Annual Financial Report - Part 7

HSBC Holdings PLC

21 February 2024



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The Board

The Board, which seeks to promote the Group's long-term
success, deliver sustainable value to shareholders
and promote a culture of openness and debate, comprises
diverse, high-calibre members who have experience in
our global markets.

Chairman and executive Directors

Mark E Tucker (66) 4C

Group Chairman

Appointed to the Board: September 2017

Group Chairman since: October 2017

Skills and experience: With over 35 years of experience in financial services in Asia, Africa, the US, the EU and the UK, including 30 years living and working in Hong Kong, Mark has a deep understanding of the industry and markets in which we operate.

Career: Mark was previously Chairman, Group Chief Executive and President of AIA Group Limited ('AIA'), and prior to AIA he was Group Chief Executive of Prudential plc. Mark previously served as a non-executive Director of the Court of the Bank of England and as an independent non-executive Director of Goldman Sachs Group.

External appointments:

- Non-executive Chairman of Discovery Limited

- Supporting Chair of Chapter Zero

- Member of the UK Investment Council

- Member of the Advisory Group on Trade Finance to the International Chamber of Commerce

- Member of the Trade Advisory Group on Financial Services to the UK Government's Department for International Trade

- Member of the Asia Business Council

- Member of Hong Kong's Chief Executive's Advisory Council on Economic Development

- Member of the Investment Advisory Council of the Supreme National Investment Committee of the Kingdom of Saudi Arabia

- Chairman of the Multinational Chairman's Group

- Director, Peterson Institute for International Economics

- Director, Institute of International Finance

- Asia Society Global Board of Trustees

- International Advisory Council of the China National Financial Regulatory Administration

- Hong Kong Academy of Finance International Council of Advisors

- Member of the Asia Global Institute

- International Business Leaders' Advisory Council to the Mayor of Beijing - Adviser to the Mayor

- International Business Leaders' Advisory Council to the Mayor of Shanghai - Adviser to the Mayor

Noel Quinn (62)

Group Chief Executive

Appointed to the Board: August 2019

Group Chief Executive since: March 2020

Skills and experience: Having qualified as an accountant in 1987, Noel has more than 30 years of banking and financial services experience, both in the UK and Asia.

Career: Noel was appointed Group Chief Executive in March 2020, having held the role on an interim basis since August 2019. Since joining HSBC and its constituent companies in 1987, Noel has held a variety of roles including Chief Executive Officer, Global Commercial Banking; Regional Head of Commercial Banking for Asia-Pacific; Head of Commercial Banking UK; and Head of Commercial Finance Europe.

External appointments:

- Independent non-executive Director of Sustainable Markets Initiative Limited and Chair of the Financial Services Task Force

- Principal member of the Glasgow Financial Alliance for Net Zero

- Member of the World Economic Forum's International Business Council

- Member of the World Bank Private Sector Investment Lab

- Member of the Advisory Board of the China Children Development Fund

- Founding member of CNBC ESG Council

- Member of the British Infrastructure Council

Georges Elhedery (49)

Group Chief Financial Officer

Appointed to the Board: January 2023

Skills and experience: Georges has over 25 years of experience in the banking industry across Europe, the Middle East and Asia, and has held a number of executive roles at both a regional and global business level.

Career: Georges was appointed Group Chief Financial Officer and executive Director with effect from 1 January 2023. He is also responsible for the oversight of the Group's transformation initiatives, strategy and corporate development activities. Georges was previously co-Chief Executive Officer, Global Banking and Markets and also Head of the Markets and Securities Services division of the business. Georges joined HSBC in 2005 with extensive trading experience in London, Paris and Tokyo. He has since held a number of senior leadership roles, including Head of Global Banking and Markets, Middle East and North Africa; Chief Executive Officer for HSBC, Middle East, North Africa and Türkiye; and Global Head of Markets based in London.

Board committee membership key

C. Committee Chair

1. Group Audit Committee

2. Group Risk Committee

3. Group Remuneration Committee

4. Nomination & Corporate Governance Committee

For full biographical details of our Board members, see www.hsbc.com/who-we-are/leadership-and-governance.

Independent non-executive Directors

Geraldine Buckingham (46) 2,3,4

Independent non-executive Director

Appointed to the Board: May 2022

Skills and experience: Geraldine is an experienced executive within the global financial services industry, with significant leadership experience in Asia.

Career: Geraldine is the former Chair and Head of Asia-Pacific at BlackRock, where she was responsible for all business activities across Hong Kong, mainland China, Japan, Australia, Singapore, India and Korea. After stepping down from this role, she acted as senior adviser to the Chairman and Chief Executive Officer of BlackRock. She earlier served as BlackRock's Global Head of Corporate Strategy, and previously was a partner within McKinsey & Company's financial services practice.

External appointments:

- Independent non-executive Director of Brunswick Group Partnership Ltd

- Independent non-executive Director of H.R.L. Morrison & Co Limited

- Member of the Advisory Board of ClimateWorks Centre Australia

- Member of the Advisory Board of the McKinsey Health Institute

Rachel Duan (53) 1,3,4

Independent non-executive Director

Appointed to the Board: September 2021

Skills and experience: Rachel is an experienced business leader with exceptional international experience in the US, Japan, mainland China and Hong Kong.

Career: Rachel spent 24 years at General Electric ('GE'), where she held positions including Senior Vice President of GE, and President and Chief Executive Officer of GE's Global Markets where she was responsible for driving GE's growth in Asia-Pacific, the Middle East, Africa, Latin America, Russia and the Commonwealth of Independent States. She also previously served as President and Chief Executive Officer of GE Advanced Materials China and then of the Asia-Pacific; President and CEO of GE Healthcare China; and President and CEO of GE China.

External appointments:

- Independent non-executive Director of Sanofi S.A.

- Independent non-executive Director of AXA S.A.

- Independent non-executive Director of the Adecco Group AG

Dame Carolyn Fairbairn (63) 2,3C,4

Independent non-executive Director

Appointed to the Board: September 2021

Skills and experience: Carolyn has significant experience across the media, government and finance sectors, and a deep understanding of the macroeconomic, regulatory, and political environment.

Career: An economist by training, Carolyn has served as a partner at McKinsey & Company, a member of the UK prime minister John Major's Number 10 Policy Unit, and as Director-General of the Confederation of British Industry, and held senior executive positions at the BBC and ITV plc. She has extensive board experience, having previously served as non-executive Director of Lloyds Banking Group plc, The Vitec Group plc, Capita plc and BAE Systems plc. She has also served as a non-executive Director of the UK Competition and Markets Authority and the Financial Services Authority.

External appointments:

- Independent non-executive Director of Tesco plc

- Chair of Royal Mencap Society

- Honorary Fellow of Gonville and Caius College, Cambridge

James Forese (60) 1,2C,4

Independent non-executive Director

Appointed to the Board: May 2020

Skills and experience: Jamie has over 30 years of international business and management experience in the finance industry working in areas including global markets, investment and private banking.

Career: Jamie formerly served as President of Citigroup. He began his career in securities trading with Salomon Brothers, one of Citigroup's predecessor companies, in 1985. In addition to his most recent role as Citigroup's President, he was Chief Executive Officer of Citigroup's Institutional Clients Group. He has held the positions of Chief Executive of its Securities and Banking division and Head of its Global Markets business.

External appointments:

- Non-executive Chair of HSBC North America Holdings Inc

- Non-executive Chairman of Global Bamboo Technologies

Ann Godbehere (68) 3,4

Independent non-executive Director

Appointed to the Board: September 2023

Skills and experience: Ann brings deep financial acumen and extensive financial services experience over a 30-year career spanning insurance, retail and private banking, and wealth management. She also provides global perspectives, drawing upon experiences and insights gained from a long career in international business.

Career: After joining Swiss Re in 1996, Ann served as the company's Chief Financial Officer from 2003 to 2007. She was also Interim Chief Financial Officer of Northern Rock Bank from 2008 to 2009 in the period immediately after its nationalisation. Ann also has extensive board experience, including with FTSE 100 companies, having previously served as non-executive Director of Prudential plc, British American Tobacco plc, UBS AG, UBS Group AG and as Senior Independent non-executive Director of Rio Tinto plc and Rio Tinto Limited.

External appointments:

- Non-executive Director and Chair of the Audit Committee of Stellantis N.V.

- Non-executive Director and Chair of the Audit Committee of Shell plc

Steven Guggenheimer (58) 2,4

Independent non-executive Director

Appointed to the Board: May 2020

Skills and experience: Steven brings extensive insight into technologies ranging from artificial intelligence to Cloud computing, through his experience advising businesses on digital transformation.

Career: Steven has more than 25 years of experience at Microsoft, including more than a decade as Corporate Vice President, where he led teams focused on original equipment manufacturers, developers and independent software vendors and artificial intelligence solutions.

External appointments:

- Independent non-executive Director of BT Group plc

- Independent non-executive Director of Leupold & Stevens, Inc

- Independent non-executive Director of Forrit Holdings Limited

Dr José Antonio Meade Kuribreña (54) 3,4

Independent non-executive Director

Appointed to the Board: March 2019

Workforce engagement non-executive Director since: June 2022

Skills and experience: José has extensive experience in public administration, banking and financial policy.

Career: José has held Cabinet-level positions in the federal government of Mexico, including as Secretary of Finance and Public Credit, Secretary of Social Development, Secretary of Foreign Affairs and Secretary of Energy. Prior to his appointment to the Cabinet, he served as Undersecretary and as Chief of Staff in the Ministry of Finance and Public Credit. José is also a former Director General of Banking and Savings at the Ministry of Finance and Public Credit, and served as Chief Executive Officer of the National Bank for Rural Credit.

External appointments:

- Independent non-executive Director of Alfa S.A.B. de C.V.

- Independent non-executive Director of Grupo Comercial Chedraui, S.A.B. de C.V.

- Board member of the Global Center on Adaptation

- Member of the Advisory Board of the University of California, Centre for US Mexican Studies

- Member of the UNICEF Mexico Advisory Board

Kalpana Morparia (74) 2,4

Independent non-executive Director

Appointed to the Board: March 2023

Skills and experience: Kalpana is a skilled business leader with significant experience gained through a 45-year career in banking across Asia, primarily in India.

Career: Kalpana's most recent executive role was as Chair of J.P. Morgan, South and Southeast Asia and a member of J.P. Morgan's Asia executive committee, which she held until her retirement in 2021. Before J.P. Morgan, she was the Joint Managing Director of ICICI Bank, India's second-largest bank, from 2001 to 2007.

External appointments:

- Independent non-executive Director of Hindustan Unilever Limited

- Independent non-executive Director of Dr. Reddy's Laboratories Ltd.

- Independent non-executive Director of Philip Morris International Inc

- Governing board member of the Bharti Foundation

- Governing board member of Foundation for Audit Quality

- Governing board member of the Generation India Foundation

- Governing council member of Krea University

Eileen Murray (65) 1,3,4

Independent non-executive Director

Appointed to the Board: July 2020

Skills and experience: Eileen has extensive knowledge in financial services, technology and corporate strategy from a career spanning more than 40 years.

Career: Eileen previously served as co-Chief Executive Officer of Bridgewater Associates, LP. Before this, she was Chief Executive Officer for Investment Risk Management LLC, and President and co-Chief Executive Officer of Duff Capital Advisors. Eileen started her professional career at Morgan Stanley, where she held positions including Controller, Treasurer, and Global Head of Technology and Operations, as well as Chief Operating Officer for its Institutional Securities Group. She was also Head of Global Technology, Operations and Product Control at Credit Suisse.

External appointments:

- Independent non-executive Director of Guardian Life Insurance Company of America

- Independent non-executive Director of Broadridge Financial Solutions, Inc

- Member of the Advisory Board of Mobilize Capital Partners

Brendan Nelson (74) 1,2,4

Independent non-executive Director

Appointed to the Board: September 2023

Skills and experience: Brendan brings UK and international financial and auditing expertise, and significant experience in auditing and as audit committee chair of UK-listed companies.

Career: Brendan spent over 25 years as a partner at KPMG LLP, served on the board from 2000 and as Vice Chairman from 2006, until his retirement in 2010. Internationally, he held various senior positions including Global Chairman of the financial services practice. Subsequently, Brendan joined the boards of bp plc and NatWest Group plc where he also served as Chairman of both companies' audit committees.

During his career, Brendan was President of the Institute of Chartered Accountants of Scotland, a member of the Financial Reporting Review Panel and a member of the Financial Services Authority's Practitioner Panel. As current Chairman of the Board of BP Pension Fund Trustees Ltd, Brendan has received training in ESG considerations for investment decisions and helped set an ambition to be net zero in terms of greenhouse gas emissions from investments by 2050.

External appointments:

- Chairman of BP Pension Trustees Ltd

David Nish (63) 1C,2,4

Independent non-executive Director

Appointed to the Board: May 2016

Senior Independent non-executive Director since: February 2020

Skills and experience: David has international experience in financial services, corporate governance, strategy, financial reporting, and operational transformation.

Career: David served as Group Chief Executive Officer of Standard Life plc between 2010 and 2015, having joined the company in 2006 as Group Finance Director. He is also a former Group Finance Director of Scottish Power plc and was a partner at Price Waterhouse. David has also previously served as a non-executive Director of HDFC Life (India), Northern Foods plc, Thus plc, London Stock Exchange Group plc, the UK Green Investment Bank plc and Zurich Insurance Group.

External appointments:

- Senior Independent non-executive Director of Vodafone Group plc and Chairman of the Audit and Risk Committee

- Honorary Professor of University of Dundee Business School

Swee Lian Teo (64) 2,4

Independent non-executive Director

Appointed to the Board: October 2023

Skills and experience: Swee Lian brings extensive experience within the international financial services industry, having previously spent over 27 years with the Monetary Authority of Singapore ('MAS').

Career: During Swee Lian's time at the MAS, she worked in foreign reserves management, financial sector development, strategic planning and financial supervision, before she became the Deputy Managing Director for Financial Supervision. She retired from the MAS in 2015 after serving as Special Advisor, focused on MAS's role in the international regulatory framework, in the Managing Director's office. Swee Lian previously served as a non-executive Director on the boards of AIA Group Limited and the Dubai Financial Services Authority.

External appointments:

- Non-executive Director of Singapore Telecommunications Limited and Chair of the Risk Committee

- Non-executive Director of Avanda Investment Management Pte Ltd

- Director of Clifford Capital Pte Ltd

- Director of Clifford Capital Holdings Pte Ltd

- Chair of CapitaLand Integrated Commercial Trust Management Limited.

Aileen Taylor (51)

Group Company Secretary and Chief Governance Officer

Appointed: November 2019

Skills and experience: Aileen is a solicitor with significant governance and regulatory experience across various roles in the banking industry. She is a member of the European Corporate Governance Council, the GC100 and the Financial Conduct Authority's Listing Authority Advisory Panel.

Career: Prior to joining HSBC, Aileen spent 19 years at the Royal Bank of Scotland Group, holding various legal, risk and compliance roles. She was appointed Group Secretary in 2010 and subsequently Chief Governance Officer and Board Counsel.

Former Directors who served during the year

Jackson Tai

Jackson Tai retired from the Board on 5 May 2023

For full biographical details of our Board members, see
www.hsbc.com/who-we-are/leadership-and-governance.

Senior management

Senior management, which includes the Group Executive Committee, supports the Group Chief Executive in the day-to-day management of the business and the implementation of strategy.

Elaine Arden (55)

Group Chief Human

Resources Officer

Elaine joined HSBC as Group Chief Human Resources Officer in June 2017. Prior to joining HSBC, she was Group Human Resources Director at the Royal Bank of Scotland Group for six years in the aftermath of the global financial crisis. She has held a number of human resources roles throughout her career in financial services, including Head of Human Resources for Direct Line Group. Elaine is a member of the Chartered Institute of Personnel and Development, and a Fellow of the Chartered Institute of Banking in Scotland.

Jonathan Calvert-Davies (55)

Group Head of Internal Audit

Jonathan is a standing attendee of the Group Executive Committee, having joined HSBC as Group Head of Internal Audit in October 2019. He has over 30 years of experience providing assurance, audit and advisory services to the banking and securities industries in the UK, the US and Europe. Jonathan's previous roles included leading KPMG UK's financial services internal audit services practice and PwC's UK internal audit services practice. He also previously served as interim Group Head of Internal Audit at the Royal Bank of Scotland Group.

Colin Bell (56)

Chief Executive Officer,

HSBC Bank plc and HSBC Europe

Colin joined HSBC in July 2016 and was appointed Chief Executive Officer, HSBC Bank plc and HSBC Europe in February 2021, having previously held the role of Group Chief Compliance Officer. He is also a Director of HSBC Bank (Singapore) Limited. Colin worked at UBS as Global Head of Compliance and Operational Risk Control. He served for 16 years in the British Army, where he held a variety of command and staff positions, including operational tours of Iraq and Northern Ireland, and roles in the Ministry of Defence and NATO.

Greg Guyett (60)

Chief Executive Officer,

Global Banking and Markets

Greg joined HSBC in October 2018 as Head of Global Banking and became co-Chief Executive Officer of Global Banking and Markets in March 2020, before assuming sole responsibility in October 2022. Before joining HSBC, he was President and Chief Operating Officer of East West Bank. Greg began his career as an investment banker at J.P. Morgan, where positions included: Chief Executive Officer for Greater China; Chief Executive Officer, Global Corporate Bank; Head of Investment Banking for Asia-Pacific; and Co-Head of Banking for Asia-Pacific.

