailing the binding elements defined in the investment strategy in the SFDR appendix to the prospectus.

HSBC Asset Management’s responsible investment policies applied by HSBC Global Asset Management (France) are available on the management company’s website at www.assetmanagement.hsbc.fr.

Then, based on the SRI universe, the portfolio consisting of “equities” segments and a “bonds” segment is determined:

1. For non-government issues:

  • Taking into account two specific sustainability indicators: an environmental indicator (greenhouse gas intensity) and a social indicator (lack of human rights policy indicator).
    For these two sustainability indicators, for each of its segments, the subfund commits to obtaining a better ESG performance than that of each of the above-mentioned benchmarks.
    In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
  • By also including an analysis of issuers' ESG criteria.
    Using a rating improvement approach, the subfund selects, for each of its segments the securities enabling the portion of the portfolio excluding government exposures to have an ESG rating higher than that of each of the above-mentioned benchmark indicators, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and on the basis of the exclusions applied by the subfund.

2. For government issues and exposures:

A) Non-government issues:

The ESG rating of issuers, used in the rating improvement approach, is constructed from an E rating, an S rating, a G rating, and an ESG aggregate rating.

The ratings of the pillars (E, S, and G) are provided by external ESG data providers that assess the non-financial aspects of the business sector to which the rated company belongs.

For each E, S, and G rating, several aspects are assessed, such as:

  • Environmental aspects are connected with the nature of the company’s activity and its particular sector. In extractive industries, utilities and air transport, for example, the release of CO2 emissions directly related to the company’s activity is of paramount importance: not measuring or controlling these emissions can represent a major industrial risk and result in major financial penalties and/or reputational damage. For example, if a cement or energy company is highly exposed to climate risk and does not take adequate mitigation measures, it may maximise its risk of sanctions or production disruptions in the event of major climate events for which it is not prepared.
  • The second pillar, Social, covers concepts related to relations with civil society, personnel management, compensation and training policy, respect for trade union rights, occupational health and safety policy. The very nature of the company's business will strongly influence the nature and relative importance of these practices. In sectors where there is a proven risk of accidents, such as construction and mining, for example, workplace accident prevention and compliance with safety standards are priority criteria.
  • Lastly, with regard to Governance, aspects such as the structure and representation of the Board of Directors, the attendance and independence of directors, the robustness of audit and control processes and respect for minority shareholder rights are systematically analysed. The assessment of the company's performance in these areas will also take into account the country in which the company is based, the country in which it is listed and/or the country in which it has its registered office, for example.

The relative weight of each of the three pillars in the final rating is at least 20 per cent and varies according to the specific features of the company’s sector of activity. The sector groupings are based on the GICS level 1 and level 2 classification, which is then aggregated into 12 economic “macro-sectors”. The weighting of each of the E, S, and G pillars within these 12 macro-sectors reflects the perspective of the ESG investment and research teams regarding ESG risks and opportunities. These sector weightings are available online in the subfund’s Transparency Code (www.assetmanagement.hsbc.fr).

The selection of securities based on these ESG criteria is thus based on an internal ESG analysis model with data supplied by external providers and in-house research.

B) Government issues and exposures:

Euro-issuing countries are ranked according to their overall “ESG” rating, which is based 50 per cent on the Environmental (E) pillar and 50 per cent on the Social/Governance (S/G) pillar.

The Social and Governance pillar includes the analysis of the political and governance system, human rights and fundamental freedoms, and social conditions. The Environmental pillar includes the analysis of natural resources, climate change and energy, production, and sustainable consumption.

The scores, resulting from the analysis by the external data provider ISS ESG, range from A+ to D-. The SRI strategy consists of selecting from among issuing countries those that have a minimum ESG rating. Thus:

  • for countries rated between A+ and B-, there are no investment limits.
  • for countries rated C+, the weight of these States in the portfolio cannot exceed the representative weight of these countries in the Bloomberg Capital Euro Aggregate 500MM index.
  • for countries classified between C and D-, investments are not permitted.

The rating of issuing countries is reviewed on an annual basis.

An exhaustive list of external providers of ESG data is available in the section on the subfund’s ESG information online at www.assetmanagement.hsbc.fr

The subfund also uses an “engagement” approach. This approach is implemented through an engagement policy established by the Management Company, which involves maintaining a presence with companies through one-on-one meetings, engagement actions, and exercising voting rights attached to the securities held in the portfolio.

The engagement policy and the voting policy are available on the management company’s website at www.assetmanagement.hsbc.fr.

Information on the social, environmental, and quality of governance criteria in this subfund’s investment policy is available on the management company’s website and in the subfund’s annual report.

(b) The subfund's investments are assessed to determine whether they comply with minimum standards of good governance, taking into account compliance with the UNGC principles. In addition, corporate governance practices are examined through ESG and Pillar G ratings. Governance is assessed on the basis of criteria including ethics, culture and values, corporate governance and anti-corruption measures. Companies considered to have an inadequate governance framework are reviewed and may be subject to further analysis, which may involve specific engagement action. The HSBC Asset Management Stewardship team meets regularly with issuers to gain a better understanding of their business and strategy and to promote best practices. HSBC Asset Management believes that good corporate governance ensures that companies are managed in the long-term interests of investors. Issuers that meet sustainable investment criteria are identified based on minimum governance ratings and the absence of exposure to severe ESG controversies.


Proportion of investments

The subfund’s strategic allocation is composed on average of 80 per cent equities and 20 per cent fixed-income investments. The portfolio will be invested in international equity and fixed-income markets with a euro bias by selecting securities issued by companies or countries in a universe of issues that meet Environmental, Social, and Governance (ESG) criteria.

The manager may invest in UCIs managed or distributed by an HSBC Group entity. These UCIs must meet the defined financial and non-financial objectives.

The SRI strategies of the UCIs or investment funds that may be selected by the fund manager (excluding UCIs/investment funds managed by the Management Company) may use ESG indicators and/or different SRI approaches independent of the subfund.

The minimum proportion of investments used to attain the environmental or social characteristics promoted by the subfund is 80 per cent. The remaining 20 per cent of investments is detailed in the section “What investments are included in category #2 ‘Other’” below.

Although the subfund does not have sustainable investments as an objective, it commits to a minimum proportion of 20 per cent of its assets in sustainable investments.

The fund commits to investing a minimum of 20 per cent in sustainable investments with an environmental objective that are not aligned with the EU Taxonomy.

What investments are included in category “# 2 Others”:

The subfund may hold cash, derivatives, and investments that do not meet the minimum ESG ratings or for which non-financial analysis could not be carried out due to the unavailability of ESG data. The use of derivatives will not help attain the fund’s environmental or social characteristics. Derivatives are used for portfolio risk adjustment (exposure, hedging).


Monitoring of environmental or social characteristics

All subfunds must have strong and/or improving E/S characteristics at the issuer and overall portfolio level.

The management teams conduct ongoing monitoring. Funds are monitored to ensure that the portfolios meet the non-financial criteria and, where applicable, internally established thresholds (such as the portfolio’s average ESG score or exclusions) We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

First-level controls are also performed by independent management teams:

  • Contractual non-financial investment restrictions are currently set according to the same methodology as the financial ratios;
  • Environmental, Social, and Governance performance indicators identified according to the fund’s strategy are monitored on a monthly basis by the risk department.

In addition, the subfund may undergo occasional and periodic fund compliance checks, which will ensure, in particular, that sectoral exclusions are respected.

Lastly, in connection with labels, controls are conducted by auditors outside the management company.


Methodologies

HSBC relies on a proprietary ESG analysis model with data supplied by non-financial rating agencies and the management company’s internal research. HSBC Asset Management verifies the data used.


Data sources and processing

(a) Our investment team relies on the information available in the ESG Global Research intranet tool, which is populated by data from the following providers: MSCI ESG Research, ISS ESG, S&P Trucost, Sustainalytics, RepRisk, FTSE Green Revenues, Carbon4, Iceberg Datalab (IDL), GAIA Research, Equileap and Denominator.

(b) HSBC Asset Management verifies the data used.

(c) For the portfolio’s ESG rating, the data are weighted by coefficients reflecting our analysis of the various business sectors and their respective ESG impacts.

(d) Such data, if not communicated by companies, are estimated by our external data providers.


Limitations to methodologies and data

(a) The management company relies on non-financial data providers. As a result, the company is subject to certain operational and data quality risks associated with reliance on third-party service providers and data sources. Furthermore, data coverage may be limited depending on the type of issuer (small caps, certain high-yield issuers) and by the geographical area of the issuer (particularly for emerging countries). When non-financial data are not available in our suppliers’ databases, we initiate a qualitative analysis and possibly exchanges with the company to supplement our assessment of E/S characteristics.

(b) HSBC Asset Management is not aware of any methodological limitations likely to prevent the attainment of the E/S characteristics pursued by the subfund. The subfund may invest in derivatives. Sustainability risks are therefore more difficult to take into account because the subfund does not invest directly in the underlying asset. As of the date of the prospectus, no ESG integration methodology can be applied to derivatives.


Due diligence

As part of our investment process, we carefully monitor and analyse all companies and other issuers held in actively managed portfolios before and during the investment period. Our monitoring, by the analysts, the management teams, investment restrictions, and the risk department, is quantitative and qualitative and includes strategy, financial and non-financial performance and constraints, risks, capital structure, social and environmental impact, and corporate governance. For this monitoring, we use our own in-house research and the research of brokers and other independent research providers.

We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

Lastly, our teams in charge of voting and shareholder engagement activities can support the investment teams in the ESG assessment of issuers.

For more details on internal and external controls, please refer to the information provided in the “Monitoring of environmental or social characteristics” section.


Engagement policies

Our approach to shareholder engagement incorporates several levers for action including 1) direct dialogue with companies about their consideration of environmental and social issues to ensure that they are able to face the future and maintain long-term financial viability, 2) the exercising of voting rights by which we express our support for positive development initiatives or, conversely, our disagreement when directors do not meet our expectations, and 3) a gradual escalation procedure with companies when the ESG risks or controversies to which they are exposed are not managed.

Our management and analyst teams meet regularly with the companies in which we invest (or may invest) to better understand their business and strategy, demonstrate our support and/or express our concerns, and promote best practices.

We prioritise dialogue and interaction with companies in which we have significant positions, but also depending on the importance of the environmental or social issues identified. If a company is identified as being at risk on these issues at the end of our ESG analysis, we still favour dialogue over selling the security, but the lack of satisfactory progress or responses by the company in a timely manner that we consider reasonable to implement the desired changes may result in the exclusion of the security from our portfolios.

Lastly, every year, we define engagement themes that we consider to be key. These include climate change, biodiversity conservation, respect for human rights, diversity issues, equity and inclusion, the importance of just transition, and access to healthcare. As signatories to the Net Zero Asset Managers initiative and in keeping with our commitment to contribute to the goal of carbon neutrality for all our assets under management by 2050, we primarily engage in dialogue with companies involved in thermal coal. In practice, we are in contact with companies whose revenues were more than 20 per cent from coal mining as of the end of 2021. As we support a just transition imperative, we engage with companies to assess how their carbon neutrality transition plans take into account impacts on employees, supply chains, communities, and consumers. In terms of diversity, we have set ambitious targets for the number of women of boards of directors. For example, in Continental Europe, we have set a threshold of 40 per cent women in the composition of the boards of directors of large caps, 35 per cent for mid-caps, and 30 per cent for the small caps.

For our full Engagement Policy and Voting Policy, please visit: www.assetmanagement.hsbc.com/about-us/responsible-investing/policies


Designated reference benchmark

Not applicable

HSBC RIF SRI MODERATE

Summary


No sustainable investment objective

1. This product promotes environmental or social characteristics, but it does not have a sustainable investment goal.

2. The subfund's sustainable investments are assessed against the “do no significant harm” (DNSH) principle to ensure that they do not cause significant harm to environmental or social objectives. The DNSH principle applies only to the subfund's underlying sustainable investments. The assessment includes consideration of the principal adverse impacts (PAIs). The PAIs are a selection of environmental and social indicators including greenhouse gas (GHG) emissions, water discharges and gender pay gaps.

(a) All mandatory PAIs as defined in Table 1 of annex 1 of the Regulatory Technical Standards for Regulation 2019/2088 are used to assess that the subfund's sustainable investments do not cause significant harm to environmental or social objectives. To carry out the DNSH assessment, absolute and relative minimum thresholds were established for the 14 mandatory PAIs.

In the event of disagreement with data provided by an external data provider, or where the data is insufficient, a qualitative or quantitative assessment may be carried out by the investment teams, in collaboration with the Responsible Investment team, in order to reach a final decision. Where an issuer is found to be causing or contributing to significant harm, the security may still be held in the subfund, but will not count towards the subfund's "sustainable investment" allocation.

The description of HSBC Asset Management's sustainable investment methodology as applied by HSBC Global Asset Management (France) is available on the management company's website: https://www.assetmanagement.hsbc.fr/fr/retail-investors/about-us/responsible-investing/policies.

(b) An external data provider is used to monitor issuers and detect controversies that may indicate potential breaches of the United Nations Global Compact (UNGC) principles. These principles are aligned with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The ten UNGC principles include the assessment of non-financial risks such as human rights, working conditions, the environment and the fight against corruption. The description of HSBC Asset M Issuers reported for potential breaches of the UN Global Compact principles are excluded, unless they have been subject to enhanced ESG analysis (ESG Due Diligence) establishing that they are not in breach of these principles.

HSBC Asset Management is also a signatory to the United Nations Principles for Responsible Investment.


Environmental or social characteristics of the financial product

The subfund promotes E, S, and G characteristics by investing in international equity and fixed-income markets with a euro bias by selecting securities issued by companies or countries in a universe of issues that meet Environmental, Social, and Governance (ESG) and financial quality criteria.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on Environmental, Social, and Governance (ESG) criteria defined by the SRI label framework, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

This initial investment universe consists of securities selected on the international equity markets of developed countries with a euro bias and euro-denominated rates.

As such, this initial investment universe consists of issuers from:

  • An investment sub-universe composed of equities of eurozone countries, represented by the MSCI Emu, a benchmark given for information purposes;
  • An investment sub-universe composed of international equities, represented by the MSCI World, a benchmark given for information purposes;
  • An investment sub-universe composed of euro-denominated bonds, represented by the Bloomberg Euro Aggregate 500MM index, a benchmark given for information purposes. The weight of non-government issues in the above-mentioned index is adjusted to reflect the target sector weightings of the investment sub-universe in the event of significant deviations. The above-mentioned index, reduced to non-government issues and adjusted in terms of weighting, is a comparative element to monitor the sub-universe’s non-financial performance.

Then, based on the SRI universe, the portfolio consisting of “equities” segments and a “bonds” segment is determined:

1. For non-government issues:

  • Taking into account two specific sustainability indicators: an environmental indicator (greenhouse gas (GHG) intensity) and a social indicator (lack of human rights policy indicator).
    For these two sustainability indicators, for each of its segments, the subfund commits to obtaining a better ESG performance than that of each of the above-mentioned benchmarks.
    In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
  • By also including an analysis of issuers' ESG criteria.
  • Using a rating improvement approach, the subfund selects, for each of its segments the securities enabling the portion of the portfolio excluding government exposures to have an ESG rating higher than that of each of the above-mentioned benchmark indicators, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and on the basis of all the exclusions applied by the subfun.

