HSBC Canada adds sustainable financing products for small firms

HSBC Holdings Plc’s Canadian unit is introducing a package of sustainable financing products — including deposits and trade finance — for the small- and medium-sized business customers it focuses on in the country.

The “green deposits” will be eligible to finance loans for customers’ green initiatives, and the trade finance product will support environmentally and socially sustainable trade activities, HSBC Canada, which is run from Vancouver and Toronto, said Tuesday.

HSBC Canada Chief Executive Officer Linda Seymour said the unit was able to leverage its London-based parent company’s global expertise on sustainable finance to create the products, meeting a need that business customers frequently seek the bank’s help addressing.

“The two topics that clients want to talk about with us are the pandemic and sustainability,” Seymour said in an interview. “Clients are really asking for help because they don’t know where to turn and don’t even know where to begin.”

For smaller enterprises, being able to demonstrate a focus on sustainability is crucial in helping maintain relationships with larger customers seeking to show their own progress on those issues, said Alan Turner, head of commercial banking at HSBC Canada.

“Large companies and governments are increasingly being held to account for their own actions and for demonstrating some improvement,” Turner said. “So they’ve been changing requirements of companies they deal with.”

Sustainable-finance products like green bonds aren’t often available to smaller enterprises, leaving a hole in the market, Turner said.

HSBC Canada’s new products often carry a small discount dictated by accounting standards, said Angie Hall, head of sustainable finance for commercial banking. For example, the unit’s new sustainability-linked loans tie a company’s borrowing costs to their progress on meeting targets like greenhouse-gas emissions reductions.

“It’s not a material discount that’s going to move from the needle from a financing perspective,” Hall said. “The real driver is about demonstrating that sustainability commitment to stakeholders.”