Dr Celine Herweijer (46)

Group Chief Sustainability Officer

Celine joined HSBC as Group Chief Sustainability Officer in July 2021, and is responsible for the Group's execution of its sustainability strategy. She was previously a partner at PwC for over a decade, where she held global leadership roles including acting as its global innovation and sustainability leader. Before joining PwC in 2009, Celine worked as Director of Climate Change and Consulting for Risk Management Solutions. She is a World Economic Forum Young Global Leader, a co-chair of the We Mean Business Coalition, a PhD climate scientist and NASA Fellow.

Steve John (50)

Group Chief Communications and Brand Officer

Steve joined HSBC in December 2019 and was appointed to the Group Executive Committee in April 2021. He has a wealth of senior communications, public policy and leadership experience acquired across a number of multinational and charitable organisations. Steve was previously a partner and Global Director of Communications at McKinsey & Company from 2014 to 2019. He has also held roles with Bupa as Global Director of Corporate Affairs and PepsiCo as Director of Corporate Affairs for their UK and Ireland franchises.

John Hinshaw (53)

Group Chief Operating Officer

John became Group Chief Operating Officer in February 2020, having joined HSBC in December 2019. He is Chairman of HSBC Global Services Limited and a Director of HSBC Innovation Bank Limited. John was previously Executive Vice President of Technology and Operations and Chief Customer Officer at Hewlett Packard and Hewlett Packard Enterprise, and has held senior executive positions at Verizon and Boeing. John serves on the boards of Sysco Corporation and Illumio, Inc., and has previously served on the boards of BNY Mellon, DocuSign and the National Academy Foundation.

Pam Kaur (60)

Group Chief Risk and

Compliance Officer

Pam was appointed Group Chief Risk and Compliance Officer in 2021, having been Group Chief Risk Officer since 2020. She is a Director of the Hongkong and Shanghai Banking Corporation Limited. Since joining HSBC in 2013, her roles included Group Head of Internal Audit and Head of Wholesale Market and Credit Risk. Since qualifying as a chartered accountant with Ernst & Young, Pam held various senior audit, compliance, finance and operations roles with Deutsche Bank, the Royal Bank of Scotland Group, Lloyds TSB and Citigroup. She serves as a non-executive Director of abrdn plc.

Bob Hoyt (59)

Group Chief Legal Officer

Bob joined HSBC as Group Chief Legal Officer in January 2021. He was previously Group General Counsel at Barclays from 2013 to 2020. Prior to that, he was General Counsel and Chief Regulatory Affairs Officer for PNC Financial Services Group. Bob has served as General Counsel and Senior Policy Adviser to the US Department of the Treasury under Secretary Henry M. Paulson Jr, and as Special Assistant and Associate Counsel to the White House under President George W. Bush.

David Liao (51)

Co-Chief Executive,

The Hongkong and Shanghai Banking Corporation Limited

David was appointed Co-Chief Executive of the Asia-Pacific region in 2021. He is also a Director of the Bank of Communications Co., Limited, and Hang Seng Bank Limited. David joined HSBC in 1997, with previous roles including: Head of Global Banking Coverage for Asia-Pacific; President and Chief Executive of HSBC China; Head of Global Banking and Markets, HSBC China; and Treasurer and Head of Global Markets, HSBC China.

Nuno Matos (56)

Chief Executive Officer,

Wealth and Personal Banking

Nuno was appointed Chief Executive Officer of Wealth and Personal Banking in 2021. Since joining HSBC in 2015 from Santander Group, he has held various roles, most recently as Chief Executive Officer of HSBC Bank plc and HSBC Europe. He has also held the positions of Chief Executive Officer of HSBC Mexico and Regional Head of Retail Banking and Wealth Management for Latin America. He is currently the Chairman of MP Payments Group Limited.

Michael Roberts (63)

Chief Executive Officer,

HSBC USA and Americas

Michael was appointed Chief Executive Officer of HSBC USA when he joined HSBC in 2019. He became Chief Executive Officer of the Americas with oversight responsibility for Canada and Latin America in 2021. He is a Director of HSBC Bank Canada; Director, President and Chief Executive Officer of HSBC North America Holdings Inc.; and Chairman of HSBC Bank USA, N.A., HSBC USA Inc and HSBC Latin America Holdings (UK) Limited. Previously, Michael spent over 30 years at Citigroup in a number of senior leadership roles, most recently as Global Head of Corporate Banking and Capital Management and Chief Lending Officer.

Stephen Moss (57)

Regional Chief Executive Officer, Middle East, North Africa and Türkiye

Stephen was appointed Regional Chief Executive Officer for the Middle East, North Africa and Türkiye in 2021. He has held a series of roles in Asia, the UK and the Middle East since joining HSBC in 1992, including as Chief of Staff to the Group Chief Executive and overseeing the Group's mergers and acquisitions, and strategy and planning activities. Stephen is a Director of HSBC Bank Middle East Limited, HSBC Middle East Holdings B.V, HSBC Bank Egypt S.A.E., HSBC Saudi Arabia and Saudi Awwal Bank.

Surendra Rosha (55)

Co-Chief Executive,

The Hongkong

and Shanghai Banking

Corporation Limited

Surendra was appointed Co-Chief Executive of the Asia-Pacific region in 2021. He is a Director of The Hongkong and Shanghai Banking Corporation Limited, HSBC Global Asset Management Limited and HSBC Bank Malaysia Berhad. Surendra joined HSBC in 1991 and has held several senior positions within Global Banking and Markets, including Head of Global Markets in Indonesia and Head of Institutional Sales, Asia-Pacific. He previously held the position of Chief Executive for HSBC India and Head of HSBC's financial institutions group for Asia-Pacific.

Barry O'Byrne (48)

Chief Executive Officer,

Global Commercial Banking

Barry was appointed Chief Executive Officer of Global Commercial Banking in 2020, having served in the role on an interim basis since August 2019. He joined HSBC in 2017 as Chief Operating Officer for Commercial Banking. Before joining HSBC, Barry worked at GE Capital for 19 years where he held a number of senior leadership roles, including Chief Executive Officer and Chief Operating Officer for GE Capital International.

John David Stuart

(known as Ian Stuart) (60)

Chief Executive Officer,

HSBC UK Bank plc

Ian has been Chief Executive Officer of HSBC UK Bank plc since 2017, having joined HSBC as Head of Commercial Banking in the UK and Europe in 2014. He has worked in financial services for over 40 years, previously holding roles at the Royal Bank of Scotland Group and Barclays.

Ian holds an Honorary Masters and Honorary Doctorate degree for his services to the banking sector. He is a member of the UK Finance Board, the UK Investment Council and a business ambassador for Meningitis Now.

Additional members of the Group Executive Committee

Noel Quinn

Georges Elhedery

Aileen Taylor

Biographies are provided on pages 239 and 243.

Board and senior management diversity

We value difference

Diversity and inclusion are embedded within the culture of HSBC. The Board remains committed to having an inclusive culture that recognises the importance of
gender, social and ethnic diversity, and the benefits gained from different perspectives.

This section outlines the key diversity and inclusion metrics for Board members and executive management as at 31 December 2023. This includes tenure, age, skills and experience, as well as gender and ethnic representation.

Gender and ethnic diversity

The Financial Conduct Authority requires all listed companies to publish in their Annual Report and Accounts information on female and ethnic heritage representation on the Board and in senior management. The tables below outline the current gender and ethnic diversity of the HSBC Holdings Board and executive management reflecting data gathered through self-identification.

Gender Ethnic diversity

	Board members			Executive management²
	Number	%	Number of senior positions¹	Number	%
Male	8	53	4	15	79
Female	7	47	0	4	21
Other	-	-	-	-	-
Not specified/prefer not to say	-	-	-	-	-

	Board members			Executive management²
	Number	%	Number of senior positions¹	Number	%
White British or other White (including minority-White groups)	10	67	4	13	69
Mixed/multiple ethnic groups	-	-	-	1	5
Asian/Asian British	3	20	-	3	16
Black/African/Caribbean/Black British	-	-	-	-	-
Other ethnic groups, including Arab	2	13	-	1	5
Not specified/prefer not to say	-	-	-	1	5
1 Senior positions on the Board comprise the Group Chairman, Group Chief Executive, Group Chief Financial Officer and Senior Independent non-executive Director. 2 Executive management comprises the Group Chief Executive, his direct reports, and the Group Company Secretary and Chief Governance Officer.

Board composition, tenure and age

2 Executive Directors

13 Non-executive Directors

1 Tenure of a non-executive Director is calculated by reference to the date of their election by shareholders following their appointment.

Skills and experience

The summary below provides an overview of the skills and experiences held by the non-executive Directors on the Board. This is based on the current skills matrix, which is reviewed annually by the Nomination & Corporate Governance Committee to ensure that the Board has the skills and experience required to effectively discharge its duties and to support succession planning discussions. The skills and experiences of the newly appointed non-executive Directors are also included in the below extract.

How we are governed

We are committed to high standards of corporate governance. The Group has a comprehensive range of policies and procedures in place designed to help ensure that it is well managed, with effective oversight and controls.

Board and executive governance

The Board, led by the Group Chairman, is responsible among other matters for:

- promoting the Group's long-term success and delivering sustainable value to shareholders;

- establishing and approving the Group's strategy and objectives, and monitoring the alignment of the Group's purpose, strategy and values with the desired culture and standards;

- setting the Group's risk appetite and monitoring the Group's risk profile;

- approving and monitoring capital and financial resource plans for achieving strategic objectives, including material transactions;

- considering and approving the Group's technology and environmental, social and governance strategies;

- ensuring effective engagement with, and encouraging participation from, shareholders and other key stakeholders;

- approving the appointment and remuneration of Directors, including Board roles;

- reviewing the Group's overall corporate governance arrangements; and

- providing entrepreneurial leadership of the Group within a framework of prudent and effective controls.

The Board's responsibilities are set out in a schedule of matters reserved within its terms of reference, which are available on our website at www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities. The Board's powers are subject to relevant laws, regulations and HSBC's articles of association.

The role of the independent non-executive Directors is to support the development of strategy, oversee risk, hold management to account and ensure the executive Directors are discharging their responsibilities properly, while creating the right culture to encourage constructive challenge. Further details on the independence of the Board can be found in the Nomination & Corporate Governance Committee report on page 262. Non-executive Directors also review the performance of management in meeting agreed goals and objectives. The Group Chairman meets with the non-executive Directors without the executive Directors in attendance after Board meetings and otherwise, as necessary.

The roles of Group Chairman and Group Chief Executive are separate. There is a clear division of responsibilities between the leadership of the Board by the Group Chairman, and the executive responsibility for day-to-day management of HSBC's business, which is undertaken by the Group Chief Executive.

The majority of Board members are independent non-executive Directors. At 31 December 2023, the Board comprised the Group Chairman, 12 non-executive Directors, and two executive Directors who are the Group Chief Executive and the Group Chief Financial Officer. As previously announced, David Nish will not stand for
re-election at the Annual General Meeting ('AGM') on 3 May 2024.

For further details of Board members' career backgrounds, skills, experience and external appointments, see their biographies on page 239, and for a breakdown of the diversity and skills of the Board and senior management, see page 247.

Operation of the Board

The Board is ordinarily scheduled to meet nine times a year. In 2023, the Board held 11 meetings. For further details on attendance at those meetings, see page 249. The Board agenda is agreed by the Group Chairman, working with both the Group Chief Executive and the Group Company Secretary and Chief Governance Officer. For further information, see 'Board matters considered and shareholder engagement' on page 254.

The Group Company Secretary and Chief Governance Officer, the Group Chief Risk and Compliance Officer and the Group Chief Legal Officer are regular attendees at Board meetings. The non-executive Chairman of The Hongkong and Shanghai Banking Corporation Limited is also a regular attendee at most Board meetings. The chief executive officers of the three global businesses attend Board strategy discussions, and other senior executives attend Board meetings for specific items as required.

In addition, as agreed by the Board, the Board Oversight Sub-Group is called on an ad hoc basis where necessary. Such meetings are an informal mechanism for a smaller group of Board members and management to discuss emerging issues and upcoming Board matters. The Board Oversight Sub-Group was not convened in 2023.

Board roles, responsibilities and meeting attendance

The table below sets out the Board members' respective roles, responsibilities and attendance at Board meetings and the AGM in 2023. For a full description of key Board members' responsibilities, see www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities.


Group Chairman Mark E Tucker^2,3	12/12	- Provides effective leadership of the Board and promotes the highest standards of corporate governance practices. - Leads the Board in providing strong strategic oversight and setting the Board's agenda, culture and values. - Leads the Board in challenging management's thinking and proposals, and fosters open and constructive debate among Directors. - Maintains internal and external relationships with key stakeholders, and communicates investors' views to the Board. - Organises periodic monitoring and evaluation, including externally facilitated evaluation, of the performance of the Board, its committees and individual Directors. - Leads on succession planning for the Board and its committees, ensuring appointments reflect diverse cultures, skills and experiences.
Executive Director Group Chief Executive Noel Quinn³	12/12	- Leads and directs the implementation of the Group's business strategy, embedding the organisation's culture and values. - Leads the Group Executive Committee with responsibility for the day-to-day operations of the Group, under authority delegated to him from the Board. - Maintains relationships with key internal and external stakeholders including the Group Chairman, the Board, customers, regulators, governments and investors. - Maintains responsibility and accountability for the Group's and its employees' compliance with applicable laws, codes, rules and regulations, good market practice and HSBC's own standards.
Executive Director Group Chief Financial Officer Georges Elhedery^3,4	12/12	- Supports the Group Chief Executive in developing and implementing the Group strategy, and recommends the annual budget and long-term strategic and financial resource plan. - Leads the Finance function and is responsible for effective financial and regulatory reporting, including the effectiveness of the processes and controls, to ensure the financial control framework is robust and fit for purpose. - Maintains relationships with key stakeholders including shareholders.
Non-executive Director Senior Independent Director David Nish^3,5,6	10/12	- Supports the Group Chairman, acting as intermediary for non-executive Directors when necessary. - Leads the non-executive Directors in the oversight of the Group Chairman, supporting the clear division of responsibility between the Group Chairman and the Group Chief Executive. - Listens to shareholders' views if they have concerns that cannot be resolved through the normal channels.
Non-executive Directors		- Develop and approve the Group strategy. - Challenge and oversee the performance of management in achieving agreed corporate goals and objectives. - Approve the Group's risk appetite and review risk profile and performance. - Contribute to the assessment and monitoring of culture. - Maintain internal and external relationships with the Group's key stakeholders. -
Geraldine Buckingham^3,5	12/12
Rachel Duan^3,5	12/12
Dame Carolyn Fairbairn^3,5,6	10/12
James Forese^3,5	12/12
Ann Godbehere^4,5	3/3
Steven Guggenheimer^3,5,6	11/12
Dr José Antonio Meade Kuribreña^3,5,7	12/12
Kalpana Morparia^3,4,5	10/10
Eileen Murray^3,5,6	11/12
Brendan Nelson^4,5	3/3
Jackson Tai^3,5,6,8	6/7
Swee Lian Teo^4,5	2/2
Group Company Secretary and Chief Governance Officer Aileen Taylor		- Maintains strong and consistent governance practices at Board level and throughout the Group. - Supports the Group Chairman in ensuring effective functioning of the Board and its committees, and transparent engagement between senior management and non-executive Directors. - Facilitates induction and professional development of non-executive Directors. - Advises and supports the Board and management in ensuring effective end-to-end governance and decision making across the Group.

1 The total number of meetings comprised nine scheduled meetings, two ad hoc meetings and the AGM.

2 The non-executive Group Chairman was considered to be independent on appointment.

3 Attended the AGM on 5 May 2023.

4 Georges Elhedery joined the Board effective 1 January 2023. Kalpana Morparia joined the Board effective 1 March 2023. Ann Godbehere and Brendan Nelson joined the Board effective 1 September 2023. Swee Lian Teo joined the Board effective 1 October 2023.

5 Independent non-executive Director. All of the non-executive Directors are considered to be independent of HSBC. There are no relationships or circumstances that are likely to affect any individual non-executive Director's judgement. All non-executive Directors have confirmed their independence during the year.

6 Meetings held on 9 March 2023, 16 March 2023 and 8 November 2023 were called at short notice. Due to prior commitments Dame Carolyn Fairbairn was unable to attend on 9 March 2023, David Nish, Jackson Tai and Dame Carolyn Fairbairn were unable to attend on 16 March 2023, and David Nish and Steven Guggenheimer were unable to attend on 8 November 2023. Due to prior commitments Eileen Murray was unable to attend the Board meeting in September 2023.

7 Dr José Antonio Meade Kuribreña was appointed as the independent non-executive Director with responsibility for workforce engagement on 1 June 2022. Further information can be found on page 257.

8 Jackson Tai retired from the Board on 5 May 2023.

Relationship between the Board and senior management

The Board delegates day-to-day management of the business and implementation of strategy to the Group Chief Executive. The Group Chief Executive is supported in his management of the Group by recommendations and advice from the Group Executive Committee ('GEC'), an executive forum comprising members of senior management that include chief executive officers of the global businesses and regions, as well as functional heads. For further details of the senior management team, see page 244.

All Directors are encouraged to have contact with management at all levels, and have full access to all relevant information. Visits to local business operations and meetings with local management are arranged for the non-executive Directors when they attend Board meetings in different locations, and when travelling for other reasons. Senior management often attend alongside Directors' stakeholder engagements (see 'Board decision making and engagement with stakeholders' on page 20). The workforce engagement non-executive Director attends the GEC on occasion to provide senior management with updates on workforce engagements carried out by the Board, including relevant Board observations. For further details, see 'Board stakeholder and workforce engagement' on page 257.