2. For government issues and exposures:

By using an ESG Selection approach to select the countries with a minimum ESG rating according to the external ESG data provider ISS ESG from among euro-denominated issuing countries. In addition, at least 80 per cent of investments must meet minimum E, S and G and ESG ratings.

The subfund is actively managed and does not track a benchmark. There is no benchmark representative of our management philosophy and therefore of our investment universe. The MSCI Emu, MSCI World and Bloomberg Euro Aggregate 500MM indices are the benchmark indices for the subfund's sub-investment universes and are used to compare certain E/S characteristics of the subfund, as described in the section on sustainability indicators in the subfund's SFDR appendix.


Investment strategy

(a) The HSBC RESPONSIBLE INVESTMENT FUNDS – SRI MODERATE subfund is a profiled subfund within a multi-asset SRI range composed of several profiles.

The long-term strategic allocation is composed of 30 per cent equities and 70 per cent international bonds with a euro bias.

The minimum non-financial analysis rate is 90 per cent of the eligible assets of the subfund.

The subfund may directly hold up to 10 per cent of its assets in issues not rated according to ESG criteria.

The process of selecting securities, consisting of two successive, independent steps, is based on non-financial and financial criteria.

The integration of non-financial criteria into the securities analysis and selection process begins with determining the SRI universe of the subfund based on an initial investment universe.

This initial investment universe consists of issues selected on the international equity markets of developed countries with a euro bias and euro-denominated rates.

As such, this initial investment universe consists of issuers from:

  • An investment sub-universe composed of equities of eurozone countries, represented by the MSCI Emu, a benchmark given for information purposes;
  • An investment sub-universe composed of international equities, represented by the MSCI World, a benchmark given for information purposes;
  • An investment sub-universe composed of euro-denominated bonds, represented by the Bloomberg Euro Aggregate 500MM index, a benchmark given for information purposes. The weight of non-government issues in the above-mentioned index is adjusted to reflect the target sector weightings of the investment sub-universe in the event of significant deviations.

The above-mentioned index, reduced to non-government issues and adjusted in terms of weighting, is a comparative element to monitor the sub-universe’s non-financial performance.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on Environmental, Social, and Governance (ESG) criteria defined by the SRI label framework, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

A detailed description of the subfund’s exclusions is presented in the section detailing the binding elements defined in the investment strategy in the SFDR appendix to the prospectus.

HSBC Asset Management’s responsible investment policies applied by HSBC Global Asset Management (France) are available on the management company’s website at www.assetmanagement.hsbc.fr.

Then, based on the SRI universe, the portfolio consisting of “equities” segments and a “bonds” segment is determined:

1. For non-government issues:

  • Taking into account two specific sustainability indicators: an environmental indicator (greenhouse gas intensity) and a social indicator (lack of human rights policy indicator).
    For these two sustainability indicators, for each of its segments, the subfund commits to obtaining a better ESG performance than that of each of the above-mentioned benchmarks.
    In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
  • By also including an analysis of issuers' ESG criteria.
  • Using a rating improvement approach, the subfund selects, for each of its segments the securities enabling the portion of the portfolio excluding government exposures to have an ESG rating higher than that of each of the above-mentioned benchmark indicators, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and on the basis of the exclusions applied by the subfund.

2. For government issues and exposures:

By using an ESG Selection approach to choose from among euro-denominated issuing countries those with a minimum ESG rating according to the external ESG data provider ISS ESG.

In addition, at least 80 per cent of investments must meet minimum E, S and G and ESG ratings.

A) Non-government issues:

The ESG rating of issuers, used in the rating improvement approach, is constructed from an E rating, an S rating, a G rating, and an ESG aggregate rating.

The ratings of the pillars (E, S, and G) are provided by external ESG data providers that assess the non-financial aspects of the business sector to which the rated company belongs.

For each E, S, and G rating, several aspects are assessed, such as:

  • Environmental aspects are connected with the nature of the company’s activity and its particular sector. In extractive industries, utilities and air transport, for example, the release of CO2 emissions directly related to the company’s activity is of paramount importance: not measuring or controlling these emissions can represent a major industrial risk and result in major financial penalties and/or reputational damage. For example, if a cement or energy company is highly exposed to climate risk and does not take adequate mitigation measures, it may maximise its risk of sanctions or production disruptions in the event of major climate events for which it is not prepared.
  • The second pillar, Social, covers concepts related to relations with civil society, personnel management, compensation and training policy, respect for trade union rights, occupational health and safety policy. The very nature of the company's business will strongly influence the nature and relative importance of these practices. In sectors where there is a proven risk of accidents, such as construction and mining, for example, workplace accident prevention and compliance with safety standards are priority criteria.
  • Lastly, with regard to Governance, aspects such as the structure and representation of the Board of Directors, the attendance and independence of directors, the robustness of audit and control processes and respect for minority shareholder rights are systematically analysed. The assessment of the company's performance in these areas will also take into account the country in which the company is based, the country in which it is listed and/or the country in which it has its registered office, for example.

The relative weight of each of the three pillars in the final rating is at least 20 per cent and varies according to the specific features of the company’s sector of activity. The sector groupings are based on the GICS level 1 and level 2 classification, which is then aggregated into 12 economic “macro-sectors”. The weighting of each of the E, S, and G pillars within these 12 macro-sectors reflects the perspective of the ESG investment and research teams regarding ESG risks and opportunities. These sector weightings are available online in the subfund’s Transparency Code (www.assetmanagement.hsbc.fr).

The selection of securities based on these ESG criteria is thus based on an internal ESG analysis model with data supplied by external providers and in-house research.

B) Government issues and exposures:

Euro-issuing countries are ranked according to their overall “ESG” rating, which is based 50 per cent on the Environmental (E) pillar and 50 per cent on the Social/Governance (S/G) pillar.

The Social and Governance pillar includes the analysis of the political and governance system, human rights and fundamental freedoms, and social conditions. The Environmental pillar includes the analysis of natural resources, climate change and energy, production, and sustainable consumption.

The scores, resulting from the analysis by the external data provider ISS ESG, range from A+ to D-. The SRI strategy consists of selecting from among issuing countries those that have a minimum ESG rating. Thus:

  • for countries rated between A+ and B-, there are no investment limits.
  • for countries rated C+, the weight of these States in the portfolio cannot exceed the representative weight of these countries in the Bloomberg Capital Euro Aggregate 500MM index.
  • for countries classified between C and D-, investments are not permitted.

The rating of issuing countries is reviewed on an annual basis.

An exhaustive list of external providers of ESG data is available in the section on the subfund’s ESG information online at www.assetmanagement.hsbc.fr

The subfund also uses an “engagement” approach. This approach is implemented through an engagement policy established by the Management Company, which involves maintaining a presence with companies through one-on-one meetings, engagement actions, and exercising voting rights attached to the securities held in the portfolio.

The engagement policy and the voting policy are available on the management company’s website at www.assetmanagement.hsbc.fr.

Information on the social, environmental, and quality of governance criteria in this subfund’s investment policy is available on the management company’s website and in the subfund’s annual report.

(b) The subfund's investments are assessed to determine whether they comply with minimum standards of good governance, taking into account compliance with the UNGC principles. In addition, corporate governance practices are examined through ESG and Pillar G ratings. Governance is assessed on the basis of criteria including ethics, culture and values, corporate governance and anti-corruption measures. Companies considered to have an inadequate governance framework are reviewed and may be subject to further analysis, which may involve specific engagement action. The HSBC Asset Management Stewardship team meets regularly with issuers to gain a better understanding of their business and strategy and to promote best practices. HSBC Asset Management believes that good corporate governance ensures that companies are managed in the long-term interests of investors. Issuers that meet sustainable investment criteria are identified based on minimum governance ratings and the absence of exposure to severe ESG controversies.


Proportion of investments

The subfund’s strategic allocation is composed of 30 per cent equities and 70 per cent fixed-income investments on average. The portfolio will be invested in international equity and fixed-income markets with a euro bias by selecting securities issued by companies or countries in a universe of issues that meet Environmental, Social, and Governance (ESG) criteria.

The manager may invest in UCIs managed or distributed by an HSBC Group entity. These UCIs must meet the defined financial and non-financial objectives.

The SRI strategies of the UCIs or investment funds that may be selected by the fund manager (excluding UCIs/investment funds managed by the Management Company) may use ESG indicators and/or different SRI approaches independent of the subfund.

The minimum proportion of investments used to attain the environmental or social characteristics promoted by the subfund is 80 per cent. The remaining 20 per cent of investments is detailed in the section entitled ""What investments are included in category #2 ‘Other’” below.

Although the subfund does not have sustainable investments as an objective, it commits to a minimum proportion of 10 per cent of its assets in sustainable investments.

The fund commits to investing a minimum of 10 per cent in sustainable investments with an environmental objective that are not aligned with the EU Taxonomy.

What investments are included in category “# 2 Others”:

The subfund may hold cash, derivatives, and investments that do not meet the minimum ESG ratings or for which non-financial analysis could not be carried out due to the unavailability of ESG data. The use of derivatives will not help attain the subfund’s environmental or social characteristics. Derivatives are used for portfolio risk adjustment (exposure, hedging).


Monitoring of environmental or social characteristics

All subfunds must have strong and/or improving E/S characteristics at the issuer and overall portfolio level.

The management teams conduct ongoing monitoring. Funds are monitored to ensure that the portfolios meet the non-financial criteria and, where applicable, internally established thresholds (such as the portfolio’s average ESG score or exclusions) We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

First-level controls are also performed by independent management teams:

  • Contractual non-financial investment restrictions are currently set according to the same methodology as the financial ratios;
  • Environmental, Social, and Governance performance indicators identified according to the fund’s strategy are monitored on a monthly basis by the risk department.

In addition, the subfund may undergo occasional and periodic fund compliance checks, which will ensure, in particular, that sectoral exclusions are respected.

Lastly, in connection with labels, controls are conducted by auditors outside the management company.


Methodologies

HSBC relies on a proprietary ESG analysis model with data supplied by non-financial rating agencies and the management company’s internal research. HSBC Asset Management verifies the data used.


Data sources and processing

(a) Our investment team relies on the information available in the ESG Global Research intranet tool, which is populated by data from the following providers: MSCI ESG Research, ISS ESG, S&P Trucost, Sustainalytics, RepRisk, FTSE Green Revenues, Carbon4, Iceberg Datalab (IDL), GAIA Research, Equileap and Denominator.

(b) HSBC Asset Management verifies the data used.

(c) For the portfolio’s ESG rating, the data are weighted by coefficients reflecting our analysis of the various business sectors and their respective ESG impacts.

(d) Such data, if not communicated by companies, are estimated by our external data providers.


Limitations to methodologies and data

(a) The management company relies on non-financial data providers. As a result, the company is subject to certain operational and data quality risks associated with reliance on third-party service providers and data sources. Furthermore, data coverage may be limited depending on the type of issuer (small caps, certain high-yield issuers) and by the geographical area of the issuer (particularly for emerging countries). When non-financial data are not available in our suppliers’ databases, we initiate a qualitative analysis and possibly exchanges with the company to supplement our assessment of E/S characteristics.

(b) HSBC Asset Management is not aware of any methodological limitations likely to prevent the attainment of the E/S characteristics pursued by the subfund. The subfund may invest in derivatives. Sustainability risks are therefore more difficult to take into account because the subfund does not invest directly in the underlying asset. As of the date of the prospectus, no ESG integration methodology can be applied to derivatives.


Due diligence

As part of our investment process, we carefully monitor and analyse all companies and other issuers held in actively managed portfolios before and during the investment period. Our monitoring, by the analysts, the management teams, investment restrictions, and the risk department, is quantitative and qualitative and includes strategy, financial and non-financial performance and constraints, risks, capital structure, social and environmental impact, and corporate governance. For this monitoring, we use our own in-house research and the research of brokers and other independent research providers.

We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

Lastly, our teams in charge of voting and shareholder engagement activities can support the investment teams in the ESG assessment of issuers.

For more details on internal and external controls, please refer to the information provided in the “Monitoring of environmental or social characteristics” section.


Engagement policies

Our approach to shareholder engagement incorporates several levers for action including 1) direct dialogue with companies about their consideration of environmental and social issues to ensure that they are able to face the future and maintain long-term financial viability, 2) the exercising of voting rights by which we express our support for positive development initiatives or, conversely, our disagreement when directors do not meet our expectations, and 3) a gradual escalation procedure with companies when the ESG risks or controversies to which they are exposed are not managed.

Our management and analyst teams meet regularly with the companies in which we invest (or may invest) to better understand their business and strategy, demonstrate our support and/or express our concerns, and promote best practices.

We prioritise dialogue and interaction with companies in which we have significant positions, but also depending on the importance of the environmental or social issues identified. If a company is identified as being at risk on these issues at the end of our ESG analysis, we still favour dialogue over selling the security, but the lack of satisfactory progress or responses by the company in a timely manner that we consider reasonable to implement the desired changes may result in the exclusion of the security from our portfolios.

Lastly, every year, we define engagement themes that we consider to be key. These include climate change, biodiversity conservation, respect for human rights, diversity issues, equity and inclusion, the importance of just transition, and access to healthcare. As signatories to the Net Zero Asset Managers initiative and in keeping with our commitment to contribute to the goal of carbon neutrality for all our assets under management by 2050, we primarily engage in dialogue with companies involved in thermal coal. In practice, we are in contact with companies whose revenues were more than 20 per cent from coal mining as of the end of 2021. As we support a just transition imperative, we engage with companies to assess how their carbon neutrality transition plans take into account impacts on employees, supply chains, communities, and consumers. In terms of diversity, we have set ambitious targets for the number of women of boards of directors. For example, in Continental Europe, we have set a threshold of 40 per cent women in the composition of the boards of directors of large caps, 35 per cent for mid-caps, and 30 per cent for the small caps.

For our full Engagement Policy and Voting Policy, please visit: www.assetmanagement.hsbc.com/about-us/responsible-investing/policies


Designated reference benchmark

Not applicable

HSBC RIF SRI EURO BOND

Summary


No sustainable investment objective

1. This product promotes environmental or social characteristics, but it does not have a sustainable investment goal.

2. The subfund's sustainable investments are assessed against the “do no significant harm” (DNSH) principle to ensure that they do not cause significant harm to environmental or social objectives. The DNSH principle applies only to the subfund's underlying sustainable investments. The assessment includes consideration of the principal adverse impacts (PAIs). The PAIs are a selection of environmental and social indicators including greenhouse gas (GHG) emissions, water discharges and gender pay gaps.

(a) All mandatory PAIs as defined in Table 1 of annex 1 of the Regulatory Technical Standards for Regulation 2019/2088 are used to assess that the subfund's sustainable investments do not cause significant harm to environmental or social objectives. To carry out the DNSH assessment, absolute and relative minimum thresholds were established for the 14 mandatory PAIs.