Executive governance

The GEC promotes the tone from the top, set by the Board, across the organisation. This helps to ensure that our colleagues follow our values, and foster a culture that delivers against our purpose of opening up a world of opportunity. At its meetings, the GEC dedicates time to reflect on our purpose and values and how they are demonstrated in the day-to-day course of business.

During 2023, the GEC undertook an extensive review of the Group's strategy with a view to building upon its unique strengths. For further details of our strategy, see page 11.

The GEC has led and overseen the delivery of a number of strategic projects to simplify how we get things done, by identifying operating efficiencies, reducing complexity and optimising costs. The GEC will continue to focus on simplification throughout 2024.

The GEC's operating rhythm helps to facilitate end-to-end governance between senior leadership and the Board.

The operating rhythm has the following three pillars:

- regular check-in meetings to review and discuss current and emerging trends and issues;

- a monthly meeting to review the performance of each of the global businesses in principal geographical areas and legal entities, supported by the development and introduction of a new key performance indicators architecture in 2023; and

- a strategy- and governance-focused meeting, which is generally held two weeks in advance of each Board meeting.

Separate committees have been established to provide specialist oversight for matters delegated to the Group Chief Executive and senior management. For further details of these committees, see page 252.

To further support our senior management, we have dedicated corporate governance officers who support and advise legal entities, global businesses and global functions on our corporate governance practices. These corporate governance officers serve to strengthen the consistency and effectiveness of our end-to-end governance arrangements, and support connectivity and information sharing.

Subsidiary governance

We are committed to maintaining high standards of corporate governance throughout the Group. All subsidiary boards and their respective businesses are required to have in place effective governance arrangements with regard to the businesses' nature, size, location and the sectors in which they operate.

The subsidiary accountability framework

The subsidiary accountability framework aims to balance appropriate governance oversight by the Group with each subsidiary's local legal and regulatory duties. The framework supports the Group in promoting effective governance arrangements across its subsidiaries by:

- setting out high level principles to enhance communications and connectivity; and

- ensuring a shared and consistent understanding of the Group's strategic objectives, culture and values.

The subsidiary accountability framework also focuses on ensuring that each subsidiary is led by an effective board with an appropriate balance of skills, diversity, experience and knowledge, having regard to the nature of the subsidiary's business and local legal and regulatory requirements. Board composition of the Group's subsidiaries is kept under review as part of succession planning.

The framework is subject to periodic review by the Board and/or the Nomination & Corporate Governance Committee and updated as required to ensure it is aligned to best practice.

The role of principal subsidiaries

Certain subsidiaries are designated formally by the Board as principal subsidiaries. In addition to their obligations under their respective local laws and regulations, principal subsidiaries, supported by regional company secretaries, perform a critical role in ensuring effective and high standards of governance across the Group and in overseeing the implementation of the subsidiary accountability framework in the regions for which they are responsible.

Representatives from principal subsidiaries attend the Board and its committee meetings for relevant topics, including when the Board holds meetings outside of the UK. Chairs of the principal subsidiary risk and audit committees also regularly attend respective Group Risk Committee and Group Audit Committee meetings. Attendance and participation at these committees enhance the subsidiary directors' understanding of the challenges facing the Group and help to identify common challenges and share lessons learned. Such committee participation supplements the regular reports, certifications and escalations from principal subsidiaries' boards and their committees to the Board and relevant committee(s) of the Board.

The Group Chairman also interacts regularly with the chairs of the principal subsidiaries, including through the Chairman's Forum. The Chairman's Forum comprises the chairs of the principal subsidiaries and the chairs of the Group's audit, risk and remuneration committees, and where relevant, the Group Chief Executive, other non-executive Directors and relevant executive management, advisers and/or external experts. In 2023, the Chairman's Forum covered topics such as strategic business considerations, geopolitical issues, resolvability assessment requirements and separability, shareholder engagements, Group-wide connectivity of non-executive Directors, key regulatory themes, ESG insights, employee engagement and financial performance.

The Group Remuneration Committee Chair also hosted dedicated forums with chairs of principal subsidiaries to share key priorities for 2023 and the future. These sessions also provide an opportunity for review and input on proposed pay outcomes and allocation, before approval by the Group Remuneration Committee.

The principal subsidiaries are:


The Hongkong and Shanghai Banking Corporation Limited	Asia-Pacific
HSBC Bank plc	Europe, Bermuda (excluding Switzerland and UK ring-fenced activities)
HSBC UK Bank plc	UK ring-fenced bank and its subsidiaries
HSBC Middle East Holdings BV	Middle East, North Africa and Türkiye
HSBC North America Holdings Inc.	US
HSBC Latin America Holdings (UK) Limited	Mexico and Latin America
HSBC Bank Canada¹	Canada

1 On 29 November 2022, HSBC announced the sale of HSBC Bank Canada to Royal Bank of Canada, subject to regulatory and governmental approvals. On 21 December 2023, the Canadian Federal Government's Minister of Finance approved the sale, and the transaction is expected to close in the first quarter of 2024.

Subsidiary director development

The Group is dedicated to supporting the continuing professional development of its subsidiary directors. In May 2023, a two-day non-executive director summit was held in Hong Kong, which brought together over 100 non-executive directors from across the Group. Connectivity was a key theme and attendees were reminded of the importance of the subsidiary accountability framework in driving consistent governance standards and ensuring connectivity and engagement across our non-executive director community. The agenda included sessions on strategy and financial performance; Asia-Pacific; subsidiary governance; the macroeconomic environment; diversity and inclusion; sustainability; technology; finance; and risk.

The Bank Director Programme, launched in 2022, continues to support subsidiaries with succession planning by developing and equipping internal talent to undertake internal non-executive director roles on subsidiary boards.

Following the success of the Bank Director Programme, a Bank Chair Programme is being developed to ensure existing and prospective chairs of subsidiary boards and board committees have the requisite knowledge, skills and behaviours to be effective chairs.

Board and Group Executive committees and working groups

The Board delegates oversight of certain audit, risk, remuneration, nomination and governance matters to its committees. Each standing Board committee is chaired by a non-executive Director and has a remit to cover specific topics in accordance with their respective terms of reference. Only the Group Chairman and the independent non-executive Directors are members of Board committees. Details of the work carried out by each of the Board committees can be found in the respective committee reports from page 262.

The Chairman's Committee provides the Board with the opportunity to consider ad hoc and routine matters between scheduled Board meetings. All Board members are invited to attend Chairman's Committee meetings.

As part of its ongoing review of the effectiveness of the Group's governance arrangements, and in response to the findings from the Board evaluation in 2023, the Board has decided to establish a new Group Technology Committee to oversee the Group's technology strategy and alignment with the overall Group strategy. The committee, which will be in place from 1 March 2024, will have responsibility for areas where technology is fundamental to strategic delivery, including innovation, data and cyber risk frameworks. As a result, the Technology Governance Working Group, which was established to support oversight of technology strategy, governance and emerging risks, will be demised from the same date. The terms of reference and membership of the Board committees are available at www.hsbc.com/who-we-are/leadership-and-governance/board-committees.

The GEC has established a number of committees to support the Group Chief Executive and senior management in their running of the business, and provide specialist oversight for matters delegated to them, including capital and liquidity, risk management, disclosure and financial reporting, restructuring and investment considerations, transformation oversight, ESG matters and talent and development. These committees also help fulfil their responsibilities under the Senior Managers and Certification Regime.

During 2023, new committees were established including the Sustainability Execution Committee to provide greater oversight of ESG matters. In addition, the Transformation Oversight Executive Committee was demised and in its place the Change Prioritisation Oversight Committee was formed. The committee provides oversight of the Group's change portfolio, focusing on investment oversight and prioritisation, as well as delivery and execution of ongoing initiatives across the Group.

Board Chair: Mark Tucker

Chairman's Committee	Nomination & Corporate Governance Committee	Group Audit Committee	Group Risk Committee	Group Remuneration Committee	Informal governance Board Oversight Sub-Group

Chair: Mark Tucker	Chair: Mark Tucker	Chair: David Nish¹	Chair: James Forese	Chair: Dame Carolyn Fairbairn	Chair: Mark Tucker
	See page 262	See page 266	See page 274	See page 279	Technology Governance Working Group²
1 Brendan Nelson will be appointed as chair from 21 February 2024. 2 The Technology Governance Working Group will be demised on 1 March 2024. The Group Technology Committee will be established on the same date.					Co-Chairs: Eileen Murray and Steven Guggenheimer
					Chairman's Forum
					Chair: Mark Tucker

Group Executive Committee Chair: Noel Quinn

Acquisitions and Disposals Committee	Group Disclosure and Controls Committee	Group People Committee	Group Risk Management Meeting	Holdings Asset and Liabilities Committee	Change Prioritisation and Oversight Committee	Environmental, Social and Governance Committee

Chair: Noel Quinn	Chair: Georges Elhedery	Chair: Elaine Arden	Chair: Pam Kaur	Chair: Georges Elhedery	Chair: Georges Elhedery	Co-Chairs: Celine Herweijer and Georges Elhedery
						Sustainability Execution Committee
						Co-Chairs: Celine Herweijer and Barry O'Byrne

Board induction and training

The Group Company Secretary and Chief Governance Officer works with the Group Chairman to ensure that all Board members receive appropriate training, both individually and collectively, throughout their time on the Board. On appointment, new Directors are provided with tailored and comprehensive induction programmes to fit with their individual experiences and needs, including the process for managing conflicts.

During 2023, Kalpana Morparia, Ann Godbehere, Brendan Nelson and Swee Lian Teo were welcomed to the Board as non-executive Directors. Biographies for each can be found from page 239.

The Group Company Secretary and Chief Governance Officer also helps to arrange and deliver the induction programme through formal briefings and introductory sessions with other Board members, senior management, legal counsel, auditors, tax advisers and regulators, as appropriate. Topics covered in the induction programme include, but are not limited to: purpose and values; culture and leadership; governance and stakeholder management; Directors' legal and regulatory duties; recovery and resolution planning; anti-money laundering and anti-bribery; technical and business briefings; and strategy.

The induction process is often initiated before appointment to allow each new Board member to contribute meaningfully from appointment, such as in February 2023 when Kalpana Morparia joined the Board meeting as an observer before she was appointed to the Board the following month. The structure of the induction supports good information flows within the Board and its committees, as well as between senior management and non-executive Directors, providing a clear understanding of our culture and way of operating.

In January 2023, the Nomination & Corporate Governance Committee agreed the proposed approach to Board training for the year. It was

agreed that the training programme would include key topics relevant to the Directors' respective roles and recent developments, in areas such as corporate governance, recovery and resolution, and technology. Where appropriate, the training sessions were facilitated by external presenters who were able to provide insights into geopolitical matters, macroeconomic issues and investor sentiment. The training sessions were held as part of scheduled Board meetings to allow for in-person interactions as much as possible.

Directors were also issued routine training modules that all colleagues must complete annually. During 2023, this training covered topics including risk management, cybersecurity, sustainability, health, safety and well-being, financial crime, and data.

Non-executive Directors also discussed individual development areas with the Group Chairman as part of their ongoing performance discussions with regard to their contributions on the Board. The Group Company Secretary and Chief Governance Officer makes appropriate arrangements for any additional training needs identified using internal resources, or otherwise, at HSBC's expense.

Members of Board committees receive relevant training as appropriate. Further details on any specific training commissioned by Board committees can be found in the respective committee reports. Directors may take independent professional advice at HSBC's expense.

Board Directors who serve on principal subsidiary boards receive training that is pertinent to circumstances and context relevant to those boards. Opportunities exist for the principal subsidiary committee chairs to share their understanding of specific areas with the Board Directors as part of the Chairman's Forum. For further details, see 'The role of principal subsidiaries' on page 250.

Directors' induction and ongoing development in 2023
Director	Induction¹	Strategy and business briefings²	Risk and control³	Corporate governance, ESG and other reporting matters⁴	Board global mandatory training⁵
Geraldine Buckingham	ô	l	l	l	l
Rachel Duan	ô	l	l	l	l
Georges Elhedery	l	l	l	l	l
Dame Carolyn Fairbairn	ô	l	l	l	l
James Forese	ô	l	l	l	l
Ann Godbehere⁶	l	l	l	l	l
Steven Guggenheimer	ô	l	l	l	l
José Antonio Meade Kuribreña	ô	l	l	l	l
Kalpana Morparia	l	l	l	l	l
Eileen Murray	ô	l	l	l	l
Brendan Nelson⁶	l	l	l	l	l
David Nish	ô	l	l	l	l
Swee Lian Teo⁶	l	l	l	l	l
Noel Quinn	ô	l	l	l	l
Mark Tucker	ô	l	l	l	l

Matter considered

Matter not considered

1 The induction programme was delivered through formal briefings and introductory sessions including topic-specific deep dives, with Board members, senior management, legal counsel, auditors, tax advisers and regulators, as appropriate. Topics covered included, but were not limited to: purpose and values; culture and leadership; governance and stakeholder management; Directors' legal and regulatory duties; recovery and resolution planning; anti-money laundering and anti-bribery; technical and business briefings; and strategy.

2 Directors participated in business strategy, market development and business briefings, which are global, regional and/or market-specific. Examples of specific sessions held in 2023 included: 'Technology and the future of artificial intelligence', 'WPB customer-centricity improvement plan', and 'Investor sentiments'.

3 Directors received risk and control training and briefings. Examples of specific sessions held in 2023 included: 'Recovery and resolution' and 'Capital management'.

4 Directors received training in Board meetings on: 'Board stakeholder engagement and management' and various ESG development updates. Directors received additional training through their attendance at forums such as the Chairman's Forum, Remuneration Committee Chairs' Forum and the Non-Executive Director Summit.

5 Global mandatory training, issued to all Directors, mirrored training undertaken by all employees, including senior management. This included: management of risk under the risk management framework; cybersecurity risk; health, safety and well-being; sustainability; financial crime, including understanding money laundering, terrorist financing, tax transparency, sanctions, fraud and bribery and corruption risks; our values, including workplace harassment; and data privacy and data literacy.

6 Ann Godbehere and Brendan Nelson, who joined the Board effective 1 September 2023, and Swee Lian Teo, who joined the Board effective 1 October 2023, only participated in training modules that were available to them since their respective joining dates.

Board matters considered and shareholder engagement

During 2023, the Board remained focused on HSBC's strategic direction, overseeing performance, and risk. It considered performance against financial and other strategic objectives, key business challenges, emerging risks, business development, investor relations and the Group's relationships with its stakeholders. The end-to-end governance framework facilitated discussion on strategy and performance by each of the global businesses and across the principal geographical areas, which enabled the Board to support executive management with its delivery of the Group's strategy.

Key areas of focus

The Board's key areas of focus in 2023 are set out by theme below.

Strategy and business performance

The Group remains focused on building a sustainable platform for growth by increasing returns for investors, enhancing customer service, and creating capacity for future investment. The Board reviewed progress within the Group's global businesses and regions against its four strategic pillars: Focus, Digitise, Energise and Transition. At each Board meeting in 2023, the Board discussed the Group's strategic performance and opportunities to track strategic execution and delivery.

Environmental, social and governance

In 2020, the Group announced a climate ambition to align its financed emissions to net zero by 2050, and to become net zero in its own operations and supply chain by 2030. The Group aims to achieve this by supporting clients' transition to a net zero carbon economy and focusing on sustainable finance opportunities, as well as by reducing the carbon emissions in its own operations.

The Board takes overall responsibility for ESG strategy, overseeing executive management in developing the approach, execution and associated reporting. The Board considered whether to establish a Board committee dedicated to ESG issues, but instead decided that the best way to support the oversight and delivery of the Group's climate ambition and ESG strategy was to retain governance at Board level. The GEC further enhanced its governance model of ESG matters with the introduction of a new Sustainability Execution Committee and supporting forums. These support senior management in the operationalisation of the Group's sustainability strategy, through the oversight of the sustainability execution programme. For further details of the Sustainability Execution Committee and the sustainability execution programme, see page 88.

In 2023, the Board oversaw the implementation of ESG strategy through regular dashboard reports and detailed updates including: review and approval of the net zero transition plan, deep dives on the sustainability execution programme, reviews of net zero-aligned policies and climate-aligned financing initiatives.

Financial decisions

The Board and its dedicated committees approved key financial decisions throughout the year, including the Annual Report and Accounts 2022, the Interim Report 2023 and the first quarter and the third quarter Earnings Releases.

At the end of 2022, the Board approved the 2023 financial resource plan. The Board monitored the Group's performance against the approved plan, as well as the plans of each of the global businesses. The Board also approved the renewal of the various debt issuance programmes. In January 2024, the Board approved the financial resource plan for 2024.

The Board adopted a dividend policy designed to provide sustainable cash dividends, while retaining the flexibility to invest and grow the business in the future, supplemented by additional shareholder distributions, if appropriate. For the financial year 2023, the Group

reverted to paying quarterly dividends, and achieved a dividend payout ratio of 50% of reported earnings per ordinary share ('EPS'), in line with our published target for 2023 and 2024. EPS for this purpose excludes material notable items and related impacts, including the sale of our retail banking operations in France, the planned sale of the banking business in Canada and the acquisition of SVB UK. In addition to dividend payments, HSBC announced share buy-backs of up to $2bn each on 2 May 2023 and 1 August 2023, and a further share buy-back of up to $3bn on 30 October 2023, bringing the total announced for 2023 to $7bn.

On 21 February 2023, an interim dividend of $0.23 per share for the 2022 full-year was announced, followed by interim dividends of $0.10 each on 2 May 2023, 1 August 2023 and 30 October 2023. For further details of dividend payments, see page 435.

Risk, regulatory and legal considerations

The Board, advised by the Group Risk Committee, promotes a strong risk governance culture that shapes the Group's risk appetite and supports the maintenance of a strong risk management framework, giving consideration to the measurement, evaluation, acceptance and management of risks, including emerging risks.

The Board considered the Group's approach to risk including its regulatory obligations. A number of key frameworks, control documents, core processes and legal responsibilities were also reviewed and approved as required by the Board and/or its relevant committees. These included:

- the Group's risk appetite framework and risk appetite statement;

- the individual liquidity adequacy assessment process;

- the individual capital adequacy assessment process;

- the Group's obligations under the Modern Slavery Act and approval of the Modern Slavery and Human Trafficking Statement;

- review and approval of the self-assessment to address the BoE's Resolvability Assessment Framework;

- review and approval of the Group's risk data aggregation and risk reporting framework aligned to the Basel Committee on Banking Supervision 239 Principles;

- review of the latest PRA Operational Resilience self-assessment regulatory submission;

- annual review and approval of the internal controls framework; and

- the revised terms of reference for the Board and Board committees.

The Board also reviewed and monitored the implications of geopolitical and macroeconomic developments during the year, both directly and by way of updates from the Group Risk Committee, and received regular updates on the Group's risk profile, including in relation to financial crime risk.

Technology

Throughout the year, the Board received detailed updates on technology and innovation from the Group Chief Operating Officer, including on the implementation of the technology strategy and key strategic business initiatives.

Following a detailed update at the Board meeting in May 2023, at the Board's request, management engaged a third party professional services firm to review the technology strategy and provide industry and peer insights. The Board received a number of updates on the review during the second half of 2023, and recommendations were presented at the December 2023 Board meeting.

Members of the Board were also closely involved in the hiring process for the new Group Chief Information Officer, who will join the Group at the end of February 2024.

In addition, the Technology Governance Working Group continued to oversee the Group's governance of technology, and supported connectivity with the principal subsidiaries on key technology initiatives. From 1 March 2024, the Technology Governance Working Group will be demised and the Group Technology Committee will be established on the same date.

People and culture

The Board continued to dedicate time in its meetings to discuss people-related and culture-related issues, with these topics remaining an important part of its focus. Each scheduled Board meeting begins with a 'culture moment', which helps to ensure that the right cultural tone is set from the top, and sets the right cultural tone for Board discussion. To help raise its awareness of employee and other stakeholder perspectives, Board meetings and dedicated reports feature insights into behaviours within the Group, which demonstrate alignment to its purpose and values. Board papers highlight relevant stakeholder considerations, including in connection with employees. The Board also gains valuable cultural insights through its many personal interactions with the workforce and other stakeholders. For further details see 'Board decision making and engagement with stakeholders' on page 20.

The Board also learns of people and culture matters by way of presentations at the Chairman's Forum. The principal subsidiary chairs report on their respective approaches to workforce engagement as well as what they have learned from such engagements and other cultural insights. The Board also receives cultural insights from the all-employee Snapshot survey and broader reporting, which provide key data indicators, including on people's behaviours, sentiment and business outcomes. Through the work of the committees, the Board is also able to monitor how the Group's culture is working in practice by receiving people-related reports covering whistleblowing, conduct and investigations.

Board engagement with management and the wider workforce continued to remain a strong area of attention, particularly with the ongoing activities carried out by the dedicated workforce engagement non-executive Director. For further details of the work carried out by the workforce engagement non-executive Director, see page 257.

Governance

The Board continued to oversee the governance, smooth operation and oversight of the Group and its principal and material subsidiaries, including monitoring compliance with the UK Corporate Governance Code, the Hong Kong Corporate Governance Code and the Companies Act 2006. Governance featured prominently in the Board agendas for the year and helped to shape strategic direction and decision taking on key issues. To see how the Board considered principal decisions in relation to our strategy, see 'Principal strategic decisions' on pages 22 and 23.

The Board and senior management continued to support further improvements to various governance initiatives to encourage simplification and promote effective decision making in the business. Guidance and training for Board and committee paper templates took place across global businesses and functions throughout the course of the year to ensure a consistent approach for writing papers. In addition, to drive our simplification agenda, the Group-wide delegations of authority framework was reviewed and standardised, allowing for more efficient signing and execution of contracts and other documentation by directors and senior management across all entities.

In 2023, Jackson Tai retired as an independent non-executive Director. On 1 January 2023, Georges Elhedery joined the Board as Group Chief Financial Officer, and the following were appointed as independent non-executive Directors: Kalpana Morparia on 1 March 2023; Ann Godbehere and Brendan Nelson on 1 September 2023; and Swee Lian Teo on 1 October 2023. The Board, supported by the Nomination & Corporate Governance Committee, reviews the skills and experience of the Board on an ongoing basis. This ensures that the Board and its committees comprise the necessary skills, diversity, experience and competencies to discharge their responsibilities effectively. For further details of the review and changes to the Board, see the Nomination & Corporate Governance report on page 262. For further details of diversity of the Board, see page 247.

Board engagements with shareholders

In 2023, the Group Chairman and Group Chief Executive held a Q&A session with retail shareholders as part of the Informal Shareholders' Meeting in Hong Kong, and the Board held a Q&A session with shareholders as part of the 2023 AGM in the UK. Board members remained responsive to shareholder requests, and were particularly active following the 2023 AGM poll vote result. They continued to engage in constructive dialogue with top investors, including Ping An Asset Management Co. Ltd. The Group Chairman and the Senior Independent Director, often with the Group Company Secretary and Chief Governance Officer, engaged with a number of our large institutional investors in 16 meetings, including a large group gathering held with the members of The Investor Forum. The Group Chief Executive and the Group Chief Financial Officer, together and separately, attended over 100 meetings with investors. Key topics included our financial performance, updates on strategy and market presence, geopolitical risks and the macroeconomic outlook in key geographies.

For further details of the Group Remuneration Committee Chair's engagements with key investors and proxy advisory firms, and how they were taken into account by the Group Remuneration Committee in its decision making, see the Directors' remuneration report on page 279.

For further details of how the Board engaged with shareholders during 2023, see 'Board decision making and engagement with stakeholders' on page 20.

Board matters considered in 2023
Main topic	Sub-topic	Meetings at which topics were discussed¹
		Jan	Feb	Mar	May	Jun	Jul	Sep	Nov	Dec
Strategy	Group strategy	ô	l	l	l	l	l	l	l	l
	Regional strategy/global business strategy	l	l	l	l	l	l	l	l	l
	Environmental, social, governance	ô	l	l	l	l	l	l	l	l
Business and financial performance	Region/global business	l	l	ô	l	l	l	l	l	l
Business and financial performance	Financial performance	l	l	l	l	l	l	l	ô	l
Financial	Results and accounts	l	l	ô	ô	ô	l	ô	ô	ô
	Dividends	l	l	ô	ô	ô	l	ô	ô	ô
	Group financial resource planning	ô	ô	ô	ô	l	ô	l	ô	ô
Risk	Risk function	l	l	ô	l	l	l	l	ô	l
	Risk appetite	l	ô	ô	ô	ô	l	ô	ô	ô
	Capital and liquidity adequacy	ô	ô	l	l	l	ô	ô	ô	ô
Regulatory	Regulatory and legal matters²	l	l	l	l	l	l	l	ô	l
Regulatory	Regulatory matters with regulators in attendance³	ô	ô	ô	ô	l	ô	l	ô	ô
External	External insights	ô	ô	ô	ô	l	ô	l	ô	ô
Technology	Strategic and operational	l	ô	ô	l	ô	ô	l	l	l
People and culture	Purpose, values and engagement	l	l	ô	l	l	l	l	ô	l
Governance	Policies and terms of reference	ô	ô	ô	ô	ô	l	ô	ô	ô
	Board/committee effectiveness	l	ô	ô	ô	ô	l	ô	ô	l
	Appointment and succession	ô	l	l	ô	ô	l	l	ô	l
	Conflicts of interest	ô	l	ô	l	ô	l	l	ô	l
	Stakeholder/workforce engagement	ô	l	ô	l	l	l	l	ô	l
	Delegation of authority	l	l	ô	ô	ô	ô	l	ô	ô
	AGM and resolutions	l	l	l	l	ô	ô	l	ô	ô

Matter considered

Matter not considered

1 No Board meetings were held during April, August and October 2023.

2 Includes recovery and resolution planning, modern slavery and human trafficking, UK regulatory activities, and listing authority renewals.

3 Meetings attended by members of the Prudential Regulation Authority and the Financial Conduct Authority.

Board stakeholder and workforce engagement

The Board is committed to engaging with colleagues, which takes place in a two-way dialogue in a variety of forums. This helps build the Board's understanding of key themes and topics that are important to the workforce.

Since his appointment as dedicated workforce engagement non-executive Director in 2022, and in line with the Board's expectation of the role, José Meade has helped deliver a progressive programme of engagements throughout 2023. Outcomes from these engagements have helped inform discussions and decision making in the Boardroom, by taking into account the employee voice on related key themes and topics.

His dedicated role does not preclude other Board members from engaging with the workforce. It remains the responsibility of all Directors to consider diverse stakeholder views, including employees, across the Group.

For more examples of how the Board has engaged with the workforce and other stakeholders, see 'Board decision making and engagement with stakeholders' on page 20.

Workforce engagement programme

A structured workforce engagement programme has been in place throughout 2023 with a focus on topics aligned to the Group's four strategic pillars. The programme was structured around the Board's priorities and agenda in 2023. These included in-person engagements when the Board travelled to different regions for Board meetings, which were highly valued by colleagues and Board members alike.

The engagements formed the bases of José Meade's reports to the Directors, aligned to key Board agenda items including those in the geographies in which the Board met. Further engagement events, town halls and meetings with the workforce were scheduled with Board members based on their locality or coincidental travel throughout the year.

The engagement events were held both at scale and through more targeted dialogue in smaller groups, to accommodate the breadth of experience, geographical spread and range of seniority of our colleagues. These engagements were designed to promote open dialogue and two-way discussions between the Board and employees, allowing the Board to gain valuable insight on employee perspectives, and in turn inform its deliberations in decision making.

Cost of living crisis support

International Women's Day

Pay, reward and performance

Strategy and performance

Branch visit

HSBC graduate insights

Mexico town hall

Hyderabad office event

↓

Audience

London-based colleagues

Group-wide colleagues

Managing

Directors

Local branch colleagues

US-based graduates

Mexico and Latin America-based colleagues

Hyderabad and India-based colleagues

Location

London, UK

Various global and local events

Birmingham, UK, videoconference

Videoconference

Hong Kong

New York, US, and videoconference

Mexico City, Mexico, and videoconference

In person visit to Hyderabad, India office and videoconference

José Meade's connectivity with the employee resource groups formed part of the workforce engagement programme. He took part in the annual employee resource group summit in September to discuss his observations since taking on the workforce engagement role, and to hear feedback on how the Board could enhance support for employee resource groups. José also participated in meetings with the employee resource group to which he is aligned, UK Nurture. This helped him better understand their successes, the value of the network and agree how often and through which means he would connect with his employee resource group in 2024.

During the year, the Board acknowledged that relevant aspects of Board discussions on workforce engagement activities and matters, informed by the employee voice, needed to make their way back to management. In this way, relevant views could be taken into consideration when progressing workforce-related matters at the executive level. To facilitate this, José Meade committed to attending

the GEC and the Chairman's Forum to discuss the key themes and outcomes from the 2023 workforce engagements. Feedback gained from the GEC session attended in November 2023 re-emphasised the value colleagues put on the two-way dialogue with Board members. This feedback helped shape the 2024 workforce engagement programme.

The Board also regularly considers other forms of employee engagement to help be informed of initiatives and sentiment, and to plan for future engagement activities. The Chairman's Forum, held in December 2023, also discussed employee feedback gained through the Group's principal subsidiaries. José Meade presented to the Chairman's Forum an overview of workforce engagement over the course of 2023 and key themes arising. He will continue to discuss workforce engagement with the GEC and the Chairman's Forum during 2024.

Workforce engagement non-executive Director

"The value of Board-employee engagement is rooted in the Board's openness to challenge and ability to adopt new approaches in response."

Q&A with José Meade

Workforce engagement non-executive Director

Q: Since being appointed as the workforce engagement non-executive Director in 2022, what insights have you gained?

A: When I reflect on the Board's engagement with the workforce over the year, I am proud of the evolution of our approach since I took on the role. Having a dedicated programme aligned to Board priorities over the course of the year has enabled me to report to the Board on the most pertinent matters depending on our location and agenda. The year 2023 was a very productive year with respect to engaging with our workforce. I met with a large number of our colleagues on a regular basis during the year, and each event has provided me with different and equally valuable insights. I have learnt the value colleagues place on having two-way dialogue with the Board. Linked to this is our non-executive Director engagement with our employee resource groups. Each non-executive Director is aligned to one of our employee resource groups, and we listened to feedback that a more structured approach to non-executive Director engagement would be valuable during 2024. As a result, we held dedicated meetings for non-executive Directors to meet with their employee resource groups to agree the cadence for engagement and priorities in 2024.

Q: What are your reflections on the value of Board-employee engagement at HSBC?

A: Firstly, at every employee engagement event I attended during the year, I was able to hear directly from our colleagues - that is an irreplaceable and extremely valuable insight to gain as a non-executive Director. Having the employee voice in the Boardroom is crucial in equipping Directors with important context to better understand successes and challenges felt throughout the Group. It then helps empower the Board to make better recommendations and feedback to executive management with employee sentiment front-of-mind. At one of our branch visits, I was able to experience first-hand the level of care put into every single one of our clients, which was extraordinary. Following the visit, we got great feedback from the branch team that they were grateful for our time in recognising how our colleagues put customers at the centre of their work, and they said that our front-line staff were highly motivated by our kind words and encouragement.

The value of Board-employee engagement is rooted in the Board's openness to challenge and ability to adopt new approaches in response. The key outcomes we get from all our engagement events are discussed not only in the Boardroom, but with executive management and between our principal subsidiaries as well. It is this circular communication that is so important to make sure not only is the employee voice heard, but it forms a backdrop for Board and executive discussions and decisions. For instance, it was interesting to hear from graduates the importance of our hybrid working strategy to them, which was seen as a differentiator compared with competitors. Our Chairman's Forum discussed each of our regions' respective workforce engagement programmes in December, which was an invaluable session to understand regional differences in sentiment and where subsidiary Directors were focusing their time for 2024 activities.

Q: Where do you see opportunities for 2024?

A: We plan to build on the successes of 2023 and engage with more colleagues over the course of 2024. Our workforce engagement plan will continue to be guided by our Board priorities for the year and tightly aligned to our four strategic pillars. The plan incorporates, where possible, participation at colleague events already scheduled, which we will supplement with targeted engagement events. We also plan to enhance the visibility of management colleagues in critical roles or on executive committee succession plans to boards across the Group. Lastly, we will align Board member scheduled travel plans to workforce engagement activities in various regions, as well as work to identify how to engage with the workforce in geographies where Board travel is not envisaged.

Mexico Town Hall, Mexico City, November 2023

"The insight and reflections provided by the speakers was extremely useful as we had a mixture of local and global level input."

Workforce engagement non-executive Director activities during 2023

In 2023, José Meade undertook a variety of engagements in his role including:

Mexico

- Attended the annual Leones event in Quintana Roo, Mexico.

- Approximately 400 employees participated across businesses and functions.

- This event recognised our top performers in HSBC Mexico.

Hong Kong

- Visited employees at the HSBC Hong Kong flagship branch and the K11 Atelier Wealth Centre (which opened in October 2021 to provide high net worth wealth management services) to understand their perspective on working life.

- Participated in an in-person meeting with a small group of local managers in London to discuss the cost of living crisis in the UK.

- The group discussed the support that HSBC had provided to its employees in response, and considered ideas for further support.

- Met with US-based graduates both in-person and virtually to hear the perceptions of the next generation of talent at HSBC.

- Views were sought on topics such as expectation versus the reality of what it is like to work at HSBC, personal development opportunities and hybrid working successes and challenges.

Türkiye

- Participated in an in-person meeting with a diverse group of colleagues to share experiences and views on socio-economic challenges, career development, and pay and performance.

Global employee resource group summit

- Attended the virtual annual employee resource group summit and heard about the groups' leaders' successes, challenges and their respective look ahead for 2024.

- Connected with employee resource group representatives across multiple regions in the Group.

India

- Spent a day at our Hyderabad office learning about the history of our presence in India and the impact of our global service centres, as well as discussing the future of the workforce and how to create a supportive environment for professional growth.

- Also participated alongside nearly 5,000 colleagues in a 'Digitise' town hall, which discussed HSBC's digital strategy and the role played by colleagues in India.

Engagement highlights

Global Service Centre office visit, Hyderabad, December 2023

68		9,571
Virtual/physical sessions attended by non-executive Directors		Number of employees engaged virtually/physically

41		8,282
Virtual/physical sessions attended by workforce engagement non-executive Director		Number of employees engaged virtually/physically by workforce engagement non-executive Director

8		69%
Countries of engagement		Highest employee engagement survey response

Board and committee effectiveness, performance and accountability

The Board and its committees are committed to regular, independent evaluation of their effectiveness. In 2023, the Board performance review comprised an externally facilitated evaluation in accordance with the UK Corporate Governance Code.