In the event of disagreement with data provided by an external data provider, or where the data is insufficient, a qualitative or quantitative assessment may be carried out by the investment teams, in collaboration with the Responsible Investment team, in order to reach a final decision. Where an issuer is found to be causing or contributing to significant harm, the security may still be held in the subfund, but will not count towards the subfund's ""sustainable investment"" allocation.

The description of HSBC Asset Management's sustainable investment methodology as applied by HSBC Global Asset Management (France) is available on the management company's website: www.assetmanagement.hsbc.fr/fr/retail-investors/about-us/responsible-investing/policies.

(b) An external data provider is used to monitor issuers and detect controversies that may indicate potential breaches of the United Nations Global Compact (UNGC) principles. These principles are aligned with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The ten UNGC principles include the assessment of non-financial risks such as human rights, working conditions, the environment and the fight against corruption. The description of HSBC Asset M Issuers reported for potential breaches of the UN Global Compact principles are excluded, unless they have been subject to enhanced ESG analysis (ESG Due Diligence) establishing that they are not in breach of these principles.

HSBC Asset Management is also a signatory to the United Nations Principles for Responsible Investment.


Environmental or social characteristics of the financial product

The subfund promotes E, S, and G characteristics by investing in euro-denominated bonds and debt securities that meet Environmental, Social, and Governance (ESG) and financial quality criteria.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on Environmental, Social, and Governance (ESG) criteria defined by the SRI label framework, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

This initial investment universe consists of approximately 4,000 euro-denominated bonds.

Then, from the SRI universe, the portfolio is determined by:

1. For non-government issues:

  • Taking into account two specific sustainability indicators: an environmental indicator (greenhouse gas (GHG) intensity) and a social indicator (lack of human rights policy). For these two sustainability indicators, the subfund is committed to achieving a better ESG performance than that of the benchmark used for information purposes reduced to non-government issues.
  • each of the above-mentioned benchmark indicators, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and on the basis of the exclusions applied by the subfund.

In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.

  • By also including an analysis of issuers' ESG criteria.
  • Using a rating improvement approach, the subfund selects, for each of its segments the securities enabling the portion of the portfolio excluding government exposures to have an ESG rating higher than that of each of the above-mentioned benchmark indicators, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and on the basis of the exclusions applied by the subfund.

The weight of non-government issues in the benchmark used for information purposes is adjusted to reflect the subfund’s target sector weightings in the event of significant deviations.

2. For government issues and exposures:

By using an ESG Selection approach to choose from among euro-denominated issuing countries those with a minimum ESG rating according to the external ESG data provider ISS ESG.

In addition, at least 80 per cent of investments must meet minimum E, S and G and ESG ratings.

The subfund is also committed to carefully considering environmental issues through engagement activities.

The subfund is actively managed and does not track a benchmark. The Bloomberg Euro Aggregate 500MM index is the benchmark used to compare certain E/S characteristics of the subfund, as described in the section on sustainability indicators in the subfund's SFDR appendix.


Investment strategy

(a) The subfund’s investment strategy is direct management in eurozone bonds and debt securities within an SRI (Socially Responsible Investment) universe.

The minimum non-financial analysis rate of the subfund’s eligible assets is 90 per cent.

The subfund may directly hold up to 10 per cent of its assets in issues not rated according to ESG criteria.

The process of selecting securities, consisting of two successive, independent steps, is based on non-financial and financial criteria.

The integration of non-financial criteria into the securities analysis and selection process begins with determining the SRI universe of the subfund based on an initial investment universe. This initial investment universe consists of approximately 4,000 euro-denominated bonds.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on Environmental, Social, and Governance (ESG) criteria defined by the SRI label framework, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

A detailed description of the subfund’s exclusions is presented in the section detailing the binding elements defined in the investment strategy in the SFDR appendix to the prospectus.

HSBC Asset Management’s responsible investment policies applied by HSBC Global Asset Management (France) are available on the management company’s website at www.assetmanagement.hsbc.fr.

Then, from the SRI universe, the portfolio is determined by:

1. For non-government issues:

  • Taking into account two specific sustainability indicators: an environmental indicator (greenhouse gas intensity) and a social indicator (lack of human rights policy).
    For these two sustainability indicators, the subfund is committed to achieving a better ESG performance than that of the benchmark used for information purposes reduced to non-government issues.
    In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
  • By also including an analysis of issuers' ESG criteria
  • Using a rating improvement approach, the subfund selects, for each for each of its segments the securities enabling the portion of the portfolio excluding government exposures to have an ESG rating higher than that of each of the above-mentioned benchmark indicators, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and on the basis of all the exclusions applied by the subfund.

The weight of non-government issues in the benchmark used for information purposes is adjusted to reflect the subfund’s target sector weightings in the event of significant deviations.

2. For government issues and exposures:

By using an ESG Selection approach to select the countries with a minimum ESG rating according to the external ESG data provider ISS ESG from among euro-denominated issuing countries.

In addition, at least 80 per cent of investments must meet minimum E, S and G and ESG ratings

A) Non-government issues:

The ESG rating of issuers, used in the rating improvement approach, is constructed from an E rating, an S rating, a G rating, and an ESG aggregate rating.

The ratings of the pillars (E, S, and G) are provided by external ESG data providers that assess the non-financial aspects of the business sector to which the rated company belongs.

For each E, S, and G rating, several aspects are assessed, such as:

  • Environmental aspects are connected with the nature of the company’s activity and its particular sector. In extractive industries, utilities and air transport, for example, the release of CO2 emissions directly related to the company’s activity is of paramount importance: not measuring or controlling these emissions can represent a major industrial risk and result in major financial penalties and/or reputational damage. For example, if a cement or energy company is highly exposed to climate risk and does not take adequate mitigation measures, it may maximise its risk of sanctions or production disruptions in the event of major climate events for which it is not prepared.
  • The second pillar, Social, covers concepts related to relations with civil society, personnel management, compensation and training policy, respect for trade union rights, occupational health and safety policy. The very nature of the company's business will strongly influence the nature and relative importance of these practices. In sectors where there is a proven risk of accidents, such as construction and mining, for example, workplace accident prevention and compliance with safety standards are priority criteria.
  • Lastly, with regard to Governance, aspects such as the structure and representation of the Board of Directors, the attendance and independence of directors, the robustness of audit and control processes and respect for minority shareholder rights are systematically analysed. The assessment of the company's performance in these areas will also take into account the country in which the company is based, the country in which it is listed and/or the country in which it has its registered office, for example.

The relative weight of each of the three pillars in the final rating is at least 20 per cent and varies according to the specific features of the company’s sector of activity. The sector groupings are based on the GICS level 1 and level 2 classification, which is then aggregated into 12 economic “macro-sectors”. The weighting of each of the E, S, and G pillars within these 12 macro-sectors reflects the perspective of the ESG investment and research teams regarding ESG risks and opportunities. These sector weightings are available online in the subfund’s Transparency Code (www.assetmanagement.hsbc.fr).

The selection of securities based on these ESG criteria is thus based on an internal ESG analysis model with data supplied by external suppliers and in-house research.

B) Government issues and exposures:

Euro-issuing countries are ranked according to their overall “ESG” rating, which is based 50 per cent on the Environmental (E) pillar and 50 per cent on the Social/Governance (S/G) pillar.

The Social and Governance pillar includes the analysis of the political and governance system, human rights and fundamental freedoms, and social conditions.

The Environmental pillar includes the analysis of natural resources, climate change and energy, production, and sustainable consumption.

The scores, resulting from the analysis by the non-financial rating agency ISS ESG, range from A+ to D-.

The SRI strategy consists of selecting from among issuing countries those that have a minimum ESG rating. Thus:

  • for countries rated between A+ and B-, there are no investment limits.
  • for countries rated C+, the weight of these States in the portfolio cannot exceed their representative weight in the Bloomberg Capital Euro Aggregate 500MM index.
  • for countries classified between C and D-, investments are not permitted.

The rating of issuing countries is reviewed on an annual basis.

An exhaustive list of external providers of ESG data is available in the section on the subfund’s ESG information online at www.assetmanagement.hsbc.fr.

The subfund also uses an “engagement” approach. This approach is implemented through an engagement policy established by the management company, which involves maintaining a presence with companies through one-on-one meetings and engagement actions.

The engagement policy is available on the Management Company’s website at www.assetmanagement.hsbc.fr.

Information on the social, environmental, and quality of governance criteria in this subfund’s investment policy is available on the management company’s website and in the subfund’s annual report.

(b) The subfund's investments are assessed to determine whether they comply with minimum standards of good governance, taking into account compliance with the UNGC principles. In addition, corporate governance practices are examined through ESG and Pillar G ratings. Governance is assessed on the basis of criteria including ethics, culture and values, corporate governance and anti-corruption measures. Companies considered to have an inadequate governance framework are reviewed and may be subject to further analysis, which may involve specific engagement action. The HSBC Asset Management Stewardship team meets regularly with issuers to gain a better understanding of their business and strategy and to promote best practices. HSBC Asset Management believes that good corporate governance ensures that companies are managed in the long-term interests of investors. Issuers that meet sustainable investment criteria are identified based on minimum governance ratings and the absence of exposure to severe ESG controversies.


Proportion of investments

The subfund invests in bonds and debt securities through an issue universe that meets socially responsible economic, Environmental, Social, and Governance (ESG) criteria.

The minimum proportion of investments used to attain the environmental or social characteristics promoted by the subfund is 80 per cent. The remaining 20 per cent of investments is detailed in the section entitled ""What investments are included in category #2 ‘Other’” below.

Although the subfund does not have sustainable investments as an objective, it commits to a minimum proportion of 5 per cent of its assets in sustainable investments.

The fund commits to investing a minimum of 5 per cent in sustainable investments with an environmental objective that are not aligned with the EU Taxonomy.

What investments are included in category “# 2 Other”:

The subfund may hold cash, derivatives, and investments that do not meet the minimum ESG ratings or for which non-financial analysis could not be carried out due to the unavailability of ESG data. The use of derivatives will not help attain the fund’s environmental or social characteristics. Derivatives are used for portfolio risk adjustment (exposure, hedging).


Monitoring of environmental or social characteristics

All subfunds must have strong and/or improving E/S characteristics at the issuer and overall portfolio level.

The management teams conduct ongoing monitoring. Funds are monitored to ensure that the portfolios meet the non-financial criteria and, where applicable, internally established thresholds (such as the portfolio’s average ESG score or exclusions) We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

First-level controls are also performed by independent management teams:

  • Contractual non-financial investment restrictions are currently set according to the same methodology as the financial ratios;
  • Environmental, Social, and Governance performance indicators identified according to the fund’s strategy are monitored on a monthly basis by the risk department.

In addition, the subfund may undergo occasional and periodic fund compliance checks, which will ensure, in particular, that sectoral exclusions are respected.

Lastly, in connection with labels, controls are conducted by auditors outside the management company.


Methodologies

HSBC relies on a proprietary ESG analysis model with data supplied by non-financial rating agencies and the management company’s internal research. HSBC Asset Management verifies the data used.


Data sources and processing

(a) Our investment team relies on the information available in the ESG Global Research intranet tool, which is populated by data from the following providers: MSCI ESG Research, ISS ESG, S&P Trucost, Sustainalytics, RepRisk, FTSE Green Revenues, Carbon4, Iceberg Datalab (IDL), GAIA Research, Equileap and Denominator.

(b) HSBC Asset Management verifies the data used.

(c) For the portfolio’s ESG rating, the data are weighted by coefficients reflecting our analysis of the various business sectors and their respective ESG impacts.

(d) Such data, if not communicated by companies, are estimated by our external data providers.


Limitations to methodologies and data

(a) The management company relies on non-financial data providers. As a result, the company is subject to certain operational and data quality risks associated with reliance on third-party service providers and data sources. Furthermore, data coverage may be limited depending on the type of issuer (small caps, certain high-yield issuers) and by the geographical area of the issuer (particularly for emerging countries). When non-financial data are not available in our suppliers’ databases, we initiate a qualitative analysis and possibly exchanges with the company to supplement our assessment of E/S characteristics.

(b) HSBC Asset Management is not aware of any methodological limitations likely to prevent the attainment of the E/S characteristics pursued by the subfund. In addition, the subfund may invest in derivatives. Sustainability risks are therefore more difficult to take into account because the subfund does not invest directly in the underlying asset. No ESG integration methodology can be applied for these financial instruments.


Due diligence

As part of our investment process, we carefully monitor and analyse all companies and other issuers held in actively managed portfolios before and during the investment period. Our monitoring, by the analysts, the management teams, investment restrictions, and the risk department, is quantitative and qualitative and includes strategy, financial and non-financial performance and constraints, risks, capital structure, social and environmental impact, and corporate governance. For this monitoring, we use our own in-house research and the research of brokers and other independent research providers.

We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

Lastly, our teams in charge of voting and shareholder engagement activities can support the investment teams in the ESG assessment of issuers.

For more details on internal and external controls, please refer to the information provided in the “Monitoring of environmental or social characteristics” section.


Engagement policies

Our approach to shareholder engagement incorporates several levers for action including 1) direct dialogue with companies about their consideration of environmental and social issues to ensure that they are able to face the future and maintain long-term financial viability, 2) the exercising of voting rights by which we express our support for positive development initiatives or, conversely, our disagreement when directors do not meet our expectations, and 3) a gradual escalation procedure with companies when the ESG risks or controversies to which they are exposed are not managed.

Our management and analyst teams meet regularly with the companies in which we invest (or may invest) to better understand their business and strategy, demonstrate our support and/or express our concerns, and promote best practices.

We prioritise dialogue and interaction with companies in which we have significant positions, but also depending on the importance of the environmental or social issues identified. If a company is identified as being at risk on these issues at the end of our ESG analysis, we still favour dialogue over selling the security, but the lack of satisfactory progress or responses by the company in a timely manner that we consider reasonable to implement the desired changes may result in the exclusion of the security from our portfolios.

Lastly, every year, we define engagement themes that we consider to be key. These include climate change, biodiversity conservation, respect for human rights, diversity issues, equity and inclusion, the importance of just transition, and access to healthcare. As signatories to the Net Zero Asset Managers initiative and in keeping with our commitment to contribute to the goal of carbon neutrality for all our assets under management by 2050, we primarily engage in dialogue with companies involved in thermal coal. In practice, we are in contact with companies whose revenues were more than 20 per cent from coal mining as of the end of 2021. As we support a just transition imperative, we engage with companies to assess how their carbon neutrality transition plans take into account impacts on employees, supply chains, communities, and consumers. In terms of diversity, we have set ambitious targets for the number of women of boards of directors. For example, in Continental Europe, we have set a threshold of 40 per cent women in the composition of the boards of directors of large caps, 35 per cent for mid-caps, and 30 per cent for the small caps.

For our full Engagement Policy and Voting Policy, please visit: www.assetmanagement.hsbc.com/about-us/responsible-investing/policies


Designated reference benchmark

Not applicable

HSBC RIF SRI GLOBAL EQUITY

Summary


No sustainable investment objective

1. This product promotes environmental or social characteristics, but it does not have a sustainable investment goal.

2. The subfund's sustainable investments are assessed against the “do no significant harm” (DNSH) principle to ensure that they do not cause significant harm to environmental or social objectives. The DNSH principle applies only to the subfund's underlying sustainable investments. The assessment includes consideration of the principal adverse impacts (PAIs). The PAIs are a selection of environmental and social indicators including greenhouse gas (GHG) emissions, water discharges and gender pay gaps.