During 2023, the Nomination & Corporate Governance Committee oversaw the process to appoint an independent service provider to evaluate the Board and its committees' effectiveness and performance. The Group Chairman led a formal tender process, with the support of the Group Company Secretary and Chief Governance Officer, which included a desktop review of proposals and a panel interview with prospective firms to discuss their approach to the evaluation. The panel interviews included the Group Chairman, three non-executive Directors, and the Group Company Secretary and Chief Governance Officer.

Following this process, and based on the recommendation of the panel, the Nomination & Corporate Governance Committee appointed Independent Board Evaluation ('IBE') to conduct the Board review in 2023. IBE is an independent external service provider with no other connection with the Group or any individual Directors.

Board effectiveness review format

A comprehensive brief was provided to IBE by the Group Chairman and Company Secretary and Chief Governance Officer. The review took the form of detailed interviews with every Board member, regular attendees of the relevant meetings and key advisers. IBE also observed the Board and its committees at the September 2023 meetings and reviewed the meeting materials.

A report was compiled by IBE based on the information and views supplied by those interviewed and IBE's observations from the September 2023 Board and committee meetings.

Board and committee evaluation process

The Board made good progress against all of the action points identified during the 2022 evaluation. In particular:

- Management developed a new key performance indicator architecture relating to performance, execution and risk management as well as other key value drivers.

- The Sustainability Execution Committee, a management forum, was established to provide greater focus and accountability for progress against the Group's ESG deliverables and milestones.

- An independent review of the Group's technology strategy was performed by a third party, with the outcomes, including lessons learned, and next steps discussed and agreed by the Board.

- The Board held focused sessions on prioritisation and simplification.

-
Stakeholder engagement plans were structured around the Board's visits to Paris, Hong Kong, New York and India during the year, and broader non-executive Director travel. These plans provided the Board with the opportunity to engage with the full spectrum of stakeholder groups, including employees. Further details of the Board's engagement activities are detailed on page 21.

- Continued training and guidance was provided to key paper authors and contributors to reinforce the importance of timely, balanced and accurate reporting to the Board.

Findings and recommendations

Overall, the review concluded that the Board was performing well as an engaged, global governance body. The Group Chairman is regarded as an excellent leader of the Board, fostering a culture of openness, with encouragement for Board members to speak freely on any issue. In particular, the effectiveness review highlighted that the Board performed well in various areas including:

- Stakeholder accountability: The Board takes its responsibilities towards stakeholders seriously, positively and sincerely.

- Board culture: The culture of the Board is regarded as a key strength. Preserving and sustaining this has been a key factor in considering candidates for appointment to the Board. Communication is open and transparent.

- Relationship with senior management: Board members value the openness between, and access to, the senior management team.

- Committee chairs: Chairs of committees are well supported by the respective functional teams, including Risk, Finance, HR and Corporate Governance and Secretariat.

- Board resources and support: The Board appreciates the strategic advice and counsel it receives on governance issues from the Group Company Secretary and Chief Governance Officer and her team.

IBE presented its report to the December 2023 Board meeting, and was present for the Board's discussion, led by the Group Chairman, on the findings identified through IBE's review. Among other recommendations for consideration that could strengthen the end-to-end governance of the Board and its committees, the Board focused on the following three specific themes:

- Effecting change: A need for greater focus was identified in relation to the prioritisation of execution, with clearer and more timely progress reporting to the Board, in particular around challenges faced.

- Board information: Reporting to the Board requires more succinct narrative and relevant key performance indicators. It was reiterated that the Board would continue to hold the Group Chief Executive and members of the GEC accountable for the quality of reporting to the Board.

- Technology governance: Strengthened governance mechanisms were agreed to support the Board's review and challenge of technology-related deliverables and monitoring of delivery against the Group-wide technology strategy.

Further details of the findings and agreed actions to be taken can be found in the table below. Completion of these actions will be monitored by the Board throughout 2024.

The additional areas of feedback gathered from members of the Board and regular attendees will be taken forward at the discretion of the Group Chairman based on his determination of their impact on the overall effectiveness of the Board and its committees.

Similar discussions were led by each of the Board committee chairs in their respective January 2024 meetings. Progress against these actions will be included in the Annual Report and Accounts 2024.

Summary of 2023 Board effectiveness findings and recommendations for action:
	Findings from the evaluation	Agreed actions
	- Although the Board is performing well, there are areas where, working with management, enhancements could be made to drive even greater value. - This would reinforce a clear understanding of priorities and enhanced clarity of management reporting, particularly in relation to areas of challenge in, or delay to, execution of those key deliverables. - Greater rigour was required in relation to the communication of, accountability for, and execution against the Board's feedback.	- Consideration will be given to the frequency and format of strategic updates to the Board. - The Group Company Secretary and Chief Governance Officer will support the Group Chairman and committee chairs to ensure that there is enhanced consolidation of related discussion and actions across Board and the committees, including clearer articulation of expected outcomes. - The Group Chief Executive will drive an increased focus in addressing the Board's feedback within the wider management team.

	- The volume of information provided to the Board and to committee meetings during the year was a common area of discussion during the review. Enhanced, dynamic and well-timed reporting of information to the Board is required. - Although the Board welcomed the thoroughness of management's review of key performance indicators, these required to be refined for Board purposes to ensure better alignment with paper narrative to ensure a clear, consistent basis for Board reporting.	- The Board has commissioned a training programme, to be developed and delivered by the Group Company Secretary and Chief Governance Officer, to further support senior leaders and other subject matter experts on reporting to, and interactions with, the Board. - A condensed key performance indicators framework was approved by the Board at its meeting in January 2024 and will be cascaded throughout the Group by the Group Chief Executive, the Group Chief Financial Officer and the Group Company Secretary and Chief Governance Officer.

	- Although the Board welcomed the important and valuable role of the Technology Governance Working Group, there is still more to do to develop a holistic oversight of technology at Board-level. - It was agreed that the future approach to oversight of technology-related matters needed to complement the existing responsibilities of the Board, Group Risk Committee, Group Audit Committee and subsidiary boards.	- A formal Board-level governance committee consisting of non-executive Directors - the Group Technology Committee - will be established to provide oversight of technology-related matters across the Group. This will be chaired by Eileen Murray and take effect from 1 March 2024. - The existing Technology Governance Working Group will be demised at that time.

Nomination & Corporate Governance Committee

	"I am confident that the changes to the composition of the Board over the past year have further strengthened the Board's collective knowledge and experience required to oversee, challenge and support management."
	Mark E Tucker Chair Nomination & Corporate Governance Committee


Membership			Key responsibilities
	Member since	Meeting attendance in 2023	The Committee's key responsibilities include: - overseeing and monitoring the corporate governance framework of the Group and ensuring that this is consistent with best practice; - overseeing succession planning and leading the process for identifying and nominating candidates for appointment to the Board and its committees; and - overseeing succession planning and development for the Group Executive Committee and other senior executives.
Mark Tucker (Chair)	Oct 2017	9/9
Geraldine Buckingham	May 2022	9/9
Rachel Duan	Sep 2021	9/9
Dame Carolyn Fairbairn¹	Sep 2021	8/9
James Forese	May 2020	9/9
Ann Godbehere²	Sep 2023	2/2
Steven Guggenheimer	May 2020	9/9
José Antonio Meade Kuribreña	Apr 2019	9/9
Kalpana Morparia³	Mar 2023	6/6
Eileen Murray⁴	Jul 2020	8/9
Brendan Nelson²	Sep 2023	2/2
David Nish	Apr 2018	9/9
Jackson Tai⁵	Apr 2018	5/5
Swee Lian Teo⁶	Oct 2023	1/1

1 Dame Carolyn Fairbairn was unable to attend the January meeting due to a prior commitment. 2 Ann Godbehere and Brendan Nelson joined the Committee on their appointments to the Board on 1 September 2023. 3 Kalpana Morparia joined the Committee on her appointment to the Board on 31 March 2023. 4 Eileen Murray was unable to attend the September meeting due to a prior commitment. 5 Jackson Tai retired from the Board on 5 May 2023. 6 Swee Lian Teo joined the Committee on her appointment to the Board on 1 October 2023.

I am pleased to present the Nomination & Corporate Governance Committee report, which provides an overview of the Committee's activities during 2023.

I signalled in last year's report that succession for key roles on the Board would be a priority for the Committee through 2023, and we announced in early December the successors for the roles of Senior Independent Director and Chair of the Group Audit Committee. This represented the culmination of considerable work by the Committee over a number of months.

As announced in December, David Nish confirmed his plans to retire from the Board at the conclusion of our AGM in May 2024. Brendan Nelson will succeed David as Chair of the Group Audit Committee with effect from 21 February 2024, and Ann Godbehere will succeed him as Senior Independent Director with effect from the conclusion of the 2024 AGM. On behalf of the Board, I want to take this opportunity to thank David for his significant commitment and contribution to HSBC, particularly in his role as Chair of the Group Audit Committee, and for the valuable counsel he has provided to the Board and to me personally. You can read more on the Committee's work on these appointments later in this report.

We also welcomed Kalpana Morparia and Swee Lian Teo and, together with Ann and Brendan's appointments, I am confident that the changes to the composition of the Board over the past year have further strengthened its collective knowledge and experience required to oversee, challenge and support management.

As a result of the changes to the Board during 2023, our year-end 2023 target of at least 40% female representation was achieved. We are committed to maintaining this at or above 40% going forward. More broadly, we remain committed to ensuring the compositions of the Board and senior management reflect the wider workforce and communities in which we operate, and you can read more on our efforts this year on page 313.

The annual review of the performance of the Board and its committees is a critical part of ensuring that our governance practices are aligned with best practice and are working effectively. Independent Board Evaluation conducted the 2023 review for the Board and its committees, and its findings and agreed actions can be found on pages 260 to 261.

These actions included the decision to establish the Group Technology Committee, which was discussed by the Committee. Further information on this new Board-level committee is set out on page 252. In addition, the Committee reviewed the approach to the Group's governance of developing areas such as ESG and AI, and will continue to focus on whether these remain appropriate and forward-looking as external standards and practices develop.

There have been numerous consultations issued over 2023, aimed at improving the effectiveness of the UK audit, governance and regulatory regimes. Given their potential impact, the Committee received updates on these and their potential implications on governance arrangements. The Committee also reviewed and provided input to the Group's responses to relevant consultations, including the Financial Reporting Council's ('FRC') consultation on proposed revisions to the UK Corporate Governance Code. The Committee continues to monitor potential future developments in the UK, Hong Kong and elsewhere to ensure that the impact of any proposed governance and regulatory changes on HSBC and its international operations is considered.

As we look ahead to the remainder of 2024, the Committee will look to oversee and enhance the succession pipeline at Board and senior management level, as well as efforts to deliver consistent standards of governance best practice across the Group.

Mark E Tucker

Group Chairman

Committee governance

The Group Chief Executive, the Group Chief Human Resources Officer, and the Group Head of Talent routinely and selectively attended Committee meetings. The Group Company Secretary and Chief Governance Officer attends all Committee meetings and supports the Group Chairman in ensuring that the Committee fulfils its governance responsibilities.

Russell Reynolds Associates supported the Committee and the management team in relation to Board succession planning and appointments. It also provides support to management in relation to senior management succession, development and recruitment. It regularly and selectively attended meetings during the year, and has no other connection with the Group or members of the Board.

Appointment and re-election of Directors

A rigorous selection process is followed for the appointment of Directors. Appointments are made on merit and candidates are considered against objective criteria, and with regard to the benefits of a diverse Board. Appointments are made in accordance with HSBC Holdings' Articles of Association.

The Board may at any time appoint any person as a Director or secretary, either to fill a vacancy or as an additional officer. The Board may appoint any Director or secretary to hold any employment or executive office and may revoke or terminate any such appointment.

Non-executive Directors are appointed for an initial three-year term and, subject to continued satisfactory performance based upon an assessment by the Group Chairman and the Committee, are proposed for re-election by shareholders at each AGM. They typically serve two three-year terms, with any individual's appointment beyond six years to be for a rolling one-year term and subject to thorough review and challenge with reference to the needs of the Board. Where non-executive Directors are appointed beyond six years, an explanation will be provided in the Annual Report and Accounts.

Shareholders vote at each AGM on whether to elect and re-elect individual Directors. All Directors that stood for election and re-election at the 2023 AGM were elected and re-elected by shareholders.

Non-executive Director commitments

The terms and conditions of the appointments of non-executive Directors are set out in a letter of appointment, which includes the expectations of them, and the estimated time required to perform their role. Letters of appointment of each non-executive Director are available for inspection at the registered office of HSBC Holdings.

Non-executive Directors serving on the Board and as a member of any committees are expected to serve up to 75 days per annum. The Senior Independent Director is expected to serve an additional 30 days per annum. Those Directors who also chair a large committee are expected to commit up to 100 days per annum, with the Group Risk Committee Chair expected to commit up to 150 days per annum. Any additional time commitment required of non-executive Directors in connection with Board and committee activities is confirmed to them separately.

Board approval is required for any non-executive Director's external commitments, with consideration given to their total time commitments, potential conflicts of interest, and regulatory and investor expectations.

Board composition and succession

During 2023, the compositions of the Board and its committees were reviewed, with assessments focused on the skills, knowledge and experience necessary to oversee, challenge and support management in the achievement of the Group's strategic and business objectives. The assessments were focused on the Board, both collectively and as individual members. The Committee discussed succession planning for key roles on the Board and committees, including the roles of Senior Independent Director and Chair of the Group Audit Committee. The recruitment process for the new Directors provided an opportunity to add significant executive experience in banking. It also provided an opportunity to add deep business and cultural expertise across Asia that the Board had previously identified as a priority, and to meet our target for a woman to hold at least one of the senior Board positions by the end of 2025. In line with these objectives, a list of potential candidates was identified and considered by the Committee. Members of the Board, including the Group Chief Executive and Group Chief Financial Officer, met with potential candidates and their feedback helped inform the Committee's discussions and recommendations to the Board. The Board then approved the Committee's recommendations to appoint Kalpana Morparia with effect from 1 March 2023, Ann Godbehere and Brendan Nelson with effect from 1 September 2023, and Swee Lian Teo with effect from 1 October 2023.

Kalpana Morparia and Swee Lian Teo each bring significant banking, risk and regulatory experience in Asia. Ann's deep financial acumen and extensive financial services experience gained over a 30-year career, as well as her extensive large, public-listed company board experience as a non-executive director, makes her the right successor for the role of Senior Independent Director. Brendan's UK and international financial expertise and significant experience as statutory audit partner, and as audit committee chair at UK-listed companies, as well as previously being President of the Institute of Chartered Accountants of Scotland, will be particularly valuable in the leadership of the Group Audit Committee given the evolving audit, regulatory and disclosure environment in which the Group operates. Their biographies can be found on pages 239 to 243.

Following the annual review of the Board skills matrix, the Committee remains focused on identifying candidates for future appointments with deep business and cultural expertise across Hong Kong and mainland China.

The Committee will continue to monitor the market during 2024 for potential candidates for appointment to the Board in both the short and medium term, to ensure that the Board has a pipeline of credible successors.

Neither Jackson Tai, who retired from the Board during the year, nor David Nish, who is not offering himself for re-election at the 2024 AGM, have raised concerns about the operation of the Board or the management of the company.

Committee composition

As part of the decision to establish the Group Technology Committee, when reviewing the Committee composition, it was agreed that Eileen Murray would be appointed as Chair, and Steven Guggenheimer, Kalpana Morparia, Swee Lian Teo and Brendan Nelson would be appointed as members of the Group Technology Committee with effect from 1 March 2024.

The Committee also reviewed the composition of the Board committees more broadly to ensure that these remained appropriate and diverse, with consideration of the Board diversity and inclusion policy while utilising the respective skills and expertise of the Board members as set out in the Board skills matrix on page 247. As a result, and in addition to the appointments of members to the Group Technology Committee, it was agreed that Ann Godbehere would be appointed to the Group Audit Committee with effect from 21 February 2024.

Board diversity

The Board recognises the importance of gender, social and ethnic diversity, and the benefits diversity brings to Board effectiveness. Diversity is taken into account when considering succession plans and appointments at both Board and senior management level, as well as more broadly across the Group. The Committee also considered the diversity and representation on Board committees when reviewing their composition.

At the end of 2023, the Board had 47% female representation, with seven female Board members out of 15, ahead of the year-end 2025 target set by the FTSE Women Leaders Review. Ann Godbehere's appointment as Senior Independent Director will mean the Board achieves the FTSE Women Leaders Review target that at least one of the senior Board positions of Chair, Chief Executive Officer, Senior Independent Director or Chief Financial Officer is held by a woman. In accordance with the UK Listing Rules, the Board is on track to be compliant with these diversity targets and will be fully compliant with effect from the conclusion of the 2024 AGM. Beyond gender, the Board continues to exceed the Parker Review target of having at least one Director of ethnic heritage. However, given the international nature of our business, including our heritage in Asia, the Board has set a target to maintain or improve the current representation of Directors from a diverse ethnic heritage.

The Board's diversity and inclusion policy was updated in December 2023. The policy confirms our commitment to, and also details the approach to achieving, our diversity ambitions. Further details on activities to improve diversity across senior management and the wider workforce, together with representation statistics, can be found from page 76. The Board's diversity and inclusion policy is available on www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities

Independence

Independence is a critical component of good corporate governance, and a principle that is applied consistently at both HSBC Holdings and subsidiary level. The Committee has delegated authority from the Board in relation to the assessment of the independence of non-executive Directors. In accordance with the UK and Hong Kong Corporate Governance Codes, the Committee has reviewed and confirmed that all non-executive Directors who have submitted themselves for election and re-election at the AGM are considered to be independent. This conclusion was reached after consideration of all relevant circumstances that are likely to impair, or could appear to impair, independence.

In line with the requirements of the Hong Kong Corporate Governance Code, the Committee also reviewed and considered the mechanisms in place to ensure independent views and input are available to the Board. These mechanisms include:

- having the appropriate Board and committee structure in place, including rules on the appointment and tenure of non-executive Directors;

- facilitating the option of having brokers and external industry experts in attendance at Board meetings during 2023, as well as having representatives from the Group's key regulators attend Board meetings in relation to specific regulatory items;

- ensuring non-executive Directors are entitled to obtain independent professional advice relating to their personal responsibilities as a Director at the Group's expense;

- having terms of reference for each committee and the Board provide authority to engage independent professional advisers; and

- holding annual Board and committee effectiveness reviews, with feedback sought from members on the quality of, and access to, independent external advice.

Senior executive succession and development

Following Georges Elhedery's appointment as Group Chief Financial Officer from 1 January 2023, the Committee monitored and received updates on his induction plan.

The succession plans for the Group Executive Committee members were approved by the Committee in December 2023. These reflect continued efforts to support the development and progression of diverse talent and promote the long-term success of the Group, with the gender diversity and proportion of Asian heritage successors improving year on year. The approval of succession plans included future internal and external succession options for the Group Chief Executive, to ensure that the Committee has a robust and actionable plan when required. The Committee also reviewed longer-term internal succession options for the Group Chief Executive to enable the Committee to interact more frequently with high potential and diverse talent in the Group.

The Committee continued to receive updates on the development of our talent programme within the Asia-Pacific region. Since its launch in 2020, significant progress has been made towards ensuring that we have a deeper and more diverse leadership bench-strength. Succession plans are more robust, with greater diversity and good succession fulfilment outcomes.

Committee evaluation

The annual review of the effectiveness of the Board and Board committees, including the Committee, was conducted externally by Independent Board Evaluation for 2023. It determined that the Committee continued to operate effectively, with no specific actions identified for the Committee. Positive feedback was received on the effectiveness of the recruitment processes of new Board members and the succession planning for senior management.

Further details of the annual review of the Board and committee effectiveness can be found on pages 260 to 261.

Subsidiary governance

In line with the subsidiary accountability framework, the Committee continued to oversee the corporate governance and succession arrangements across the principal and material subsidiary portfolio. The Committee also reviewed the succession plans for the principal subsidiary chairs to ensure future successors had the necessary skills and experience to effectively oversee and monitor delivery of the Group's strategic and business priorities within their territory, in accordance with the Group's governance expectations.

Where a subsidiary was unable to fully comply with the subsidiary accountability framework, the Committee endorsed exceptions, where appropriate, subject to strong rationale, including consideration of local laws and regulations and market practice. Endorsement requests were also subject to thorough review and consideration by the Group Company Secretary and Chief Governance Officer in advance of consideration by the Committee.

The Committee reviewed succession plans and oversaw compliance with the Group's governance expectations of principal and material subsidiaries. The overall quality of succession plans has improved markedly over the past three years, with plans demonstrating a clear focus on strengthening boards' overall diversity and experience, in line with strategic and business objectives.

The Committee continued to support and seek opportunities to enhance subsidiary connectivity, including through the Chairman's Forum and Remuneration Committee Chairs' Forum, which regularly brought together the chairs of the principal subsidiaries to discuss common issues, and the Non-Executive Director Summit which brought over 100 non-executive Directors together in Hong Kong in May 2023.

Subsidiaries also provided opportunities for internal talent to serve on their boards, following the training that they received through the HSBC Bank Director Programme. The Committee continues to support and look for opportunities to enhance subsidiary connectivity through Non-Executive Director Summits and other engagement forums.

Matters considered during 2023
	Jan	Feb	Mar	Apr	May	Jun	Jul	Sep	Dec
Board composition and succession
Board composition, including succession planning and skills matrices	l	l	l	l	l	l	l	l	l
Approval of diversity and inclusion policy	ô	ô	ô	ô	ô	ô	ô	ô	l
Executive talent and development
Senior executive succession	l	l	ô	ô	ô	l	l	l	l
Approval of executive succession plans	ô	ô	ô	ô	ô	ô	ô	ô	l
Talent programmes	ô	ô	ô	ô	ô	ô	l	ô	ô
Governance
Board and committee evaluation	l	ô	l	ô	ô	ô	l	ô	ô
Subsidiary governance	ô	ô	ô	ô	l	ô	l	l	l
Subsidiary and executive appointments	l	l	ô	ô	l	ô	l	ô	l

Matter considered

Matter not considered

Group Audit Committee

	"Given the uncertain external environment, as well as HSBC's growth ambitions, the GAC will continue to play an important role in monitoring the effectiveness of the control environment."
	David Nish Chair Group Audit Committee


Membership			Key responsibilities
	Member since	Meeting attendance in 2023¹	The Committee's key responsibilities include: - monitoring and assessing the integrity of the financial statements, formal announcements and regulatory information in relation to the Group's financial performance, as well as significant accounting judgements; - reviewing the effectiveness of, and ensuring that management has appropriate internal controls over, financial reporting; - reviewing management's arrangements for compliance with prudential regulatory financial reporting; - reviewing and monitoring the relationship with the external auditor and overseeing its appointment, remuneration and independence; - overseeing the Group's policies, procedures and arrangements for capturing and responding to whistleblower concerns and ensuring they are operating effectively; and - overseeing the work of Global Internal Audit and monitoring and assessing the effectiveness, performance, resourcing, independence and standing of the function.
David Nish (Chair)	May 2016	10/10
Rachel Duan²	Apr 2022	9/10
James Forese³	May 2020	7/7
Eileen Murray⁴	Jun 2022	8/10
Brendan Nelson⁵	Sep 2023	4/4
Jackson Tai⁶	Dec 2018	3/3

1 These included two joint meetings with the Group Risk Committee ('GRC') and the Technology Governance Working Group. 2 Rachel Duan was unable to join one meeting, a joint meeting with the GRC and Technology Governance Working Group, due to prior a commitment. 3 James Forese rejoined the GAC on 5 May 2023 following his appointment as GRC Chair. 4 Eileen Murray was unable to join two meetings due to prior commitments. 5 Brendan Nelson joined the GAC upon appointment to the Board with effect from 1 September 2023 and has been appointed GAC Chair with effect from 21 February 2024. 6 Jackson Tai retired from the GAC on 5 May 2023 upon his retirement from the Board.

I am pleased to introduce the Group Audit Committee ('GAC') report setting out the key matters and issues considered in 2023.

As well as the GAC's usual obligations for financial reporting and the associated control environment, the GAC spent significant time on the oversight of the Group's ESG disclosures and improvement of the Group's regulatory reporting, specifically assurance of the Group's ESG disclosures for the Annual Report and Accounts 2023 and the net zero transition plan and related policies, which were published in January 2024.

Internal financial control also remained a key area of focus for the GAC during 2023. This will continue to be a priority going ahead due to the need for a robust control environment given the ongoing the volume of regulatory- and strategy-driven change across the Group. This included oversight of regulatory and accounting deliverables, such as the enhancement of Finance systems and controls and the progress in the implementation of Basel III.

Significant time was also spent at GAC meetings on the positioning and forward-looking financial guidance provided to the market as part of our financial reporting for both the current and prior year, notably in relation to returns, costs and expected credit losses ('ECL'), including those associated with the Group's exposure to the China corporate real estate market.

Given the uncertain external environment, as well as HSBC's growth ambitions, the GAC will continue to play an important role in monitoring the effectiveness of the control environment in supporting sustainability of these ambitions.

The GAC continued to strengthen our relationships and understanding of issues at the local level through regular information sharing with the principal subsidiary audit committee chairs. This was supplemented with regular meetings with the chairs to discuss key issues, and through their periodic attendance at GAC meetings. I also joined a number of principal subsidiary audit committee meetings throughout the year, which supported connectivity and information flows across the Group.

The Group's whistleblowing arrangements continue to satisfy regulatory obligations. I regularly met the whistleblowing team to discuss material whistleblowing cases, and the progress made in enhancing the Group's whistleblowing arrangements.

The GAC's performance and effectiveness were reviewed as part of the Board effectiveness review undertaken during the year. I was pleased that the review concluded that the GAC continued to operate effectively, with no material areas for improvement identified.

Finally, as announced on 6 December, Brendan Nelson will succeed me as Chair of the GAC following the publication of HSBC's Annual Report and Accounts 2023 on 21 February 2024. The Board has determined that Brendan's previous experience, notably as audit chair at NatWest and bp, makes him ideally suited to chair the GAC.

David Nish

Chair of the Group Audit Committee

Committee governance

The Committee operates under delegated authority from the Board, and advises the Board on matters concerning the Group's financial reporting requirements. The Committee Chair reports on the key matters and discussions at the subsequent Board meeting, and the Board also receives copies of the Committee agendas and minutes. This supports the Board's oversight of the work carried out by management, Global Internal Audit and PricewaterhouseCoopers LLP ('PwC'), as the Group's statutory auditor.

The Nomination & Corporate Governance Committee has confirmed that each member of the Committee is independent according to the criteria from the US Securities and Exchange Commission; and the Committee and individual members continue to possess competence relevant to the banking and broader financial services sector in which the Group operates. The Board has determined that David Nish, Brendan Nelson and Eileen Murray are the audit committee 'financial experts' for the purposes of section 407 of the Sarbanes-Oxley Act and have recent and relevant financial experience for the purposes of the UK and Hong Kong Corporate Governance Codes.

The Committee Chair continued to engage with various key stakeholders, including regulators such as the UK's PRA and the Financial Reporting Council, to understand their views, key themes and areas of focus within the broader financial services sector. These included trilateral meetings involving the Group's external auditor, PwC, and the PRA.

The Group Chief Executive, Group Chief Financial Officer, Global Financial Controller, Group Head of Internal Audit, Group Chief Risk and Compliance Officer, Group Company Secretary and Chief Governance Officer and other members of senior management routinely attended meetings of the GAC. The external auditor attended all meetings.

The Chair holds regular meetings with management, Global Internal Audit and PwC, as the external auditor, to discuss relevant items as they had arisen during the year outside the formal Committee process. The Committee also regularly meets with the internal and external auditors, without management present. Private discussions are also held with relevant members of senior management, including the Group Chief Financial Officer and Group Chief Risk and Compliance Officer.

Matters considered during 2023
	Jan	Feb	Apr	Jun	Jul	Sep	Oct	Dec
Reporting
Financial reporting matters including: - review of financial statements, ensuring that disclosures are fair, balanced and understandable - significant accounting judgements - going concern assumptions and viability statement - supplementary regulatory information	l	l	l	l	l	l	l	l
ESG and climate reporting	l	l	l	l	l	l	l	l
Regulatory reporting-related matters including: - oversight of the Group's engagement with PRA-requested skilled person reviews - reports from the principal subsidiaries on progress and learnings in relation to their local remediation efforts - adequacy of resources across Finance and other SME teams to deliver the Group-wide remediation programme	l	l	l	l	l	l	l	l
Certificates from principal subsidiary audit committees	ô	l	ô	ô	l	ô	ô	ô
Control environment
Control enhancement programmes	l	l	l	l	l	l	l	l
Group transformation	ô	ô	ô	ô	l	l	ô	ô
Review of deficiencies and effectiveness of internal financial controls	l	l	l	l	l	l	l	l
Internal audit
Reports from Global Internal Audit	l	l	l	ô	l	ô	l	l
Audit plan updates, independence and effectiveness	l	l	l	ô	l	ô	l	l
External audit
Reports from external audit, including external audit plan	l	l	l	l	l	l	l	l
Appointment, remuneration, non-audit services and effectiveness	l	l	l	l	ô	l	l	l
Compliance
Accounting standards and critical accounting policies	ô	l	ô	ô	l	ô	l	l
Corporate governance codes and listing rules	ô	l	ô	ô	l	ô	ô	ô
Whistleblowing
Whistleblowing arrangements and effectiveness	ô	l	ô	ô	ô	l	ô	l

Matter considered

Matter not considered

How the Committee discharged its responsibilities

Financial, ESG and climate reporting

The GAC is responsible for reviewing the Group's financial reporting during the year, including the Annual Report and Accounts, Interim Report, quarterly earnings releases, analyst presentations and Pillar 3 disclosures.

Furthermore, as an area of expanded assurance, the GAC, supported by the executive-level ESG Committee, provided close oversight of the disclosure risks in relation to ESG and climate reporting, amid rising stakeholder expectations.

As part of its review, the GAC:

- reviewed the narrative commentary on our financial and non-financial performance to ensure it remained fair, balanced and understandable;

- challenged and evaluated management's application of critical accounting policies and material areas in which significant accounting judgements were applied;

- gave particular regard to the analysis and measurement of IFRS 9 ECL, including the key judgements and management adjustments made in relation to the forward economic guidance, underlying economic scenarios and reasonableness of the weightings, as well as modelling and adjustments;

- focused on preparation for disclosures to ensure these were consistent, appropriate and acceptable under the relevant financial and governance reporting requirements;

- tracked and monitored developments relating to the strategy and scope of ESG and climate disclosures, in particular the assurance related to the Group's net zero transition plan, which was published at the end of January 2024. The GAC also focused on internal and external assurance within ESG reporting in line with wider market developments to ensure ESG and climate disclosures were materially accurate and consistent;

- tracked and monitored the delivery against the external audit plan;

- provided advice to the Board on the form and basis underlying the long-term viability statement; and

- considered the key performance metrics related to strategic priorities, and ensured that the performance and outlook statements reflected the risks and uncertainties appropriately.

In addition to its work on the Group's financial disclosures, PwC also provided limited standalone assurance on the Group's climate reporting. Further details can be found in 'Assurance relating to ESG data' on page 43.

In conjunction with the GRC, the GAC considered the current position of the Group, along with the emerging and principal risks, and carried out a robust assessment of the Group's prospects. This assessment informed the GAC's recommendation to the Board on the Group's long-term viability. The GAC also undertook a detailed review before recommending to the Board that the Group continues to adopt the going concern basis in preparing the annual and interim financial statements. Further details can be found on page 40.

Fair, balanced and understandable

Following review and challenge of the disclosures, the Committee recommended to the Board that the Annual Report and Accounts, taken as a whole, were fair, balanced and understandable. These provided the shareholders with the necessary information to assess the Group's position and performance, business model, strategy and risks facing the business, including in relation to the increasingly important ESG considerations.

The Committee reviewed the draft Annual Report and Accounts 2023 and results announcements to provide feedback and challenge to management. It was supported by the work of the Group Disclosure and Controls Committee, which also reviewed and assessed the Annual Report and Accounts 2023 and investor communications.

This work enables the GAC to discharge its responsibilities and support the Board in making the statement required under the UK and Hong Kong Corporate Governance Codes.

Internal controls

Regular updates and confirmations are provided to the GAC on the action management takes to remediate any failings or weaknesses identified through the operation of the Group's framework of internal financial controls. This is supplemented by reviews of these controls by the second line of defence and internal audit, and the external auditors, who provided additional comfort to the Committee on the effectiveness of these controls. These reviews confirmed that there were no material weaknesses as at the year-end.

These updates included the Group's work on compliance with section 404 of the Sarbanes-Oxley Act. Based on this work, the GAC recommended that the Board support its assessment of the internal controls over financial reporting.

The GAC continues to focus on controls over the Group's insurance business following the implementation of the IFRS 17 'Insurance Contracts' accounting standards. This will remain a focus through 2024, with the GAC scheduled to receive further updates on the control environment for this business and in relation to the change programme more generally through the first half of 2024.

For further details of how the Board reviewed the effectiveness of key aspects of internal control, see page 311.

Regulatory reporting

Regulatory reporting has been a key priority for the Committee over recent years, and will continue to be a priority for 2024. The Committee is focused on monitoring the programme of work to address the quality and reliability of regulatory reporting to meet regulatory expectations.

The Committee approved the Integrity of Regulatory Reporting programme, management's strategy for remediation of deficiencies in relation to the Group's regulatory reporting governance, process and controls. The Committee also provided oversight of the Group's engagement with PRA-requested skilled-persons reviews including the initiation of a review of the sustainability of the Group's ongoing remediation efforts for regulatory reporting, which commenced in 2023 for an initial period to 31 December 2025. Regular updates will be provided to the Committee by the skilled person throughout the course of their review.

Management provided updates on the status of ongoing HSBC-specific external reviews, and discussed the issues and themes identified from the increased assurance work and focus on regulatory reporting. The GAC also discussed root cause themes, remediation of known issues and new issues identified through the increased assurance work and focus on regulatory reporting. The Committee challenged management on remediation plans, to ensure there was a sustainable reduction in issues and that dependencies with other key programmes were well understood.

The Committee Chair initiated a schedule under which certain principal subsidiary audit committee chairs, chief executive officers and chief financial officers attended GAC meetings to share progress and learnings in relation to their local remediation efforts.

Further details can be found in the 'Principal activities and significant issues considered during 2023' table on page 271.

Adequacy of resources

The Committee is responsible, under the Hong Kong Listing Rules, to annually assess the adequacy of resources of the accounting, internal audit, financial reporting and ESG performance and reporting functions. It also monitored the legal and regulatory environment relevant to its responsibilities.

The Committee determined that each of the functions provided thorough information with regards to people capacity and capability and endorsed the annual update to the Board.

In recognition that the enhancement of the Group's regulatory reporting processes and controls was a priority for both the Committee and the Group's regulators, the GAC also considered the adequacy of regulatory reporting resources as part of the year-end activities.