(a) All mandatory PAIs as defined in Table 1 of annex 1 of the Regulatory Technical Standards for Regulation 2019/2088 are used to assess that the subfund's sustainable investments do not cause significant harm to environmental or social objectives. To carry out the DNSH assessment, absolute and relative minimum thresholds were established for the 14 mandatory PAIs.

In the event of disagreement with data provided by an external data provider, or where the data is insufficient, a qualitative or quantitative assessment may be carried out by the investment teams, in collaboration with the Responsible Investment team, in order to reach a final decision. Where an issuer is found to be causing or contributing to significant harm, the security may still be held in the subfund, but will not count towards the subfund's ""sustainable investment"" allocation.

The description of HSBC Asset Management's sustainable investment methodology as applied by HSBC Global Asset Management (France) is available on the management company's website: www.assetmanagement.hsbc.fr/fr/retail-investors/about-us/responsible-investing/policies.

(b) An external data provider is used to monitor issuers and detect controversies that may indicate potential breaches of the United Nations Global Compact (UNGC) principles. These principles are aligned with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The ten UNGC principles include the assessment of non-financial risks such as human rights, working conditions, the environment and the fight against corruption. The description of HSBC Asset M Issuers reported for potential breaches of the UN Global Compact principles are excluded, unless they have been subject to enhanced ESG analysis (ESG Due Diligence) establishing that they are not in breach of these principles.

HSBC Asset Management is also a signatory to the United Nations Principles for Responsible Investment.


Environmental or social characteristics of the financial product

The subfund promotes E, S, and G characteristics by investing in international equity markets by selecting corporate securities in markets of international developed countries that meet environmental, social, and governance (ESG) and financial quality criteria.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions with regard to ESG criteria defined by the SRI label framework, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

This initial investment universe is made up of around 1,500 securities, mainly including securities of companies listed on international developed markets and, on an ancillary basis, securities of companies from developed industrialised countries outside the OECD.

Then, from the SRI universe, the portfolio is determined by:

  • Taking into account two specific sustainability indicators: an environmental indicator (greenhouse gas (GHG) intensity) and a social indicator (lack of human rights policy). For these two indicators, the subfund commits to achieving a better ESG performance than the benchmark used for information purposes.
  • In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
  • By also including an analysis of issuers' ESG criteria. Using a rating improvement approach, the subfund selects stocks that enable the portfolio to achieve a higher ESG rating than the benchmark used for information purposes, after eliminating at least 30 per cent of the worst-rated stocks in terms of ESG ratings and all exclusions applied by the subfund.

In addition, at least 80 per cent of investments must meet minimum E, S and G and ESG ratings.

The subfund is actively managed and does not track a benchmark. The MSCI World index is the benchmark used to compare certain E/S characteristics of the subfund, as described in the section on sustainability indicators in the subfund's SFDR appendix.


Investment strategy

(a) The subfund’s investment strategy is to invest in the international equity markets by selecting securities of international companies that meet environmental, social, and governance (ESG) and financial quality criteria.

The minimum non-financial analysis rate of the Subfund’s eligible assets is 90 per cent.

The process of selecting securities, consisting of two successive, independent steps, is based on non-financial and financial criteria.

The integration of non-financial criteria into the securities analysis and selection process begins with determining the SRI universe of the subfund based on an initial investment universe. This initial investment universe is made up of around 1,500 securities, mainly including securities of companies listed on international developed markets and, on an ancillary basis, securities of companies from developed industrialised countries outside the OECD.

The subfund is generally invested in large-cap equities (and similar securities), but it reserves the right to invest up to 100 per cent of its assets in small and mid-cap securities.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on Environmental, Social, and Governance (ESG) criteria defined by the SRI label framework, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

A detailed description of the subfund’s exclusions is presented in the section detailing the binding elements defined in the investment strategy in the SFDR appendix to the prospectus.

HSBC Asset Management’s responsible investment policies applied by HSBC Global Asset Management (France) are available on the management company’s website at www.assetmanagement.hsbc.fr.

Then, from the SRI universe, the portfolio is determined by:

  • Taking into account two specific sustainability indicators: an environmental indicator (greenhouse gas intensity) and a social indicator (lack of human rights policy).
    For these two sustainability indicators, the subfund is committed to achieving a better ESG performance than that of the benchmark used for information purposes.
    In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
  • By also including an analysis of issuers' ESG criteria.
    Using a rating improvement approach, the subfund selects stocks that enable the portfolio to achieve a higher ESG rating than the benchmark used for information purposes, after eliminating at least 30 per cent of the worst-rated stocks in terms of ESG ratings and all exclusions applied by the subfund.
    In addition, at least 80 per cent of investments must meet minimum E, S and G and ESG ratings.

The ESG rating of issuers, used in the rating improvement approach, is constructed from an E rating, an S rating, a G rating, and an ESG aggregate rating.

The ratings of the pillars (E, S, and G) are provided by external ESG data providers that assess the non-financial aspects of the business sector to which the rated company belongs.

For each E, S, and G rating, several aspects are assessed, such as:

  • Environmental aspects are connected with the nature of the company’s activity and its particular sector. In extractive industries, utilities and air transport, for example, the release of CO2 emissions directly related to the company’s activity is of paramount importance: not measuring or controlling these emissions can represent a major industrial risk and result in major financial penalties and/or reputational damage. For example, if a cement or energy company is highly exposed to climate risk and does not take adequate mitigation measures, it may maximise its risk of sanctions or production disruptions in the event of major climate events for which it is not prepared.
  • The second pillar, Social, covers concepts related to relations with civil society, personnel management, compensation and training policy, respect for trade union rights, occupational health and safety policy. The very nature of the company's business will strongly influence the nature and relative importance of these practices. In sectors where there is a proven risk of accidents, such as construction and mining, for example, workplace accident prevention and compliance with safety standards are priority criteria.
  • Lastly, with regard to Governance, aspects such as the structure and representation of the Board of Directors, the attendance and independence of directors, the robustness of audit and control processes and respect for minority shareholder rights are systematically analysed. The assessment of the company's performance in these areas will also take into account the country in which the company is based, the country in which it is listed and/or the country in which it has its registered office, for example.

The relative weight of each of the three pillars in the final rating is at least 20 per cent and varies according to the specific features of the company’s sector of activity. The sector groupings are based on the GICS level 1 and level 2 classification, which is then aggregated into 12 economic “macro-sectors”. The weighting of each of the E, S, and G pillars within these 12 macro-sectors reflects the perspective of the ESG investment and research teams regarding ESG risks and opportunities. These sector weightings are available online in the subfund’s Transparency Code (www.assetmanagement.hsbc.fr).

The selection of securities based on these ESG criteria is thus based on an internal ESG analysis model with data supplied by external providers and in-house research.

An exhaustive list of external providers of ESG data is available in the section on the subfund’s ESG information on our website at www.assetmanagement.hsbc.fr.

The subfund also uses an “engagement” approach. This approach is implemented through an engagement policy established by the Management Company, which involves visits in the form of individual meetings, engagement activities and the exercise of voting rights attached to the securities held in the portfolio.

The engagement and voting policies are available on the Management Company’s website at www.assetmanagement.hsbc.fr.

Information on the social, environmental, and quality of governance criteria in this subfund’s investment policy is available on the Management Company’s website and in the SICAV’s annual report.

(b) The subfund's investments are assessed to determine whether they comply with minimum standards of good governance, taking into account compliance with the UNGC principles. In addition, corporate governance practices are examined through ESG and Pillar G ratings. Governance is assessed on the basis of criteria including ethics, culture and values, corporate governance and anti-corruption measures. Companies considered to have an inadequate governance framework are reviewed and may be subject to further analysis, which may involve specific engagement action. The HSBC Asset Management Stewardship team meets regularly with issuers to gain a better understanding of their business and strategy and to promote best practices. HSBC Asset Management believes that good corporate governance ensures that companies are managed in the long-term interests of investors. Issuers that meet sustainable investment criteria are identified based on minimum governance ratings and the absence of exposure to severe ESG controversies.


Proportion of investments

The subfund invests in international equities. The companies are selected according to Environmental, Social, and Corporate Governance (ESG) criteria as well as standard economic and financial criteria.

The minimum proportion of investments used to attain the environmental or social characteristics promoted by the subfund is 80 per cent. The remaining 20 per cent of investments is detailed in the section entitled ""What investments are included in category #2 ‘Other’” below.

Although the subfund does not have sustainable investments as an objective, it commits to a minimum proportion of 10 per cent of its assets in sustainable investments.

The fund commits to investing a minimum of 10 per cent in sustainable investments with an environmental objective that are not aligned with the EU Taxonomy.

What investments are included in category “# 2 Other”:

The subfund may hold cash and investments that do not meet the minimum ESG ratings or for which non-financial analysis could not be carried out due to the unavailability of ESG data.


Monitoring of environmental or social characteristics

All subfunds must have strong and/or improving E/S characteristics at the issuer and overall portfolio level.

The management teams conduct ongoing monitoring. Funds are monitored to ensure that the portfolios meet the non-financial criteria and, where applicable, internally established thresholds (such as the portfolio’s average ESG score or exclusions) We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

First-level controls are also performed by independent management teams:

  • Contractual non-financial investment restrictions are currently set according to the same methodology as the financial ratios;
  • Environmental, Social, and Governance performance indicators identified according to the fund’s strategy are monitored on a monthly basis by the risk department.

In addition, the subfund may undergo occasional and periodic fund compliance checks, which will ensure, in particular, that sectoral exclusions are respected.

Lastly, in connection with labels, controls are conducted by auditors outside the management company.


Methodologies

HSBC relies on a proprietary ESG analysis model with data supplied by non-financial rating agencies and the management company’s internal research. HSBC Asset Management verifies the data used.


Data sources and processing

(a) Our investment team relies on the information available in the ESG Global Research intranet tool, which is populated by data from the following providers: MSCI ESG Research, ISS ESG, S&P Trucost, Sustainalytics, RepRisk, FTSE Green Revenues, Carbon4, Iceberg Datalab (IDL), GAIA Research, Equileap and Denominator.

(b) HSBC Asset Management verifies the data used.

(c) For the portfolio’s ESG rating, the data are weighted by coefficients reflecting our analysis of the various business sectors and their respective ESG impacts.

(d) Such data, if not communicated by companies, are estimated by our external data providers.


Limitations to methodologies and data

(a) The management company relies on non-financial data providers. As a result, the company is subject to certain operational and data quality risks associated with reliance on third-party service providers and data sources. Furthermore, data coverage may be limited depending on the type of issuer (small caps, certain high-yield issuers) and by the geographical area of the issuer (particularly for emerging countries). When non-financial data are not available in our suppliers’ databases, we initiate a qualitative analysis and possibly exchanges with the company to supplement our assessment of E/S characteristics.

(b) HSBC Asset Management is not aware of any methodological limitations likely to prevent the attainment of the E/S characteristics pursued by the subfund.


Due diligence

As part of our investment process, we carefully monitor and analyse all companies and other issuers held in actively managed portfolios before and during the investment period. Our monitoring, by the analysts, the management teams, investment restrictions, and the risk department, is quantitative and qualitative and includes strategy, financial and non-financial performance and constraints, risks, capital structure, social and environmental impact, and corporate governance. For this monitoring, we use our own in-house research and the research of brokers and other independent research providers.

We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

Lastly, our teams in charge of voting and shareholder engagement activities can support the investment teams in the ESG assessment of issuers.

For more details on internal and external controls, please refer to the information provided in the “Monitoring of environmental or social characteristics” section.


Engagement policies

Our approach to shareholder engagement incorporates several levers for action including 1) direct dialogue with companies about their consideration of environmental and social issues to ensure that they are able to face the future and maintain long-term financial viability, 2) the exercising of voting rights by which we express our support for positive development initiatives or, conversely, our disagreement when directors do not meet our expectations, and 3) a gradual escalation procedure with companies when the ESG risks or controversies to which they are exposed are not managed.

Our management and analyst teams meet regularly with the companies in which we invest (or may invest) to better understand their business and strategy, demonstrate our support and/or express our concerns, and promote best practices.

We prioritise dialogue and interaction with companies in which we have significant positions, but also depending on the importance of the environmental or social issues identified. If a company is identified as being at risk on these issues at the end of our ESG analysis, we still favour dialogue over selling the security, but the lack of satisfactory progress or responses by the company in a timely manner that we consider reasonable to implement the desired changes may result in the exclusion of the security from our portfolios.

Lastly, every year, we define engagement themes that we consider to be key. These include climate change, biodiversity conservation, respect for human rights, diversity issues, equity and inclusion, the importance of just transition, and access to healthcare. As signatories to the Net Zero Asset Managers initiative and in keeping with our commitment to contribute to the goal of carbon neutrality for all our assets under management by 2050, we primarily engage in dialogue with companies involved in thermal coal. In practice, we are in contact with companies whose revenues were more than 20 per cent from coal mining as of the end of 2021. As we support a just transition imperative, we engage with companies to assess how their carbon neutrality transition plans take into account impacts on employees, supply chains, communities, and consumers. In terms of diversity, we have set ambitious targets for the number of women of boards of directors. For example, in Continental Europe, we have set a threshold of 40 per cent women in the composition of the boards of directors of large caps, 35 per cent for mid-caps, and 30 per cent for the small caps.

For our full Engagement Policy and Voting Policy, please visit: www.assetmanagement.hsbc.com/about-us/responsible-investing/policies


Designated reference benchmark

Not applicable

HSBC RIF SRI EUROLAND EQUITY

Summary


No sustainable investment objective

1. This product promotes environmental or social characteristics, but it does not have a sustainable investment goal.

2. The subfund's sustainable investments are assessed against the “do no significant harm” (DNSH) principle to ensure that they do not cause significant harm to environmental or social objectives. The DNSH principle applies only to the subfund's underlying sustainable investments. The assessment includes consideration of the principal adverse impacts (PAIs). The PAIs are a selection of environmental and social indicators, including greenhouse gas (GHG) emissions, water discharges and the gender pay gap.

(a) All mandatory PAIs as defined in Table 1 of Annex 1 of the Regulatory Technical Standards for Regulation 2019/2088 are used to assess that the subfund's sustainable investments do not significantly harm environmental or social objectives. To carry out the DNSH assessment, absolute and relative minimum thresholds were established for the 14 mandatory PAIs.

In the event of disagreement with data provided by an external data provider, or where the data is insufficient, a qualitative or quantitative assessment may be carried out by the investment teams, in collaboration with the Responsible Investment team, in order to reach a final decision. Where an issuer is found to be causing or contributing to significant harm, the security may still be held in the subfund, but will not count towards the subfund's ""sustainable investment"" allocation.

The description of HSBC Asset Management's sustainable investment methodology as applied by HSBC Global Asset Management (France) is available on the management company's website: www.assetmanagement.hsbc.fr/fr/retailinvestors/about-us/responsible-investing/policies.