Connectivity with principal subsidiary audit committees

The Committee recognises the importance of strong connectivity and alignment with principal subsidiary audit committees. The mechanisms to support this are well established and continued to operate effectively during the year.

This included information sharing and targeted collaboration between audit committee chairs and management to ensure there was appropriate focus on the local implementation of programmes. During 2023 this included a particular focus on regulatory reporting, with the subsidiary audit committee chairs, chief executive officers and chief financial officers, attending Committee meetings to update on progress, share local challenges, and areas of focus with the Committee.

In addition to the Chair's regular meetings with the audit chairs of the Group's UK, European, US and Asian principal subsidiaries, and their attendance at Committee meetings for reference items, escalations were received by the Committee for its information and action.

On a half-year basis, principal subsidiary audit committees provided certifications to the GAC that regarded the preparation of their financial statements, adherence to Group policies and escalation of any issues that required the attention of the GAC. These certifications also included information regarding the governance, review and assurance activities undertaken by principal subsidiary audit committees in relation to prudential regulatory reporting.

External auditor

The GAC has the primary responsibility for overseeing the relationship with the Group's external auditor, PwC. The GAC undertook a formal competitive tender process for the Group's statutory audit during 2022 following PwC's appointment for the Annual Report and Accounts 2015. This process concluded that PwC would remain as the statutory auditor, which was announced in January 2023. As part of the tender process, PwC committed to a number of initiatives to enhance the effectiveness and efficiency of the Group audit, and progress against these is reported to the Committee on a regular basis to allow these to be monitored.

PwC completed its ninth audit, providing robust challenge to management and sound independent advice to the Committee on specific financial reporting judgements and the control environment. The senior audit partner is Scott Berryman who has been in the role since 2019. It was announced during 2023 that Matthew Falconer would become the senior audit partner from 2024 as part of the rotation of auditors. The Committee reviewed the external auditor's approach and strategy for the annual audit and received regular updates on the audit, including observations on the control environment. Key audit matters discussed with PwC are set out in its report on page 318.

Following the publication of the Financial Reporting Council's ('FRC') Audit Committee and the External Audit: Minimum Standard ('the Standard') during 2023, the Committee confirmed that all requirements of the standard have been complied with.

External audit plan

The GAC reviewed the PwC external audit approach, including the materiality, risk assessment and scope of the audit. PwC highlighted the changes being made to its approach to enhance the quality and effectiveness of the audit. PwC's plan supports its, and the GAC's, focus on audit quality through standardisation, centralisation and the use of technology. The GAC has questioned PwC on its plans to utilise more digital solutions on the HSBC audit, and updates on this will be provided through 2024.

Effectiveness of external audit process

The GAC assessed the effectiveness of PwC as the Group's external auditor, using a questionnaire that focused on the overall audit process, its effectiveness and the quality of output.

In addition, the GAC Chair, certain principal subsidiary audit chairs and members of the Group Executive Committee met with the Senior Audit Partner to discuss findings from the questionnaire and provide in-depth feedback on the interaction with the PwC audit team.

PwC highlighted the actions being taken in response to the HSBC effectiveness review, including the development of audit quality indicators. These provide a balanced scorecard and transparent reporting to the GAC on the work of both HSBC teams and PwC during the course of the audit. These audit quality indicators focused on the following areas:

- findings from inspections across the Group and regulators on PwC as a firm;

- the hours of audit work delivered by senior PwC audit team members, the extent of specialist and expert involvement, delivery against agreed timetable and milestones and the use of technology;

- any new control deficiencies in Sarbanes-Oxley locations, proportion of management identified deficiencies and delivery of audit deliverables to agreed timelines; and

- matters occurring in PwC's global network that could be relevant to the audit of HSBC.

Specifically in 2023, PwC reported to the GAC on the recommended actions taken in response to the independent review of governance, culture and accountability that was undertaken by Dr Ziggy Switkowski AO, as well as further detail on audit quality controls across PwC's global operations.

The GAC receives regular updates from PwC and management on performance across the audit quality indicators, which provides wider visibility of ongoing and emerging issues. The GAC requested that these indicators included metrics in relation to PwC's IT security, reflecting the significant volume of information that is shared between HSBC and PwC as part of the audit activity.

There were no breaches of the policy on hiring employees or former employees of the external auditor during the year. The external auditor attended all Committee meetings and the GAC Chair maintains regular contact with the senior audit partner and his team throughout the year.

The FRC's Quality Review team routinely monitors the quality of the audit work of certain UK audit firms through inspections of sample audits and related quality processes. PwC was reviewed on the audit of our financial reporting for the 2022 financial year. The Chair had discussions with the FRC as part of the process, and also discussed the outcome of the inspection with the Senior Audit Partner and the other members of the Committee. The Committee was pleased with the outcome of the inspection, which reported no key findings as well as a number of specific examples of good audit practice.

Independence and objectivity

The Committee assessed any potential threats to independence that were self-identified or reported by PwC. The GAC considered PwC to be independent and PwC, in accordance with professional ethical standards and applicable rules and regulations, provided the GAC with written confirmation of its independence for the duration of 2023.

The Committee confirms it has complied with the provisions of The Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014 for the financial statements.

Following the recommendation to reappoint PwC as the auditor, the associated resolutions concerning the reappointment and the audit fee for 2023 were approved at the 2023 AGM by the shareholders of the Group.

Non-audit services

The Committee is responsible for setting, reviewing and monitoring the appropriateness of the provision of non-audit services by the external auditor. It also applies the Group's policy on the award of non-audit services to the external auditor. The non-audit services are carried out in accordance with the external auditor independence policy to ensure that services do not create a conflict of interest. All non-audit services are either approved by the GAC, or by Group Finance when acting within delegated limits and criteria set by the GAC.

The non-audit services carried out by PwC included 64 engagements approved during the year where the fees were over $100,000 but less than $1m. Global Finance, as a delegate of the GAC, considered that it was in the best interests of the Group to use PwC for these services because they were:

- audit-related engagements that were largely carried out by members of the audit engagement team, with the work closely related to the work performed in the audit;

- engagements covered under other assurance services that require obtaining appropriate audit evidence to express a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the subject matter information;

- other permitted services such as advisory attestation reports on internal controls of a service organisation primarily prepared for and used by third-party end users; or

- required or permitted by local regulators to be performed by the external auditor.

Eight engagements during the year were approved where the fees exceeded $1m. These were mainly engagements required by the regulator and incremental fees related to previously approved engagements, including the provision of independent assurance reports on global controls for 2023.

	2023	2022
Auditors' remuneration	$m	$m
Total fees payable	155.9	148.1
of which fees for non-audit services	46.1	50.5
Ratio of non-audit fees to audit fees¹	42.0%	51.7%

1 The calculation is on a simple ratio and is not based on FRC guidance on non-audit fees ratio thresholds.

Whistleblowing and speak-up culture

An important part of HSBC's values is speaking up when something does not feel right. HSBC remains committed to ensuring colleagues have confidence to speak up and acting when they do. A wide variety of channels are provided for colleagues to raise concerns, including the Group's whistleblowing channel, HSBC Confidential (see page 94 for further information).

The Board has delegated responsibility to the GAC to oversee the effectiveness of HSBC's whistleblowing procedures. The Chair of the GAC is a Group Senior Manager (SMF7), and has a prescribed responsibility as the whistleblowers' champion, to ensure integrity of HSBC's policies on whistleblowing and protecting those who report concerns. As part of his responsibility, the GAC Chair reports to the Board on the GAC's oversight of whistleblowing as part of his regular reporting updates.

The Group Head of Regulatory Compliance regularly updates the GAC on whistleblowing effectiveness, including controls assessments and internal audit findings. The Committee is briefed on culture and conduct risks from whistleblowing cases and actions taken.

In 2023, the GAC received updates on topics such as cultural insights from internal HR-led investigations relating to matters reported through HSBC Confidential. Reports were also provided on the actions taken to support different functional areas collaborate post-investigation. The Chair met with the Group Head of Conduct, Policy and Whistleblowing for briefings on significant whistleblowing matters. In 2024, the GAC will continue to receive briefings on these actions and the ongoing efficiency of the HSBC Confidential channel.

Global Internal Audit

The primary role of the Global Internal Audit function is to help the Board and management protect the assets, reputation and sustainability of the Group. Global Internal Audit does this by providing independent and objective assurance on the design and operating effectiveness of the Group's governance, risk management and control framework and processes, prioritising the greatest areas of risk. The independence of Global Internal Audit from day-to-day line management responsibility is critical to its ability to deliver objective audit coverage by maintaining an independent and objective stance. Global Internal Audit is free from interference by any element in the organisation, including on matters of audit selection, scope, procedures, frequency, timing, or internal audit report content. The Group Head of Internal Audit reports to, and meets frequently with, the Chair of the GAC. In addition, in 2023, there was more interaction between Global Internal Audit senior management and the members of the GAC, aimed at increasing knowledge and awareness of the audit universe and existing and emerging risks identified by Global Internal Audit. Global Internal Audit adheres to The Institute of Internal Auditors' mandatory guidance.

Consistent with previous years, the 2024 audit planning process includes assessing the inherent risks and strength of the control environment across the audit entities representing the Group. Results

of this assessment are combined with a top-down analysis of risk themes by risk category to ensure that themes identified are addressed in the annual plan. Audit coverage is achieved using a combination of business and functional audits of processes and controls, risk management frameworks and major change initiatives, as well as regulatory audits, investigations and special reviews. In addition to the ongoing importance of regulatory-focused work, key risk theme categories for 2024 audit coverage remain as: strategy, governance and culture; financial crime, conduct and compliance; financial resilience; and operational resilience. A quarterly continuous monitoring assessment of key risk themes will form the basis of thematic reporting and plan updates and will ultimately drive the 2025 planning process.

In 2024, Global Internal Audit's new or heightened areas of coverage are: transformation including regulatory change; people capacity and capability; ESG; material regulatory obligations; Consumer Duty implementation; retail and wholesale credit risk management; Basel III; regulatory reporting; treasury; operational resilience; enterprise-wide risk management; model risk management; machine learning and artificial intelligence; data management and technology. In addition, Global Internal Audit will continue its programme of culture audits to assess the extent that behaviours reflect HSBC's purpose, ambition, values and strategy, and expand its coverage of franchise audits for locally significant countries. The annual audit plan and material plan updates made in response to changes in the Group's structure and risk profile are approved by the GAC.

The results of audit work, together with an assessment of the Group's overall governance, risk management and control framework and processes are reported to the GAC, GRC and local audit and risk committees, as appropriate. This reporting highlights key themes identified through audit activity, and the output from continuous monitoring. This includes business and regulatory developments and an independent view of emerging and horizon risk, together with details of audit coverage and any required changes to the annual audit plan. Based on regular internal audit reporting to the GAC, private sessions with the Group Head of Internal Audit, the Global Professional Practices annual assessment and quarterly quality assurance updates, the GAC is satisfied with the effectiveness of the Global Internal Audit function and the appropriateness of its resources.

Executive management is accountable for addressing the matters raised by Global Internal Audit, which must be addressed within an appropriate and agreed timetable. Confirmation to this effect must be provided to Global Internal Audit, which validates closure on a risk basis.

Global Internal Audit maintains a close working relationship with HSBC's external auditor, PwC. The external auditor is kept informed of Global Internal Audit's activities and results, and is afforded free access to all internal audit reports and supporting records.

Principal activities and significant issues considered during 2023 (continued)
Areas of focus	Key issues	Conclusions and actions
	Environmental, social and governance ('ESG') reporting The Committee considered management's efforts to enhance ESG disclosures and associated verification and assurance activities, with a specific focus on the net zero transition plan and climate-related disclosures made in the Annual Report and Accounts 2023.	The Committee considered ESG disclosures for the Annual Report and Accounts 2023 in detail, to ensure these were fair and balanced, and were also transparent on the challenges faced and aligned with the Group's progress in the embedding of sustainable and climate-related policies across the business. The Committee also focused on the evolution of the control environment for ESG disclosures, particularly data sourcing and policy adherence. Management provided updates on additional assurance performed over these disclosures while the control environment matures and the progress of the sustainability enhancement programme (to upgrade our capabilities in this growing area).
	Regulatory reporting The GAC monitored the progress of the regulatory reporting assurance programme to enhance the Group's regulatory reporting, impact on the control environment and oversight of regulatory reviews and engagement.	The Committee reflected on the continued focus on the quality and reliability of regulatory reporting by the PRA and other regulators globally. The GAC reviewed management's proposals on remediation efforts, and endorsed the strategy for the remediation of the errors in the Group's reporting submissions to regulators globally. The chief executive officers, chief financial officers and audit committee chair of the US, UK ring-fenced bank, European and Asian subsidiaries attended Committee meetings during the year to report on the remediation activities and priorities with regards to regulatory reporting in their respective markets. We continue to keep the PRA and other relevant regulators informed of our progress.
	Expected credit losses The measurement of expected credit losses involves significant judgements, particularly under current economic conditions. There remains uncertainty over ECL estimation due to sustained high inflation, a high interest rate environment and weaker economic growth in the Group's key operating markets.	The Committee reviewed economic scenarios for the key countries and territories in which the Group operates and challenged management's judgements on the weightings assigned to the scenarios. The Committee also challenged management's judgemental adjustments to account for uncertainty in specific sectors and geographies, including the controls underpinning the adjustments process and conditions under which the adjustments would be reduced or removed. The Committee continued to monitor management's updates on areas of particular focus, including downside risk on mainland China and Hong Kong commercial real estate.
	Tax-related judgements HSBC has recognised deferred tax assets to the extent that they are recoverable through expected future taxable profits. Significant judgement continues to be exercised in assessing the probability and sufficiency of future taxable profits, future reversals of existing taxable temporary differences and expected outcomes relating to uncertain tax treatments.	The Committee considered the recoverability of deferred tax assets, in particular in the US, the UK and France. The Committee also considered management's judgements relating to tax positions in respect of which the appropriate tax treatment is uncertain, open to interpretation or has been challenged by the tax authority.
	Valuation of defined benefit pension obligations The valuation of defined benefit pension obligations involves highly judgemental inputs and actuarial assumptions which includes rate, inflation rate, mortality rates and other demographic assumptions. Management considered these assumptions in consultation with actuarial experts to determine the valuation of the defined benefit obligations.	The GAC has considered the effect of changes in key assumptions on the HSBC UK Bank plc section of the HSBC Bank (UK) Pensions Scheme, which is the principal plan of HSBC Group. Details of key assumptions can be found on pages 366 to 368 of the 'Notes on the financial statements'.
	Valuation of financial instruments During 2023, management continuously refined its methodology and approach to valuing the Group's portfolio in relation to investments, trading assets and liabilities and derivatives.	The Committee considered the key valuation metrics and judgements involved in the determination of the fair value of financial instruments, and agreed with the judgements applied by management, which were validated through appropriate governance and control forums.
	Investment in subsidiaries Management has reviewed investments in subsidiaries for indicators of impairment and conducted impairment reviews where relevant. These involve exercising significant judgement to assess the recoverable amounts of subsidiaries, by reference to projected future cash flows, discount rates and regulatory capital assumptions.	The Committee reviewed the judgements in relation to the impairment review of HSBC Overseas Holdings (UK) Limited and the key inputs such as projected profits, underpinning the recoverable amounts of its subsidiaries.

	Investment in an associate - Bank of Communications Co., Limited During the year, management performed impairment reviews of HSBC's investment in Bank of Communications Co., Ltd ('BoCom'). This included consideration of the potential impact of BoCom's designation as a globally systemically important bank in November 2023. The impairment reviews are complex and require significant judgements, such as the appropriateness of projected future cash flows, discount rate, and regulatory capital assumptions.	The Committee reviewed and challenged management's judgements in relation to impairment reviews of HSBC's investment in BoCom, performed using a value-in-use methodology. The GAC reviewed the appropriateness of key assumptions such as projected future cash flows, with a particular focus on the loan growth and net interest margin outlook, and potential impacts of the recent designation of BoCom as a globally systemically important bank. The Committee held a dedicated meeting to challenge management on the impairment charge taken in the fourth quarter of 2023, considering sensitivity analysis of value-in-use to reasonably possible changes in key assumptions and consistency of judgements with prior impairment reviews, which we have disclosed previously.
	Interest rate management, including disposal of hold-to-collect-and-sell portfolio During 2023, management proposed a framework for the disposal of selected hold-to-collect-and-sell securities to improve risk management of hold-to-collect-and-sell positions and to stabilise and protect net interest income over the medium term.	The GAC received regular management updates on hedging strategy, including the repositioning of structural interest rate hedges. The Committee reviewed controls on, and financial outcomes of, disposals of hold-to-collect-and-sell securities.
	Impairment of goodwill and non-financial assets During the year, management tested for impairment goodwill and non-financial assets. Key judgements in this area relate to long-term growth rates, discount rates and projected future cash flows to include for each cash-generating unit tested, both in terms of compliance with the accounting standards and reasonableness of the forecasts.	The Committee reviewed and challenged management's approach and methodology used for the impairment testing of goodwill and non-financial assets, with a key focus on the projected cash flows included in the forecasts and discount rates used. The GAC also challenged management's key judgements and considered the reasonableness of the outcomes against business forecasts and strategic objectives of HSBC.
	Legal proceedings and regulatory matters Management has used judgement in relation to the recognition and measurement of provisions, as well as the existence of contingent liabilities for legal and regulatory matters.	The Committee reviewed reports from management on legal proceedings and regulatory matters, and challenged related accounting judgements and disclosures.
	Long-term viability and going concern statement The GAC has considered a wide range of information relating to present and future projections of profitability, cash flows, capital requirements and capital resources. These considerations include stressed scenarios that reflect the implications of: (i) the ongoing Russia-Ukraine and Middle East conflicts, and the consequential impacts on the supply chains globally; (ii) macroeconomic risks including inflationary risks, which were expected to remain heightened in most markets; and (iii) climate risk, operational resilience, and other top and emerging risks, and the related impact on profitability, capital and liquidity.	In accordance with the UK and Hong Kong Corporate Governance Codes, the Directors carried out a robust assessment of the principal risks of the Group and parent company. The GAC considered the statement to be made by the Directors and concluded that the Group and parent company will be able to continue in operation and meet liabilities as they fall due, and that it is appropriate that the long-term viability statement covers a period of three years.
	Impact of acquisitions and disposals HSBC engaged in a number of business acquisitions and disposals, notably in the UK, Canada, France, Greece, China, Oman and Russia. Significant judgement was involved in determining the timing of recognition of assets held-for-sale, gains or losses, and the measurement of assets and liabilities on acquisition or disposal.	The Committee reviewed management's judgements related to the planned sales of our banking business in Canada, our retail banking operations in France and our banking business in Russia, such as the timing of classification as held-for-sale and the remeasurement of assets. The Committee considered the financial and accounting impacts of the merger of HSBC Oman with Sohar International Bank of Oman, and the acquisitions of Silicon Valley Bank UK Limited, Silkroad Property Partners Pte Limited and Citi's retail wealth management portfolio in China.