(b) An external data provider is used to monitor issuers and detect controversies that may indicate potential breaches of the United Nations Global Compact (UNGC) principles. These principles are aligned with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The ten UNGC principles include the assessment of non-financial risks such as human rights, working conditions, the environment and the fight against corruption. Issuers reported for potential breaches of the United Nations Global Compact principles are excluded, unless they have been subject to enhanced ESG analysis (ESG Due Diligence) establishing that that they are not in breach of these principles.

HSBC Asset Management is also a signatory to the United Nations Principles for Responsible Investment.


Environmental or social characteristics of the financial product

The subfund promotes E, S, and G characteristics by investing in equity markets of eurozone countries through a selection of corporate securities that meet Environmental, Social, and Governance (ESG) and financial quality criteria.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on environmental, social, and governance (ESG) criteria defined by the frameworks of the SRI and Towards Sustainability labels, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

This initial investment universe consists of around 250 securities, mainly including corporate securities on the equity market of eurozone countries and, on an ancillary basis, on markets outside the eurozone.

Then, from the SRI universe, the portfolio is determined by:

Taking into consideration three specific sustainability indicators: an environmental indicator (greenhouse gas (GHG) intensity), an indicator relating to respect for human rights (lack of human rights policy), and a social indicator (gender equality within governance bodies). For the greenhouse gas intensity indicator and the lack of human rights policy indicator, the subfund commits to obtaining a better ESG performance than that of the benchmark used for information purposes.

In addition, in order to comply with the requirements of the Towards Sustainability label, the subfund commits to obtaining a better ESG performance than that mentioned in the label’s reference framework for indicators on greenhouse gas intensity and gender diversity within governance bodies. The ESG performances mentioned in the Towards Sustainability label framework can be consulted in the Transparency Code.

In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.

  • By also including an analysis of issuers' ESG criteria.
  • Using a rating improvement approach, the subfund selects securities enabling the portfolio to have an ESG rating higher than that of the benchmark used for information purposes, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and all the exclusions applied by the subfund.

In addition, to comply with the requirements of the Towards Sustainability label, the portfolio’s ESG rating must be 15 per cent higher (in relative terms) than that of the benchmark used for information purposes.

In addition, at least 80 per cent of investments must meet minimum E, S and G and ESG ratings.

Lastly, the subfund is committed to carefully considering environmental issues through its voting and engagement activities.

The subfund is actively managed and does not track a benchmark. The MSCI EMU (NR) index is the benchmark used to compare certain E/S characteristics of the subfund, as described in the section on sustainability indicators in the subfund's SFDR appendix.


Investment strategy

(a) The subfund’s investment strategy is to invest in equity markets of eurozone countries and, on an ancillary basis, in non-eurozone markets by selecting securities that meet Environmental, Social, and Governance (ESG) and financial quality criteria.

The minimum non-financial analysis rate of the subfund’s eligible assets is 90 per cent.

The process of selecting securities is based on non-financial and financial criteria.

The integration of non-financial criteria into the securities analysis and selection process begins with determining the SRI universe of the Subfund based on an initial investment universe. This initial investment universe consists of around 250 securities, mainly including corporate securities on the equity market of eurozone countries and, on an ancillary basis, on markets outside the eurozone.

The SRI universe is obtained following the reduction of the initial investment universe, first by applying exclusions based on environmental, social, and governance (ESG) criteria defined by the frameworks of the SRI and Towards Sustainability labels and HSBC Asset Management’s responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

A detailed description of the subfund’s exclusions is presented in the section detailing the binding elements defined in the investment strategy in the SFDR appendix to the prospectus.

HSBC Asset Management’s responsible investment policies applied by HSBC Global Asset Management (France) are available on the management company’s website at www.assetmanagement.hsbc.fr.

Then, from the SRI universe, the portfolio is determined by:

  • Taking into consideration three specific sustainability indicators: an environmental indicator (greenhouse gas intensity), an indicator relating to respect for human rights (lack of human rights policy), and a social indicator (gender equality within governance bodies).

For the greenhouse gas intensity indicator and the lack of human rights policy indicator, the subfund commits to obtaining a better ESG performance than that of the benchmark used for information purposes.

In addition, in order to comply with the requirements of the Towards Sustainability label, the subfund commits to obtaining a better ESG performance than that mentioned in the label’s reference framework for indicators on greenhouse gas intensity and gender diversity within governance bodies. The ESG performances mentioned in the Towards Sustainability label framework can be consulted in the Transparency Code.

In addition, the subfund undertakes to exclude any issuer found to be in breach of one or more of the principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
  • By also including an analysis of issuers' ESG criteria.
  • Using a rating improvement approach to select the securities enabling the portfolio to have an ESG rating higher than that of the benchmark used for information purposes, after eliminating at least 30 per cent of the worst securities in terms of ESG rating and on the basis of all the exclusions applied by the subfund.

In addition, to comply with the requirements of the Towards Sustainability label, the portfolio’s ESG rating must be 15 per cent higher (in relative terms) than that of the benchmark used for information purposes.

In addition, at least 80 per cent of investments must meet minimum E, S and G and ESG ratings.

The ESG rating of issuers, used in the rating improvement approach, is constructed from an E rating, an S rating, a G rating, and an ESG aggregate rating.

The ratings of the pillars (E, S, and G) are provided by external ESG data providers that assess the non-financial aspects of the business sector to which the rated company belongs.

For each E, S, and G rating, several aspects are assessed, such as:

  • Environmental aspects are connected with the nature of the company’s activity and its particular sector. In extractive industries, utilities and air transport, for example, the release of CO2 emissions directly related to the company’s activity is of paramount importance: not measuring or controlling these emissions can represent a major industrial risk and result in major financial penalties and/or reputational damage. For example, if a cement or energy company is highly exposed to climate risk and does not take adequate mitigation measures, it may maximise its risk of sanctions or production disruptions in the event of major climate events for which it is not prepared.
  • The second pillar, Social, covers concepts related to relations with civil society, personnel management, compensation and training policy, respect for trade union rights, occupational health and safety policy. The very nature of the company's business will strongly influence the nature and relative importance of these practices. In sectors where there is a proven risk of accidents, such as construction and mining, for example, workplace accident prevention and compliance with safety standards are priority criteria.
  • Lastly, with regard to Governance, aspects such as the structure and representation of the Board of Directors, the attendance and independence of directors, the robustness of audit and control processes and respect for minority shareholder rights are systematically analysed. The assessment of the company's performance in these areas will also take into account the country in which the company is based, the country in which it is listed and/or the country in which it has its registered office, for example.

The relative weight of each of the three pillars in the final rating is at least 20 per cent and varies according to the specific features of the company’s sector of activity. The sector groupings are based on the GICS level 1 and level 2 classification, which is then aggregated into 12 economic “macro-sectors”. The weighting of each of the E, S, and G pillars within these 12 macro-sectors reflects the perspective of the ESG investment and research teams regarding ESG risks and opportunities. These sector weightings are available online in the subfund’s Transparency Code (www.assetmanagement.hsbc.fr).

The selection of securities based on these ESG criteria is thus based on an internal ESG analysis model with data supplied by external providers and in-house research.

An exhaustive list of external providers of ESG data is available in the section on the subfund’s ESG information on our website at www.assetmanagement.hsbc.fr.

The subfund also uses an “engagement” approach. This approach is implemented through an engagement policy established by the Management Company, which involves maintaining a presence with companies through one-on-one meetings, engagement actions, and exercising voting rights attached to the securities held in the portfolio.

The engagement and voting policies are available on the Management Company’s website at www.assetmanagement.hsbc.fr.

Information on the social, environmental, and quality of governance criteria in this subfund’s investment policy is available on the Management Company’s website and in the SICAV’s annual report.

(b) The subfund's investments are assessed to determine whether they comply with minimum standards of good governance, taking into account compliance with the UNGC principles. In addition, corporate governance practices are examined through ESG and Pillar G ratings. Governance is assessed on the basis of criteria including ethics, culture and values, corporate governance and anti-corruption measures. Companies considered to have an inadequate governance framework are reviewed and may be subject to further analysis, which may involve specific engagement action. The HSBC Asset Management Stewardship team meets regularly with issuers to gain a better understanding of their business and strategy and to promote best practices. HSBC Asset Management believes that good corporate governance ensures that companies are managed in the long-term interests of investors. Issuers that meet sustainable investment criteria are identified based on minimum governance ratings and the absence of exposure to severe ESG controversies.


Proportion of investments

The subfund invests in equities of eurozone countries. The companies are selected according to Environmental, Social, and Corporate Governance (ESG) criteria as well as standard economic and financial criteria.

The minimum proportion of investments used to attain the environmental or social characteristics promoted by the subfund is 80 per cent. The remaining 20 per cent of investments is detailed in the section entitled ""What

Investments are included in category #2 ‘Other’” below.

Although the subfund does not have sustainable investments as an objective, it commits to a minimum proportion of 10 per cent of its assets in sustainable investments.

The fund commits to investing a minimum of 10 per cent in sustainable investments with an environmental objective that are not aligned with the EU Taxonomy.

What investments are included in category “# 2 Others”:

The subfund may hold cash and cash equivalents as well as investments that do not meet the minimum ESG ratings or for which no non-financial analysis could be performed due to the unavailability of ESG data. The prospectus provides for the possibility of using derivatives, but the subfund does not use them.


Monitoring of environmental or social characteristics

All subfunds must have strong and/or improving E/S characteristics at the issuer and overall portfolio level.

The management teams conduct ongoing monitoring. Funds are monitored to ensure that the portfolios meet the non-financial criteria and, where applicable, internally established thresholds (such as the portfolio’s average ESG score or exclusions) We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

First-level controls are also performed by independent management teams:

  • Contractual non-financial investment restrictions are currently set according to the same methodology as the financial ratios;
  • Environmental, Social, and Governance performance indicators identified according to the fund’s strategy are monitored on a monthly basis by the risk department.

In addition, the subfund may undergo occasional and periodic fund compliance checks, which will ensure, in particular, that sectoral exclusions are respected.

Lastly, in connection with labels, controls are conducted by auditors outside the management company.


Methodologies

HSBC relies on a proprietary ESG analysis model with data supplied by non-financial rating agencies and the management company’s internal research. HSBC Asset Management verifies the data used.


Data sources and processing

(a) Our investment team relies on the information available in the ESG Global Research intranet tool, which is populated by data from the following providers: MSCI ESG Research, ISS ESG, S&P Trucost, Sustainalytics, RepRisk, FTSE Green Revenues, Carbon4, Iceberg Datalab (IDL), GAIA Research, Equileap and Denominator.

(b) HSBC Asset Management verifies the data used.

(c) For the portfolio’s ESG rating, the data are weighted by coefficients reflecting our analysis of the various business sectors and their respective ESG impacts.

(d) Such data, if not communicated by companies, are estimated by our external data providers.


Limitations to methodologies and data

(a) The management company relies on non-financial data providers. As a result, the company is subject to certain operational and data quality risks associated with reliance on third-party service providers and data sources. Furthermore, data coverage may be limited depending on the type of issuer (small caps, certain high-yield issuers) and by the geographical area of the issuer (particularly for emerging countries). When non-financial data are not available in our suppliers’ databases, we initiate a qualitative analysis and possibly exchanges with the company to supplement our assessment of E/S characteristics.

(b) HSBC Asset Management is not aware of any methodological limitations likely to prevent the attainment of the E/S characteristics pursued by the subfund.


Due diligence

As part of our investment process, we carefully monitor and analyse all companies and other issuers held in actively managed portfolios before and during the investment period. Our monitoring, by the analysts, the management teams, investment restrictions, and the risk department, is quantitative and qualitative and includes strategy, financial and non-financial performance and constraints, risks, capital structure, social and environmental impact, and corporate governance. For this monitoring, we use our own in-house research and the research of brokers and other independent research providers.

We also apply an enhanced due diligence process for companies that may be high risk due to violations of international conventions such as the principles of the UN Global Compact and/or not aligned with anti-financial crime standards or due to poor ESG ratings.

Lastly, our teams in charge of voting and shareholder engagement activities can support the investment teams in the ESG assessment of issuers.

For more details on internal and external controls, please refer to the information provided in the “Monitoring of environmental or social characteristics” section.


Engagement policies

Our approach to shareholder engagement incorporates several levers for action including 1) direct dialogue with companies about their consideration of environmental and social issues to ensure that they are able to face the future and maintain long-term financial viability, 2) the exercising of voting rights by which we express our support for positive development initiatives or, conversely, our disagreement when directors do not meet our expectations, and 3) a gradual escalation procedure with companies when the ESG risks or controversies to which they are exposed are not managed.

Our management and analyst teams meet regularly with the companies in which we invest (or may invest) to better understand their business and strategy, demonstrate our support and/or express our concerns, and promote best practices.

We prioritise dialogue and interaction with companies in which we have significant positions, but also depending on the importance of the environmental or social issues identified. If a company is identified as being at risk on these issues at the end of our ESG analysis, we still favour dialogue over selling the security, but the lack of satisfactory progress or responses by the company in a timely manner that we consider reasonable to implement the desired changes may result in the exclusion of the security from our portfolios.

Lastly, every year, we define engagement themes that we consider to be key. These include climate change, biodiversity conservation, respect for human rights, diversity issues, equity and inclusion, the importance of just transition, and access to healthcare. As signatories to the Net Zero Asset Managers initiative and in keeping with our commitment to contribute to the goal of carbon neutrality for all our assets under management by 2050, we primarily engage in dialogue with companies involved in thermal coal. In practice, we are in contact with companies whose revenues were more than 20 per cent from coal mining as of the end of 2021. As we support a just transition imperative, we engage with companies to assess how their carbon neutrality transition plans take into account impacts on employees, supply chains, communities, and consumers. In terms of diversity, we have set ambitious targets for the number of women of boards of directors. For example, in Continental Europe, we have set a threshold of 40 per cent women in the composition of the boards of directors of large caps, 35 per cent for mid-caps, and 30 per cent for the small caps.

For our full Engagement Policy and Voting Policy, please visit: www.assetmanagement.hsbc.com/about-us/responsible-investing/policies


Designated reference benchmark

Not applicable

HSBC RIF EUROPE EQUITY GREEN SOLUTIONS

Summary


No sustainable investment objective

(a) All mandatory PAIs as defined in Table 1 of Annex 1 of the Regulatory Technical Standards for Regulation 2019/2088 are used to assess that the subfund's sustainable investments do not significantly harm environmental or social objectives.

To carry out the DNSH assessment, absolute and relative minimum thresholds were established for the 14 mandatory PAIs.

In the event of disagreement with data provided by an external data provider, or where the data is insufficient, a qualitative or quantitative assessment may be carried out by the investment teams, in collaboration with the Responsible Investment team, in order to reach a final decision. Where an issuer is found to be causing or contributing to significant harm, the security may still be held in the subfund, but will not count towards the subfund's ""sustainable investment"" allocation.

(b) An external data provider is used to monitor issuers and detect controversies that may indicate potential breaches of the United Nations Global Compact (UNGC) principles. These principles are aligned with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The ten UNGC principles include the assessment of non-financial risks such as human rights, working conditions, the environment and the fight against corruption. Issuers reported for potential breaches of the United Nations Global Compact principles are excluded, unless they have been subject to enhanced ESG analysis (ESG Due Diligence) establishing that that they are not in breach of these principles.

HSBC Asset Management is also a signatory to the United Nations Principles for Responsible Investment.


Sustainable investment objective of the financial product

The subfund invests primarily in shares issued by European companies that contribute to climate solutions. Climate solutions are products or services that directly or indirectly provide the solutions needed to decarbonise the players involved in the energy and ecological transition.

These products and services meet one of the following conditions:

  1. they provide a low-carbon or zero-carbon activity (e.g. renewable energy),
  2. they enable low or zero carbon activity through the value chain (such as battery manufacturers),
  3. they protect, manage or restore the environment or natural resources,
  4. they prevent or reduce the risk of adverse impacts of climate change on people, nature and property (physical risks).

Assessing investments in climate solutions means measuring their potential to significantly reduce, avoid or eliminate potential GHG emissions. Assessments are therefore based on modelling the potential future outcomes of decarbonisation rather than examining historical trends in the company's emissions.

Investing in climate solutions is more than just investing in renewable energy.

Achieving a low-carbon transition will require structural and disruptive changes in the economy.

The subfund invests in eight climate-related eco-sectors: renewable energy, energy efficiency in industry, green buildings, transport – sustainable mobility, circular economy, biodiversity, clean water and environmental protection, adaptation to physical risks, and information and communication technologies.

In addition, issuers are deemed to contribute to climate solutions when at least 20 per cent of their revenues or other quantitative scores/measures demonstrate material alignment with climate solutions.

In this way, the subfund contributes to the environmental objectives defined in article 9 of the Taxonomy Regulations, and in particular to the objectives of climate change mitigation and climate change adaptation.

In addition, the companies identified are all examined and selected according to ESG criteria (selection of the best companies in each sector) and sustainability indicators tailored to the specific characteristics of the subfund.

Lastly, the subfund undertakes to exclude:

  • any issuer found to be in breach of one or more principles of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises;
  • securities of issuers involved in so-called ""excluded"" activities. Excluded activities are set out in the section on the binding elements of the investment strategy.

Achievement of the sustainable investment objective is measured using sustainability indicators, some of which are measured against the MSCI Europe IMI GDP weighted Net Return index. However, the MSCI Europe IMI GDP weighted Net Return index has not been designated to determine whether the subfund meets the sustainability objectives.


Investment strategy

(a) The subfund invests in equities of all capitalisations issued by European companies whose activities contribute to climate solutions. The stock-picking process, which consists of two independent and successive stages, is based on non-financial and financial criteria.

A minimum non-financial analysis ratio of 90 per cent is applied to the subfund's eligible assets.

The portfolio is constructed as follows:

1) Definition of the universe of eligible securities

The first step in the process is to determine the subfund's SRI universe from an initial investment universe.

This initial investment universe is made up of around 1,200 European large-, mid- and small-cap companies.

The SRI universe is obtained by reducing the initial investment universe by first applying exclusions based on environmental, social and governance (ESG) criteria defined by the Greenfin label, HSBC Asset Management's responsible investment policies and the exclusions applicable to the "Paris agreement" benchmark indices in accordance with ESMA guidelines on funds’ names.

A detailed description of the subfund's exclusions can be found in the SFDR appendix of the SICAV's prospectus.

HSBC Asset Management's responsible investment policies applied by HSBC Global Asset Management (France) are available on the management company's website at www.assetmanagement.hsbc.fr.

Second, based on the SRI universe, the second step is to define the universe of eligible securities. In order to achieve its investment objective, the subfund invests primarily (at least 80 per cent) in equities of all capitalisations issued by European companies whose activities contribute to climate solutions. Climate solutions are products or services that directly or indirectly provide solutions needed to decarbonise the players involved in the energy and ecological transition, i.e. the transition from an economic model that is heavily dependent on fossil fuels (oil, gas, coal) to a more sustainable, even carbon-free model. A detailed description of the above products and services can be found in the section “What is the sustainable investment objective of this financial product?”

To combat climate change, the subfund actively contributes to financing companies that provide the solutions needed to decarbonise economic players and that take advantage of green growth. One of the indicators used to monitor and measure the portfolio’s environmental performance is the “avoided emissions” indicator. Avoided emissions correspond to future emissions from a green technology compared to a conventional technology that it would replace during its life cycle. The subfund aims to achieve avoided emissions that exceed those of the MSCI Europe IMI GDP Weighted Net Return index, the benchmark used for information purposes to assess its performance.

This step involves analysing companies' activities to identify those that fall within sustainable themes such as renewable energy, industry and energy efficiency, the circular economy (including waste management and pollution control) and organic farming.

The securities are then ranked according to their green intensity. This green intensity is defined as the contribution of eligible activities to the company's total revenues (less than 10 per cent, between 10 per cent and 50 per cent, and more than 50 per cent of revenues).

This step is carried out in collaboration with our fundamental research teams, who provide knowledge of issuers through direct discussions with companies and the use of external data providers. This step includes an assessment of activities that run counter to the energy and ecological transition.

The subfund's investment universe may be extended to include securities that are not included in the above-mentioned eco-sectors, but are identified as contributing to the environmental objectives of the strategy, while complying with the exclusion rules mentioned above.

The chosen companies are selected based on their good ESG profile (2) and financial attractiveness (3).

2) Selection based on non-financial criteria (SRI filter)

The subfund adopts an active management philosophy based on Environmental, Social and Corporate Governance (ESG) criteria across the entire universe (thematic and diversification universe).

The companies identified above are all examined and selected based on ESG criteria and sustainability indicators tailored to the subfund’s specific characteristics.

The ESG rating of issuers, used in the selectivity-based approach, is constructed from an E rating, an S rating, a G rating and an aggregate ESG rating. The ratings (E, S and G) are provided by ESG data providers who assess the non-financial aspects of the business sector to which the rated company belongs.

Environmental aspects are related to the nature of the company's activity and the sector to which it belongs. Thus, for example, in mining and quarrying, utilities and air transport, CO2 emissions directly linked to the company's activity are of paramount importance: failure to measure and control them can represent a major industrial risk and can result in financial penalties and/or significant reputational damage. For example, if a cement or energy company is highly exposed to climate risk and fails to take adequate mitigation measures, it may maximise its risk of penalties or production disruptions in the event of major climate events for which it is unprepared.

The second pillar, Social, covers concepts related to relations with civil society, personnel management, compensation and training policy, respect for trade union rights, occupational health and safety policy. The very nature of the company's business will strongly influence the nature and relative importance of these practices. In sectors where there is a proven risk of accidents, such as construction and mining, for example, workplace accident prevention and compliance with safety standards are priority criteria.

Lastly, with regard to Governance, aspects such as the structure and representation of the Board of Directors, the attendance and independence of directors, the robustness of audit and control processes and respect for minority shareholder rights are systematically analysed. The assessment of the company's performance in these areas will also take into account the country in which the company is based, the country in which it is listed and/or the country in which it has its registered office, for example.

These first three scores are then weighted according to the weight assigned by the Management Company to each of the E, S and G pillars within the company's sector, and aggregated to form an ESG score that will be used to rank companies by sector.

The relative weight of each of the three pillars is at least 20 per cent and varies according to the specific features of the company's business sector. The sector groupings are based on the GICS level 1 and level 2 classification, which is then aggregated into 12 economic ""macro-sectors"". The weighting of each of the E, S and G pillars within these 12 macro-sectors reflects the ESG investment and research teams' view of ESG risks and opportunities. These sector weights are available in the subfund Transparency Code on the Internet (www.assetmanagement.hsbc.fr).

The SRI universe consists of taking into account ESG criteria and rating and ranking companies into quartiles within each sector.

The SRI selection will be made within the thematic universe, supplemented by the diversification universe.

The SRI filter involves investing without any restriction in securities ranked in the first, second and third quartiles. Securities ranked in the fourth quartile are excluded. We believe that companies that meet all of these criteria are committed to long-term development.

The SRI ratings of the HSBC Responsible Investment Funds - Europe Equity Green Solutions subfund are updated every month.

The subfund's portfolio must be brought into line with the changes in quartiles resulting from the rating changes within two weeks of the new SRI universes being published and no later than the end of each calendar month. However, in exceptional circumstances, this period may be extended by a further three months, at the discretion of the manager, for companies ranked in the fourth quartile.

For companies for which no data has been provided by external data providers, the manager conducts a detailed internal analysis using the company's own data. The list of external ESG data providers is available in the subfund's ESG information section on our website www.assetmanagement.hsbc.fr

This best-in-class SRI approach aims to select securities with high ESG ratings, which helps mitigate the potential impact of sustainability risks on portfolio performance.

3) Determining the final portfolio

This stage involves analysing the securities in the filtered universe using fundamental financial analysis. Investment decisions are based on an analysis of fundamentals and valuations.

The Transparency Code for the HSBC Responsible Investment Funds - Europe Equity Green Solutions subfund is publicly available at the following internet address: www.assetmanagement.hsbc.fr and provides detailed information on the thematic approach to “energy transition” and the integration of ESG criteria in the subfund. This information is also available in its annual report.

Information on the social, environmental and governance criteria in this subfund's investment policy is available on the HSBC Global Asset Management website at the following address: (www.assetmanagement.hsbc.fr).

The subfund also uses an “engagement” approach. This takes the form of an engagement policy implemented by the Management Company, which involves visits in the form of individual meetings, engagement activities and the exercise of voting rights attached to the securities held in the portfolio. These policies, along with reports on engagement activities and the exercise of voting rights, are available on the Management Company's website (www.assetmanagement.hsbc.fr).

(b) The subfund's investments are assessed to determine whether they comply with minimum standards of good governance, taking into account compliance with the UNGC principles. In addition, corporate governance practices are examined through ESG and Pillar G ratings. Governance is assessed on the basis of criteria including ethics, culture and values, corporate governance and anti-corruption measures. Companies considered to have an inadequate governance framework are reviewed and may be subject to further analysis, which may involve specific engagement action. The HSBC Asset Management Stewardship team meets regularly with issuers to gain a better understanding of their business and strategy and to promote best practices. HSBC Asset Management believes that good corporate governance ensures that companies are managed in the long-term interests of investors. Issuers that meet sustainable investment criteria are identified based on minimum governance ratings and the absence of exposure to severe ESG controversies.


Proportion of investments

With the aim of financing companies that provide the solutions needed to decarbonise economic players and take advantage of green growth, the portfolio is constructed as follows:

  • Defining the SRI universe by applying exclusions based on ESG criteria and the universe of eligible securities according to the thematic approach by analysing companies' activities to identify those that contribute to climate solutions.
    The subfund's investment universe may be extended to include securities which are not part of the eco-sectors mentioned above in the investment strategy section, but which are identified as contributing to the strategy's environmental objectives, while complying with the aforementioned exclusion rules.
  • Determining the portfolio by selecting securities specific to the theme and according to Environmental, Social and Corporate Governance (ESG) criteria, as well as fundamental financial analysis.
    The various steps of the investment process enable the subfund to commit a minimum of 90 per cent of its assets to sustainable investments with an environmental objective. The balance consists of cash.

Monitoring of environmental or social characteristics

The financial product has a sustainable investment objective and therefore commits to holding at least 90 per cent sustainable investments with an environmental objective. As such, each issuer in the portfolio must:

  • Contribute directly or indirectly to the green transition or another environmental objective;
  • Undergo the DNSH (“do no significant harm”) assessment as part of the sustainable investment process, which includes consideration of principal adverse impacts (PAI);
  • Present a robust governance framework.

HSBC’s sustainable investment methodology is available on the management company’s website at: www.assetmanagement.hsbc.fr/fr/retail-investors/about-us/responsible-investing/policies.

The management teams conduct ongoing monitoring. Funds are monitored to ensure that the portfolios meet the non-financial criteria and, where applicable, internally established thresholds (e.g. on sectoral exclusions).

First-level controls are performed by teams independent of management:

  • Contractual non-financial investment restrictions (including the subfund’s holding of sustainable investments) are currently set according to the same methodology as the financial ratios;
  • Environmental, Social, and Governance performance indicators identified according to the fund’s strategy are monitored on a monthly basis by the risk department.

In addition, the subfund may undergo occasional and periodic fund compliance checks, which will ensure, in particular, that sectoral exclusions are respected.

Lastly, in connection with labels, controls are conducted by auditors outside the management company.


Methodologies

HSBC’s sustainable investment methodology is available on the management company’s website at: www.assetmanagement.hsbc.fr/fr/retail-investors/about-us/responsible-investing/policies.


Data sources and processing

(a) HSBC Asset Management uses data from a number of external providers such as Sustainalytics, ISS ESG, MSCI ESG Research, and S&P Trucost to ensure that the portfolio attains the sustainable investment objective.

(b) HSBC Asset Management verifies the data used.

(c) For the portfolio’s ESG rating, the data are weighted by coefficients reflecting our analysis of the various business sectors and their respective ESG impacts.

(d) Such data, if not communicated by companies, are estimated by our external data providers.


Limitations to methodologies and data

(a) The management company relies on non-financial data providers. As a result, the company is subject to certain operational and data quality risks associated with reliance on third-party service providers and data sources. Furthermore, data coverage may be limited depending on the type of issuer (small caps, certain high-yield issuers) and by the geographical area of the issuer (particularly for emerging countries). When non-financial data are not available in our suppliers’ databases, we initiate a qualitative analysis and possibly exchanges with the company to supplement our assessment of sustainable investments.

(b) HSBC Asset Management is not aware of any methodological limitations likely to prevent the attainment of the sustainable investment objective.


Due diligence

As part of our investment process, we carefully monitor and analyse all companies and other issuers held by the subfund before and during the investment period. Our monitoring, by the analysts, the management teams, investment restrictions, and the risk department, is quantitative and qualitative and includes the sustainability score, strategy, financial and non-financial performance and constraints, risks, capital structure, social and environmental impact, and corporate governance. For the purposes of this monitoring, we use our in-house research and the ESG research of independent providers and brokers.

Lastly, our teams in charge of voting and shareholder engagement activities can support the investment teams in the ESG assessment of issuers.

For more details on internal and external controls, please refer to the information provided in the “Monitoring of environmental or social characteristics” section.


Engagement policies

Our approach to shareholder engagement incorporates several levers for action including 1) direct dialogue with companies about their consideration of environmental and social issues to ensure that they are able to face the future and maintain long-term financial viability, 2) the exercising of voting rights by which we express our support for positive development initiatives or, conversely, our disagreement when directors do not meet our expectations, and 3) a gradual escalation procedure with companies when the ESG risks or controversies to which they are exposed are not managed.

Our management and analyst teams meet regularly with the companies in which we invest (or may invest) to better understand their business and strategy, demonstrate our support and/or express our concerns, and promote best practices.

We prioritise dialogue and interaction with companies in which we have significant positions, but also depending on the importance of the environmental or social issues identified. If a company is identified as being at risk on these issues at the end of our ESG analysis, we still favour dialogue over selling the security, but the lack of satisfactory progress or responses by the company in a timely manner that we consider reasonable to implement the desired changes may result in the exclusion of the security from our portfolios.

Lastly, every year, we define engagement themes that we consider to be key. These include climate change, biodiversity conservation, respect for human rights, diversity issues, equity and inclusion, the importance of just transition, and access to healthcare. As signatories to the Net Zero Asset Managers initiative and in keeping with our commitment to contribute to the goal of carbon neutrality for all our assets under management by 2050, we primarily engage in dialogue with companies involved in thermal coal. In practice, we are in contact with companies whose revenues were more than 20 per cent from coal mining as of the end of 2021. As we support a just transition imperative, we engage with companies to assess how their carbon neutrality transition plans take into account impacts on employees, supply chains, communities, and consumers. In terms of diversity, we have set ambitious targets for the number of women of boards of directors. For example, in Continental Europe, we have set a threshold of 40 per cent women in the composition of the boards of directors of large caps, 35 per cent for mid-caps, and 30 per cent for the small caps.

For our full Engagement Policy and Voting Policy, please visit: www.assetmanagement.hsbc.com/about-us/responsible-investing/policies


Designated reference benchmark

Not applicable

Fund Name Category Investment region KID Factsheet Brochure Prospectus
HGIF Global Lower Carbon Bond ACHEUR Fixed Income Global Download KID Download Factsheet Download Brochure Download Prospectus
HGIF Global Lower Carbon Equity AC Equity Global Download KID Download Factsheet Download Brochure Download Prospectus
HGIF Corporate Euro Bond Fixed Term 2027 AC Fixed Income Global Download KID Download Factsheet Download Brochure Download Prospectus
HGIF Corporate Euro Bond Fixed Term 2027 AD Fixed Income Global Download KID Download Factsheet Download Brochure Download Prospectus

ESG and Pre-contractual information

Fund Name Precontractual disclosure SFDR periodic report
HGIF Global Lower Carbon Bond Fund Download pre-contractual information Download SFDR periodic report
HGIF Global Lower Carbon Equity Fund Download pre-contractual information Download SFDR periodic report
HSBC GIF Corporate Euro Bond Fixed Term 2027 AC Download pre-contractual information
HSBC GIF Corporate Euro Bond Fixed Term 2027 AD Download pre-contractual information

ESG Information

HGIF Global Lower Carbon Bond ACHEUR

Summary

This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.

Do no significant harm is completed as part of our standard investment process, which will include the consideration of Principal Adverse Impacts.

The Investment Adviser will review all SFDR mandatory Principal Adverse Impacts to assess the relevance to the sub-fund. HSBC's Responsible Investment Policy sets out the approach taken to identify and respond to principal adverse sustainability impacts and how HSBC considers ESG sustainability risks as these can adversely impact the securities the sub-funds invest in. HSBC uses third party screening providers to identify companies and governments with a poor track record in managing ESG risks and, where potential material risks are identified, HSBC also carry out further due diligence. Sustainability impacts, including the relevant Principal Adverse Impacts, identified by screening are a key consideration in the investment decision making process and, in turn, this also supports the advice given to clients.

The approach taken, as set out above, means that among other things the following points are scrutinised:

  • companies’ commitment to lower carbon transition, adoption of sound human rights principles and employees’ fair treatment, implementation of rigorous supply chain management practices aiming, among other things, at alleviating child and forced labour. HSBC also pay a great attention to the robustness of corporate governance and political structures which include the level of board independence, respect of shareholders’ rights, existence and implementation of rigorous anti-corruption and bribery policies as well as audit trails; and
  • governments’ commitment to availability and management of resources (including population trends, human capital, education and health), emerging technologies, government regulations and policies (including climate change, anti-corruption and bribery), political stability and governance.

The sub-fund is aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work a+D8nd the International Bill of Human Rights.


Environmental or social characteristics of the financial product

The sub-fund will promote the following environmental and social characteristics:

  1. Active consideration of low carbon intensity investments compared to the Reference Benchmark.
  2. Responsible business practices in accordance with UN Global Compact and OECD Principles for businesses.
  3. Minimum environmental standards through exclusion of business activities that are deemed harmful to the environment.
  4. Identification and analysis of a company’s environmental characteristics including, but not limited to, physical risks of climate change and human capital management.
  5. Active consideration of environmental issues through engagement and proxy voting.
  6. Analysis of the share of investment involved in controversial weapons.

Investment strategy

(a) The sub-fund aims to provide long term total return by investing in a portfolio of corporate bonds, while promoting ESG characteristics within the meaning of Article 8 of SFDR. The sub-fund aims to do this with a lower carbon intensity calculated as a weighted average of the carbon intensities of the sub-fund’s investments, than the weighted average of the constituents of the Bloomberg Global Aggregate Corporate Diversified Hedged USD (the “Reference Benchmark”).

The sub-fund invests (normally a minimum of 70% of its net assets) in Investment Grade and Non-Investment Grade rated fixed income and other similar securities issued by issuers meeting certain lower carbon criteria (“Lower Carbon Criteria”). Lower Carbon Criteria are explained below.

The sub-fund will invest in both developed markets and Emerging Markets. Investments will be denominated in developed market and Emerging Market currencies.

After identifying the eligible investment universe, the Investment Adviser aims to construct a portfolio with lower carbon intensity, calculated as a weighted average of the carbon intensities of the sub-fund’s investments, than the weighted average of the constituents of the Reference Benchmark. When assessing issuers’ carbon intensity, the Investment Adviser may rely on expertise, research and information provided by well-established financial data providers.

The sub-fund is actively managed and does not track a benchmark. The Reference Benchmark is used for sub-fund market comparison purposes.

This investment strategy is implemented through HSBC's investment process on a continuous basis by way of ongoing review and compliance monitoring of the binding elements.

(b) Governance is assessed against criteria specified in the investment process which includes, among other things, business ethics, culture and values, corporate governance and bribery and corruption. Controversies and reputational risks are assessed through enhanced due diligence as well as screening which are used to identify companies that are considered to have low governance scores. Those companies will then be subjected to further review, action and/or engagement.


Proportion of investments

The sub-fund invests (normally a minimum of 70% of its net assets) in Investment Grade and Non-Investment Grade rated fixed income and other similar securities issued by issuers meeting certain Lower Carbon Criteria. Lower Carbon Criteria is explained above.

Notwithstanding the above, the sub-fund may hold other investments including cash for the purposes of liquidity management and financial derivative instruments. The sub-fund may use financial derivative instruments for hedging purposes and efficient portfolio management purposes. The sub-fund may also use, but not extensively, financial derivative instruments for investment purposes. The financial derivative instruments the sub-fund is permitted to use include, but are not limited to, futures, options, swaps (such as credit default swaps) and foreign exchange forwards (including non-deliverable forwards). Financial derivative instruments may also be embedded in other instruments in which the sub-fund may invest.

The sub-fund promotes Environmental/Social (E/S) characteristics and while it does not have as its objective a sustainable investment, it will have a minimum proportion of 10% of sustainable investments.


Monitoring of environmental or social characteristics

All Sub-funds shall demonstrate strong and/or improving ESG characteristics at the issuer and overall portfolio level. Such criteria can be quantitative or qualitative and are monitored on an on-going basis. HSBC Asset Management conducts on-going monitoring of sub-funds - both at the issuer and overall portfolio level. Companies with ESG risk scores that require targeted review are assessed within an internal governance forum. Funds are monitored via an ESG dashboard to ensure portfolios align to the internally established thresholds (for example - portfolio average ESG score, exclusions, enhanced due diligence etc.).

Good corporate governance has long been incorporated in our proprietary fundamental company research. HSBC Asset Management's Stewardship team meets with companies regularly to improve our understanding of their business and strategy, signal support or concerns we have with management actions and promote best practice. HSBC Asset Management believes that good corporate governance ensures that companies are managed in line with the long-term interests of their investors.

For our full Stewardship Policy, please go to www.assetmanagement.hsbc.com/about-us/responsible-investing/policies.


Methodologies

HSBC uses its own proprietary systematic investment process to measure how the environmental characteristics promoted by the sub-fund are met. HSBC will use data provided by a number or third parties. All data used will be verified by HSBC Asset Management's extensive research department.


Data sources and processing

(a) HSBC Asset Management uses data from a number of external third parties such as Sustainalytics, ISS, MSCI and Trucost to ensure it attains the environmental characteristics promoted. HSBC Asset Management also use a number of ESG rating agencies for norms-based screening against the UN Global Compact principles.

(b) The data is verified by HSBC Asset management's extensive research department.

(c) The data is processed via HSBC Asset Management's propriety research methodology.

(d) HSBC Asset Management is reliant on third party data and while we verify the data, we cannot comment on limitation to the methodologies of such third-party companies. No data is estimated by HSBC Asset Management.


Limitations to methodologies and data

(a) While HSBC Asset Management use third party data from multiple sources, HSBC Asset Management review and research such data, however there is still limited coverage of the data available. In certain asset classes, ESG data may not be publicly available via third party data providers or not sufficient. In such instances, HSBC leverages proprietary methodologies to support ESG assessments at the security and portfolio level.

(b) HSBC Asset Management is not aware of any limitation in meeting the environmental or social characteristics of the sub-fund.


Due diligence

As an integral part of our investment process, we carefully monitor and analyse all companies and other issuers held in active portfolios both before and during the period of our investment. Our monitoring is quantitative and qualitative and includes; strategy, financial and non-financial performance and risk, capital structure, social and environmental impact and corporate governance. It may include assessment of companies and issuers’ disclosures, consideration of research from brokers and other independent research providers – including ESG & voting research, attending individual & group meetings with management and directors, visiting production sites, talking to competitors, customers and other stakeholders, and our own financial modelling. Companies and other issuers held in active portfolios are discussed regularly within our investment teams, informed by our monitoring and analysis. Lastly, our Stewardship & Engagement teams play a role in supporting investment teams when it comes to assessing issuers against ESG considerations. Our Engagement Policy and Stewardship Plan is available on our website www.assetmanagement.hsbc/responsible-investing/policies.


Engagement policies

HSBC Asset Management uses a number of ESG rating agencies for norms-based screening against the UN Global Compact principles. Good corporate governance has long been incorporated in our proprietary fundamental company research. HSBC meets with investee companies (and potential investee companies) regularly to improve our understanding of their business and strategy, to signal support and/or to highlight concerns we have with management actions and promote best practice. HSBC believes that good corporate governance ensures that companies are managed in line with the long-term interests of their investors.

We meet the management of investee companies (or potential investee companies) and other issuers regularly as part of our active investment process. This engagement is a key element in our stewardship oversight of client assets. It may form part of our monitoring of investee companies (or potential investee companies) and issuers or it may represent a means of escalation of any concerns we identify. We challenge companies and issuers on their delivery of corporate strategy, financial and non-financial performance and risk, allocation of capital and management of environmental, social and governance issues. We engage to understand the approach management is taking and to test how far they are being good stewards. We also encourage investee companies and other issuers held in client portfolios to establish and maintain high levels of transparency, particularly in their management of ESG issues and risks. We raise ESG or other concerns with investee companies and other issuers where we believe that to be in the interest of investors, identifying company specific or systemic risks. We prioritise our engagement on the basis of scale of client holdings, salience of the issues concerned, and our overall exposure to these issues.

For our full Engagement Policy, please go to www.assetmanagement.hsbc.com/about-us/responsible-investing/policies.


Designated reference benchmark

The Bloomberg Global Aggregate Corporate Diversified Hedged USD, will be used to measure the sub-fund's carbon intensity, but has not been designated for the purpose of attaining the environmental or social characteristics of the sub-fund.


Important information

The material contained herein is for marketing purposes and is for your information only. This document is not contractually binding nor are we required to provide this to you by any legislative provision. It does not constitute legal, tax or investment advice or a recommendation to any reader of this material to buy or sell investments. You must not, therefore, rely on the content of this document when making any investment decisions.

This document is distributed in France, Italy, Spain and Sweden by HSBC Asset Management (France) and is only intended for professional investors as defined by MIFID.

The information contained herein is subject to change without notice.

The information provided herein is simplified and therefore incomplete.

The material contained herein is for information purposes only and does not constitute investment advice or a recommendation to any reader of this material to buy or sell investments. Care has been taken to ensure the accuracy of this document, but HSBC Asset Management accepts no responsibility for any errors or omissions contained herein. All non-authorised reproduction or use of this commentary and analysis will be the responsibility of the user and will be likely to lead to legal proceedings. This document has no contractual value and is not by any means intended as a solicitation, nor a recommendation for the purchase or sale of any financial instrument in any jurisdiction in which such an offer is not lawful. The commentary and analysis presented in this document reflect the opinion of HSBC Asset Management on the markets, according to the information available to date. They do not constitute any kind of commitment from HSBC Asset Management. Consequently, HSBC Asset Management will not be held responsible for any investment or disinvestment decision taken on the basis of the commentary and/or analysis in this document. All data from HSBC Asset Management unless otherwise specified. Any third party information has been obtained from sources we believe to be reliable, but which we have not independently verified.

The fund is a sub-fund of HSBC Global Investment Funds, a Luxemburg domiciled SICAV.
Before subscription, investors should refer to Key investor document (KID) of the fund as well as its complete prospectus. For more detailed information on the risks associated with this fund, investors should refer to the complete prospectus of the fund The shares of HSBC Global Investment Funds have not been and will not be offered for sale or sold in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to United States Persons.

Shares of the Company may not be offered or sold for sale or sold to any "U.S. Person within the meaning of the Articles of Incorporation, i.e. a citizen or resident of the United States of America (the "United States"), a partnership organised or existing under the laws of any state, territory or possession of the United States, or a corporation organised or existing under the laws of the United States or of any state, territory or possession thereof, or any estate or trust, other than an estate or trust the income of which from sources outside the United States is not includible in gross income for purposes of computing United States income tax payable by it.

Please note that funds included in this material may be covered by regulations outside of the European Economic Area (The EEA). Local regulations may vary, and can potentially impact your right to funds.

HSBC Asset Management is the brand name for the asset management business of HSBC Group. The above document has been produced by HSBC Asset Management (France) and has been approved for distribution/issue by the following entities : In France by HSBC Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026); in Italy and Spain through the Milan and Madrid branches of HSBC Asset Management (France), regulated by Banca d’Italia and Commissione Nazionale per le Società e la Borsa (Consob) in Italy, and the Comisión Nacional del Mercado de Valores (CNMV) in Spain. In Sweden, through the Stockholm branch of HSBC Asset Management (France), regulated by the Swedish Financial Supervisory Authority Finansinspektionen).

HSBC Asset Management (France) - 421 345 489 RCS Nanterre. Portfolio management company authorised by the French regulatory authority AMF (no. GP99026) with capital of 8.050.320 euros. Postal address: 75419 Paris cedex 08, France. Offices: Immeuble Coeur Défense, 110, esplanade du Général Charles de Gaulle, 92400 Courbevoie - La Défense 4 . (Website: www.assetmanagement.hsbc.lu).

Copyright © 2022. HSBC Asset Management (France). All rights reserved

Important information for Luxembourg investors: HSBC entities in Luxembourg are regulated and authorised by the Commission de Surveillance du Secteur Financier (CSSF).

Further Information can be found in the prospectus.
Bloomberg® is a trademark and service mark of Bloomberg Finance L.P. (collectively with its affiliates, “Bloomberg”). Barclays® is a trademark and service mark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Bloomberg or Bloomberg’s licensors, including Barclays, own all proprietary rights in the Bloomberg Barclays Indices. Neither Bloomberg nor Barclays approve or endorse this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

HGIF Global Lower Carbon Equity AC

Summary

This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.

Do no significant harm is completed as part of our standard investment process, which will include the consideration of Principal Adverse Impacts.

The Investment Adviser will review all SFDR mandatory Principal Adverse Impacts to assess the relevance to the sub-fund. HSBC's Responsible Investment Policy sets out the approach taken to identify and respond to principal adverse sustainability impacts and how HSBC considers ESG sustainability risks as these can adversely impact the securities the sub-funds invest in. HSBC uses third party screening providers to identify companies and governments with a poor track record in managing ESG risks and, where potential material risks are identified, HSBC also carry out further due diligence. Sustainability impacts, including the relevant Principal Adverse Impacts, identified by screening are a key consideration in the investment decision making process and, in turn, this also supports the advice given to clients.

The approach taken, as set out above, means that among other things the following points are scrutinised:

  • companies’ commitment to lower carbon transition, adoption of sound human rights principles and employees’ fair treatment, implementation of rigorous supply chain management practices aiming, among other things, at alleviating child and forced labour. HSBC also pay a great attention to the robustness of corporate governance and political structures which include the level of board independence, respect of shareholders’ rights, existence and implementation of rigorous anti-corruption and bribery policies as well as audit trails; and
  • governments’ commitment to availability and management of resources (including population trends, human capital, education and health), emerging technologies, government regulations and policies (including climate change, anti-corruption and bribery), political stability and governance.

The sub-fund is aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights.


Environmental or social characteristics of the financial product

The sub-fund will promote the following environmental and social characteristics:

  1. Active consideration of low carbon intensity investments and higher ESG scores compared to the index. The MSCI World Index (the Reference Benchmark), will be used to measure the sub-fund's carbon intensity and ESG scores.
  2. Responsible business practices in accordance with UN Global Compact.
  3. Minimum environmental standards through exclusion of business activities that are deemed harmful to the environment.
  4. Identification and analysis of a company’s environmental and social characteristics including, but not limited to, physical risks of climate change and human capital management.
  5. Active consideration of environmental and social issues through engagement and proxy voting.
  6. Exclusion of share of investment involved in controversial weapons.
  7. Active consideration of environmental issues through engagement and proxy voting.
  8. Analysis of the share of investment involved in controversial weapons.

Investment strategy

(a) The sub-fund invests in normal market conditions a minimum of 90% of its net assets in accordance with the Lower Carbon Strategy as described below, in equities and equity-equivalent securities of companies which are domiciled in, based in, carry out the larger part of their business activities in, or are listed on a Regulated Market in developed markets.

The sub-fund aims for lower exposure to carbon intensive businesses through portfolio construction.

The sub-fund uses a multi-factor investment process, based on five factors (value, quality, momentum, low risk and size), to identify and rank stocks in its investment universe with the aim of maximising the portfolio’s risk-adjusted return. Although the investment process currently uses these five factors, it is subject to ongoing research regarding the current and potential additional factors. In order to lower exposure to carbon intensive businesses and raise the sub-fund’s ESG rating, all holdings in the portfolio are assessed for their individual carbon intensity and ESG scores.

A HSBC proprietary systematic investment process is then used to create a portfolio which:

  1. maximises exposure to higher ranked stocks, and
  2. aims for a lower carbon intensity and higher ESG rating calculated respectively as a weighted average of the carbon intensities and ESG ratings of the sub-fund’s investments, than the weighted average of the constituents of the Reference Benchmark.

(b) Governance is a key pillar (the “G-pillar”) of the ESG process and we aim to improve the G pillar versus the Reference Benchmark.

HSBC's Stewardship team meets with companies regularly to improve our understanding of their business and strategy, signal support or concerns we have with management actions and promote best practice. HSBC believes that good corporate governance ensures that companies are managed in line with the long-term interests of their investors.


Proportion of investments

The sub-fund invests in normal market conditions a minimum of 90% of its net assets in accordance with the Lower Carbon Strategy as described below, in equities and equity-equivalent securities of companies which are domiciled in, based in, carry out the larger part of their business activities in, or are listed on a Regulated Market in developed markets.

The sub-fund uses a multi-factor investment process, based on five factors (value, quality, momentum, low risk and size), to identify and rank stocks in its investment universe with the aim of maximising the portfolio’s risk-adjusted return. Although the investment process currently uses these five factors, it is subject to ongoing research regarding the current and potential additional factors. In order to lower exposure to carbon intensive businesses and raise the sub-fund’s ESG rating, all holdings in the portfolio are assessed for their individual carbon intensity and ESG scores.

The sub-fund may invest up to 10% of its net assets in units or shares of UCITS and/or other Eligible UCIs (including other sub-funds of HSBC Global Investment Funds).

The sub-fund may use financial derivative instruments for hedging and cash flow management (for example, Equitisation). The sub-fund may also use, but not extensively, financial derivative instruments for investment purposes. The financial derivative instruments the sub-fund is permitted to use include, but are not limited to, futures and foreign exchange forwards (including non-deliverable forwards). Financial derivative instruments may also be embedded in other instruments in which the sub-fund may invest. Financial derivative instruments may also be used for efficient portfolio management purposes.

The sub-fund promotes Environmental/Social (E/S) characteristics and while it does not have as its objective a sustainable investment, it will have a minimum proportion of 10% of sustainable investments.


Monitoring of environmental or social characteristics

All Sub-funds shall demonstrate strong and/or improving ESG characteristics at the issuer and overall portfolio level. Such criteria can be quantitative or qualitative and are monitored on an on-going basis. HSBC Asset Management conducts on-going monitoring of sub-funds - both at the issuer and overall portfolio level. Companies with ESG risk scores that require targeted review are assessed within an internal governance forum. Funds are monitored via an ESG dashboard to ensure portfolios align to the internally established thresholds (for example - portfolio average ESG score, exclusions, enhanced due diligence etc.).

Good corporate governance has long been incorporated in our proprietary fundamental company research. HSBC Asset Management's Stewardship team meets with companies regularly to improve our understanding of their business and strategy, signal support or concerns we have with management actions and promote best practice. HSBC Asset Management believes that good corporate governance ensures that companies are managed in line with the long-term interests of their investors.

For our full Stewardship Policy, please go to www.assetmanagement.hsbc.com/about-us/responsible-investing/policies.


Methodologies

HSBC uses its own proprietary systematic investment process to measure how the environmental characteristics promoted by the sub-fund are met. HSBC will use data provided by a number or third parties. All data used will be verified by HSBC Asset Management's extensive research department.


Data sources and processing

(a) HSBC Asset Management uses data from a number of external third parties such as Sustainalytics, ISS, MSCI and Trucost to ensure it attains the environmental characteristics promoted. HSBC Asset Management also use a number of ESG rating agencies for norms-based screening against the UN Global Compact principles.

(b) The data is verified by HSBC Asset management's extensive research department.

(c) The data is processed via HSBC Asset Management's propriety research methodology.

(d) HSBC Asset Management is reliant on third party data and while we verify the data, we cannot comment on limitation to the methodologies of such third-party companies. No data is estimated by HSBC Asset Management.


Limitations to methodologies and data

(a) While HSBC Asset Management use third party data from multiple sources, HSBC Asset Management review and research such data, however there is still limited coverage of the data available. In certain asset classes, ESG data may not be publicly available via third party data providers or not sufficient. In such instances, HSBC leverages proprietary methodologies to support ESG assessments at the security and portfolio level.

(b) HSBC Asset Management is not aware of any limitation in meeting the environmental or social characteristics of the sub-fund.


Due diligence

As an integral part of our investment process, we carefully monitor and analyse all companies and other issuers held in active portfolios both before and during the period of our investment. Our monitoring is quantitative and qualitative and includes; strategy, financial and non-financial performance and risk, capital structure, social and environmental impact and corporate governance. It may include assessment of companies and issuers’ disclosures, consideration of research from brokers and other independent research providers – including ESG & voting research, attending individual & group meetings with management and directors, visiting production sites, talking to competitors, customers and other stakeholders, and our own financial modelling. Companies and other issuers held in active portfolios are discussed regularly within our investment teams, informed by our monitoring and analysis. Lastly, our Stewardship & Engagement teams play a role in supporting investment teams when it comes to assessing issuers against ESG considerations. Our Engagement Policy and Stewardship Plan is available on our website www.assetmanagement.hsbc/responsible-investing/policies.


Engagement policies

HSBC Asset Management uses a number of ESG rating agencies for norms-based screening against the UN Global Compact principles. Good corporate governance has long been incorporated in our proprietary fundamental company research. HSBC meets with investee companies (and potential investee companies) regularly to improve our understanding of their business and strategy, to signal support and/or to highlight concerns we have with management actions and promote best practice. HSBC believes that good corporate governance ensures that companies are managed in line with the long-term interests of their investors.

We meet the management of investee companies (or potential investee companies) and other issuers regularly as part of our active investment process. This engagement is a key element in our stewardship oversight of client assets. It may form part of our monitoring of investee companies (or potential investee companies) and issuers or it may represent a means of escalation of any concerns we identify. We challenge companies and issuers on their delivery of corporate strategy, financial and non-financial performance and risk, allocation of capital and management of environmental, social and governance issues. We engage to understand the approach management is taking and to test how far they are being good stewards. We also encourage investee companies and other issuers held in client portfolios to establish and maintain high levels of transparency, particularly in their management of ESG issues and risks. We raise ESG or other concerns with investee companies and other issuers where we believe that to be in the interest of investors, identifying company specific or systemic risks. We prioritise our engagement on the basis of scale of client holdings, salience of the issues concerned, and our overall exposure to these issues.

For our full Engagement Policy, please go to www.assetmanagement.hsbc.com/about-us/responsible-investing/policies.


Designated reference benchmark

The MSCI World Index will be used to measure the sub-fund's carbon intensity and ESG scores, but has not been designated for the purpose of attaining the environmental or social characteristics of the sub-fund.


Important information

The material contained herein is for marketing purposes and is for your information only. This document is not contractually binding nor are we required to provide this to you by any legislative provision. It does not constitute legal, tax or investment advice or a recommendation to any reader of this material to buy or sell investments. You must not, therefore, rely on the content of this document when making any investment decisions.

This document is distributed in France, Italy, Spain and Sweden by HSBC Asset Management (France) and is only intended for professional investors as defined by MIFID.

The information contained herein is subject to change without notice.

The information provided herein is simplified and therefore incomplete.

The material contained herein is for information purposes only and does not constitute investment advice or a recommendation to any reader of this material to buy or sell investments. Care has been taken to ensure the accuracy of this document, but HSBC Asset Management accepts no responsibility for any errors or omissions contained herein. All non-authorised reproduction or use of this commentary and analysis will be the responsibility of the user and will be likely to lead to legal proceedings. This document has no contractual value and is not by any means intended as a solicitation, nor a recommendation for the purchase or sale of any financial instrument in any jurisdiction in which such an offer is not lawful. The commentary and analysis presented in this document reflect the opinion of HSBC Asset Management on the markets, according to the information available to date. They do not constitute any kind of commitment from HSBC Asset Management. Consequently, HSBC Asset Management will not be held responsible for any investment or disinvestment decision taken on the basis of the commentary and/or analysis in this document. All data from HSBC Asset Management unless otherwise specified. Any third party information has been obtained from sources we believe to be reliable, but which we have not independently verified.

The fund is a sub-fund of HSBC Global Investment Funds, a Luxemburg domiciled SICAV.
Before subscription, investors should refer to Key investor document (KID) of the fund as well as its complete prospectus. For more detailed information on the risks associated with this fund, investors should refer to the complete prospectus of the fund The shares of HSBC Global Investment Funds have not been and will not be offered for sale or sold in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to United States Persons.

Shares of the Company may not be offered or sold for sale or sold to any "U.S. Person within the meaning of the Articles of Incorporation, i.e. a citizen or resident of the United States of America (the "United States"), a partnership organised or existing under the laws of any state, territory or possession of the United States, or a corporation organised or existing under the laws of the United States or of any state, territory or possession thereof, or any estate or trust, other than an estate or trust the income of which from sources outside the United States is not includible in gross income for purposes of computing United States income tax payable by it.

Please note that funds included in this material may be covered by regulations outside of the European Economic Area (The EEA). Local regulations may vary, and can potentially impact your right to funds.

HSBC Asset Management is the brand name for the asset management business of HSBC Group. The above document has been produced by HSBC Asset Management (France) and has been approved for distribution/issue by the following entities : In France by HSBC Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026); in Italy and Spain through the Milan and Madrid branches of HSBC Asset Management (France), regulated by Banca d’Italia and Commissione Nazionale per le Società e la Borsa (Consob) in Italy, and the Comisión Nacional del Mercado de Valores (CNMV) in Spain. In Sweden, through the Stockholm branch of HSBC Asset Management (France), regulated by the Swedish Financial Supervisory Authority Finansinspektionen).

HSBC Asset Management (France) - 421 345 489 RCS Nanterre. Portfolio management company authorised by the French regulatory authority AMF (no. GP99026) with capital of 8.050.320 euros. Postal address: 75419 Paris cedex 08, France. Offices: Immeuble Coeur Défense, 110, esplanade du Général Charles de Gaulle, 92400 Courbevoie - La Défense 4 . (Website: www.assetmanagement.hsbc.lu).

Copyright © 2022. HSBC Asset Management (France). All rights reserved

Important information for Luxembourg investors: HSBC entities in Luxembourg are regulated and authorised by the Commission de Surveillance du Secteur Financier (CSSF).

Further Information can be found in the prospectus.
Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)

 

Fund Name
HSBC Fund Prices

Fund Name Category Investment region KID Factsheet Brochure Prospectus
HSBC Global Funds II ICAV Euro Fixed Term Bond 2028 AC Fixed Income Global Download KID Download Factsheet Download Brochure Download Prospectus
HSBC Global Funds II ICAV Euro Fixed Term Bond 2028 AD Fixed Income Global Download KID Download Factsheet Download Brochure Download Prospectus

ESG and Pre-contractual information

Fund Name Precontractual disclosure SFDR periodic report Sustainability Summary
HSBC Global Funds II ICAV Euro Fixed Term Bond 2028 AC Download pre-contractual information Download Sustainability Summary
HSBC Global Funds II ICAV Euro Fixed Term Bond 2028 AD Download pre-contractual information Download Sustainability Summary

SFDR Entity Report Summary

Entity Name Summary document
HSBC Investments Funds (Luxembourg) S.A. Download summary document
HSBC Global Asset Management (France) Download summary document

Notice

Should you require further information related to the funds please contact us on: infomalta@hsbc.com


Disclaimer

Approved and issued by HSBC Asset Management (Malta) Ltd, Business Banking Centre, 80, Mill Street, Qormi QRM 3101, Company Reg No C20653 which is authorised to provide investment services by the Malta Financial Services Authority under the Investment Services Act.