	Sustainable control environment The GAC will oversee the impact on the risk and control environment.	The Committee received regular updates on the control environment, and broader change framework, to review the impact on financial reporting and tax risk within the Group, with particular focus on the implementation of IFRS 17 in the year. In these updates the Committee monitored the assessment of the financial reporting risk, tax risk and progress made on remediation of Sarbanes Oxley significant deficiencies. This oversight helped the Committee to understand the progress being made by management to set out strategic actions to remediate identified issues and uplift the control environment to enable a sustainable reduction in risk. Management's updates were supplemented by further focus and assurance work from Global Internal Audit, including audits of significant programmes of activity during 2023.

	Basel III Reform The GAC considered the implementation of the Basel III Reform and the impact on the capital requirements and RWA assurance. This was considered in the context of the strategy and structure of the balance sheet.	The Committee received updates on the progress and impact of the Basel III programme on the Group. Management discussed the delayed implementation dates due to ongoing uncertainty over the final definition of the rules by regulators, and the work undertaken to mitigate delivery risks given the concentration of delivery during 2024. The discussion highlighted the dependencies of the Basel III programme with data and management. Management focus was on ensuring that the data required and evolving internal standards were delivered by the end of 2023 to allow for integrated testing in the first quarter of 2024. The Committee reviewed the ongoing management of risks, issues and dependencies and challenged management to prioritise deliverables across each jurisdiction in line with regulatory timelines. The Committee discussed focus on ensuring, in each case, solutions were delivered to the minimum required standards.

	Collaboration with GAC/GRC/Technology Governance Working Group The GAC and GRC worked closely to ensure there were procedures to manage risk and oversee the internal control framework. The Chairs are members of both committees and engage on the agendas of each other's committees to further enhance connectivity, coordination and flow of information.	Given that all material remediation plans within the Group rely heavily on data, the committees held joint meetings to develop an understanding of the HSBC data strategy and execution plan. The joint meetings discussed: - the review undertaken of data within the Group and the associated baseline established as part of the review; - actions taken to prioritise execution to deliver key capabilities and remediate data quality, including pilots to provide clarity around scale, key milestones and expected execution timelines; and - the three-year Group data programme delivery roadmap including detailed plans to address data quality issues, improve the data control landscape, engage with colleagues to actively mature data culture, and build sustainable capabilities that meet a growing global trend towards localisation of data.

Committee evaluation and effectiveness

The annual review of the effectiveness of the Board committees, including the GAC, was conducted by IBE, Independent Board Evaluation during 2023. The review determined that the GAC continued to operate effectively.

Positive feedback was noted on the leadership of the Committee Chair, the composition of the Committee and the focus and balance of time dedicated to discussion at Committee meetings. The review highlighted the continued importance of strong interaction between the GAC, GRC, Technology Governance Working Group and the Board, on key issues including ESG.

Further details of the annual review of the Board and Committee effectiveness can be found on pages 260 to 261.

Committee priorities

At its meeting in December 2023, the Committee agreed a number of priorities for 2024. These included:

- Regulatory reporting: Given the criticality of accurate and timely regulatory reporting to the Group's licence to operate, the Committee will have a key focus on delivery of the Integrity of Regulatory Reporting programme during 2024.

- ESG: As competent authorities in the markets in which the Group operates launch market-specific disclosure requirements under new regulation, the Committee will continue to focus on the assurance of reporting and disclosure at both a Group and subsidiary level, as well as the effectiveness of the supporting control environment and governance.

- Data: The Committee plans to monitor and provide input into the data strategy, remediation, and controls for the purposes of financial and regulatory reporting, including that data management strategies are embedded across the Group.

Group Risk Committee

	"The Committee takes continuous and active steps to safeguard the Group's capital and liquidity positions, keeping it secure in the face of macroeconomic headwinds, enabling it to effectively deploy capital dynamically to take advantage of opportunities"
	James Forese Chair Group Risk Committee


Membership			Key responsibilities
	Member since	Meeting attendance in 2023¹	The GRC has overall non-executive responsibility for the oversight of risk-related matters and the risks impacting the Group. The GRC's key responsibilities include: - overseeing and advising the Board on all risk-related matters, including financial and non-financial risks; - advising the Board on risk appetite-related matters, and key regulatory submissions; - reviewing the effectiveness of the Group's risk management framework and internal controls systems (other than internal financial controls overseen by the GAC); - reviewing and challenging the Group's stress testing exercises; and - overseeing the Group's approach to conduct, fairness and preventing financial crime.
James Forese (Chair)²	Jun 2022	10/10
Geraldine Buckingham	Jun 2022	10/10
Dame Carolyn Fairbairn³	Sep 2021	7/10
Steven Guggenheimer⁴	May 2020	9/10
Kalpana Morparia⁵	Jul 2020	7/8
Brendan Nelson⁶	Sep 2023	3/3
David Nish	Feb 2020	10/10
Jackson Tai⁷	Sep 2016	4/4
Swee Lian Teo⁸	Oct 2023	2/2

1 These included six scheduled meetings, three ad hoc meetings and one joint meeting with the Group Audit Committee and the Technology Governance Working Group. 2 James Forese was appointed Chair of the Committee on 5 May 2023. 3 Dame Carolyn Fairbairn was unable to attend three meetings due to prior commitments. 4 Steven Guggenheimer was unable to attend one meeting due to a prior commitment. 5 Kalpana Morparia joined the GRC on 1 March 2023. She was unable to attend one meeting due to a prior commitment. 6 Brendan Nelson joined the GRC on 1 September 2023. 7 Jackson Tai stepped down from the GRC on 5 May 2023. 8 Swee Lian Teo joined the GRC on 1 October 2023.

I am pleased to present my first Group Risk Committee ('GRC') report, having taken over the role of Chair of the Committee in May 2023. I would like to take this opportunity to express my sincere gratitude to Jackson Tai for his service to GRC, and the Group more broadly, prior to stepping down as Committee Chair. I am also pleased to welcome Kalpana Morparia, Brendan Nelson and Swee Lian Teo, all of whom joined as members of the GRC during 2023, and each of whom brings unique skills and experience to the business of the Committee.

Geopolitical risks and the macroeconomic environment continued to dominate the landscape in 2023, with turmoil in the financial markets leading to the collapse of several banks in the US and Europe in the first half of the year. Commercial real estate in both the US and Asia also came under increasing pressure due to the high interest rate environment, inflationary trends and recessionary concerns. Central banks' efforts to lower inflation by rapidly raising interest rates also had a wide-ranging impact on retail borrowers as the cost of living increased globally. The GRC has closely monitored the Group's credit exposures, market risk and settlement limits in response to these events, and has endorsed management's proactive execution in reducing high risk exposures and accelerating portfolio transformation.

Oversight of financial risks has been critical against this external backdrop, and the GRC has paid close focus to the Group's ongoing treasury, capital and liquidity risk management activities, including early warning indicators, delivery of the interest rate risk in the

banking book strategy, prudential sensitivity analysis and capital and liquidity adequacy. Throughout the year, the GRC reviewed and challenged management on the Group's regulatory submissions, including the Bank of England's requirements for the Resolvability Assessment Framework, internal capital adequacy assessment process ('ICAAP') and internal liquidity adequacy assessment process ('ILAAP'). The GRC had primary non-executive responsibility for reviewing the outcomes of regulatory stress tests, including the 2023 annual cyclical scenario hybrid mortgage models update and the post-wind-down business restructuring analysis.

Non-financial risks were also a key focus of the GRC in 2023. The GRC carefully considered the Group's regulatory remediation and change programmes, and worked closely with management to better prioritise and understand where there are key interdependencies. In particular, the Committee reviewed and challenged the Group's data strategy and other key areas of regulatory focus, including oversight of the operational resilience enhancements, conduct and financial crime, technology and cyber risk. The GRC also provided oversight and support to risk transformation activities to develop stronger risk management capabilities and outcomes across the Group. Climate also continues to be a priority area of oversight with regular reports on areas of risk, such as greenwashing, compliance with regulatory requirements, and ESG policy changes.

Further details on these and other areas of GRC oversight during the year are set out below.

Committee governance

The Group Chief Risk and Compliance Officer, Group Chief Financial Officer, Group Chief Operating Officer, Group Company Secretary and Chief Governance Officer, Group Chief Legal Officer, and Group Head of Internal Audit are standing attendees at GRC meetings. The Chair and members of the GRC also hold private meetings with the Group Chief Risk and Compliance Officer, the Group Head of Internal Audit and the external auditor, PwC, following scheduled GRC meetings.

The participation of our senior business leaders, including the Group Chief Executive who attended five scheduled GRC meetings in 2023, and the chief executive officers of the three global businesses

reaffirmed the ownership and accountability of risks in the first line of defence.

The Chair meets regularly with the Group Chief Risk and Compliance Officer, and, where appropriate, members of senior management, to discuss priorities and track progress on key actions. The Chair also meets regularly with the GRC Secretary to ensure the GRC addresses its governance responsibilities. A summary of coverage is set out in the 'Matters considered during 2023' table.

Matters considered during 2023
	Jan	Feb	Mar	May	Jun	Jul	Sep	Dec
Holistic enterprise risk monitoring including Group risk profile¹	l	l	l	l	l	l	l	l
Risk framework and policies	l	l	ô	ô	ô	l	ô	ô
Treasury and traded risk	l	l	l	l	l	l	l	l
Wholesale/retail credit risk	l	l	ô	l	l	l	l	ô
Financial reporting risk	ô	l	ô	ô	ô	l	ô	ô
Resilience risk (including IT and operational risk)	ô	ô	ô	l	l	ô	l	l
Financial crime risk	l	l	l	l	l	l	l	l
People and conduct risk	ô	ô	ô	l	l	ô	l	l
Regulatory compliance risk	ô	ô	l	l	ô	l	l	l
Legal risk	ô	l	ô	l	l	l	l	l
Model risk	ô	ô	ô	ô	ô	l	ô	l
Climate risk	ô	l	ô	l	l	ô	l	l

Matter considered

Matter not considered

1 The GRC receives updates on all risk types through the Group risk profile, which is presented to the majority of meetings. The Committee also met with the Group Chief Risk and Compliance Officer and Risk and Compliance Executive Committee members in October 2023 to review matters relating to risk transformation, wholesale credit risk, treasury risk, model risk, operational risk, data and climate risk.

How the Committee discharged its responsibilities

Activities outside formal meetings

The GRC held a number of meetings outside its regular schedule to facilitate deeper and more effective oversight of the risks impacting the Group. Areas covered included capital management, stress testing, ICAAP and ILAAP preparations, as well as briefings on the Resolvability Assessment Framework. Further details of these sessions are included in the 'Principal activities and significant issues considered during 2023' table starting on page 276.

Connectivity with principal subsidiary risk committees

During 2023, the GRC continued to actively engage with principal subsidiary risk committees through the scheduled participation of principal subsidiary risk committee chairs at relevant GRC meetings, and through a quarterly connectivity meeting with the principal subsidiary risk committee chairs. This meeting is also attended by the Group Chief Risk and Compliance Officer. This participation and connectivity promoted the sharing of information and best practices between the GRC and principal subsidiary risk committees.

The GRC also received reports at its regular meetings on the key risks facing principal subsidiaries including escalations and certifications from the principal subsidiary risk committees. The certifications confirmed that the principal subsidiary risk committees had challenged management on the quality of the information provided, reviewed the actions proposed by management to address any emerging issues and that risk management and internal control systems had been operating effectively.

These interactions furthered the GRC's understanding of the risk profile of the principal subsidiaries, leading to more comprehensive review and challenge by the GRC.

Engagement with the Risk and Compliance Executive Committee

During 2023, the GRC met with the Risk and Compliance Executive Committee to promote information sharing, meet and assess the Group Risk and Compliance function leadership team, and encourage active engagement with executive management.

During the engagement meeting, the GRC developed a better understanding of the efforts to strengthen our capabilities across the Group Risk and Compliance function. There were also in-depth discussions on the progress and remediation of key regulatory concerns. The engagement promoted a healthy working relationship between GRC members and executive management.

Collaborative oversight by the GRC, GAC and Technology Governance Working Group

The GRC worked closely with the GAC and the Technology Governance Working Group to address any areas of significant overlap, and to oversee risk more comprehensively through inter-committee communications and joint meetings.

The GRC, GAC and the Technology Governance Working Group Chairs convened on two occasions to consider the Group's data strategy and ambitions. Further details of these sessions can be found under 'Collaboration with GAC/GRC/Technology Governance Working Group' in the GAC report on page 271.

The committees and working group worked closely to ensure appropriate alignment in the review, discussion, challenge and conclusions on topics including risk and control issues relating to digital assets and currencies, and the transition of core Finance capabilities to the Cloud. This ensured that the committees benefited from each other's expertise and challenge.

Coordination between the GRC, GAC and the Technology Governance Working Group is supported by cross-membership. The GRC and GAC Chairs are members of both committees, and this strengthened connectivity and the flow of information between the committees. Each of the co-chairs of the Technology Governance Working Group are members of the GRC and GAC, respectively.

Principal activities and significant issues considered during 2023
Risk areas	Key issues	Conclusions and actions
	Macroeconomic, geopolitical and other emerging risks have the potential to present significant challenges to revenue growth, operational resilience and our commitment to serve customers and local markets.	The GRC closely monitored geopolitical and macroeconomic risks that could impact the Group's strategy, business performance or operations. These risks were exacerbated by the ongoing Russia-Ukraine war and the developing Israel-Hamas war, as well as the expected 'higher for longer' interest rate environment, inflation and impacts on the commercial real estate portfolio. The GRC continued to track top and emerging risks, our risk appetite and other management information metrics, as well as other early warning measures to understand sensitivities and the likelihood of the potential impact to our operations, customers and stakeholders. The GRC provided oversight and challenge of a robust book of strategic management actions to respond to potential downside scenarios. Reflecting the Committee's ability to travel to different jurisdictions and regions more frequently, the GRC requested reports on the risk profile of key business areas in local geographies and invited principal subsidiary chairs and relevant management to attend and participate in discussions.

	Effective risk management policies, frameworks and thresholds, and oversight of these, are essential for HSBC to safely, consistently and sustainably support customers and deliver strategic aims.	The Group has a risk appetite statement to define risk appetite and tolerance thresholds, which forms the basis of the risk management procedures for the first and second lines of defence, the Group's capacity and capabilities to support customers, and the achievement of strategic goals. The GRC maintained oversight of the Group's risk management framework, reviewing changes to the Group's risk appetite statements and recommending these to the Board for approval. The agreed risk appetite statement then provided the basis for the Committee's interactive review of financial and non-financial risk management information at each scheduled GRC meeting. The GRC continued to promote the development of more dynamic and granular risk appetite statements that were both forward looking and dynamically responsive to emerging risk drivers, and linked to the Group's strategy, stress testing and financial resource plan. Changes were recommended by the GRC to the Group's risk appetite statement, including in the areas of interest rate risk in the banking book, wholesale credit risk, climate risk, model risk, digital assets and currencies, resilience risk, reputational risk and regulatory reporting risk.


	Capital and liquidity risk must be effectively monitored. It presents key risks to banks globally, as demonstrated in the first half of 2023 when there were a number of bank failures in the US and Europe. Similarly, developing action plans and guardrails to cover scenarios of recovery or resolution at a subsidiary or Group level is an essential part of HSBC's prudential management.	The Group takes continuous and active steps to safeguard its capital and liquidity positions. It performs internal and regulatory stress tests to measure resilience and performance against stress, and to consider strategic management actions that could be applied against anticipated stress events and headwinds. The GRC conducted its annual review and challenge of the Group's ICAAP and ILAAP, and provided recommendation to the Board for approval. The GRC continued to evaluate the Group's IRRBB strategy and progress made against the multi-year liquidity improvement programme. The GRC reviewed the Group's ongoing activities to identify, manage and mitigate treasury, capital and liquidity risks, including early warning indicators, sensitivity analysis, capital and liquidity reporting and adequacy. In relation to stress testing exercises, the GRC reviewed the Bank of England's 2023 annual cyclical scenario hybrid mortgage models update. The results were approved by the Committee in March 2023. The GRC also considered the 2024 financial resource plan and Group-wide internal stress test overview, scenarios and outputs, which contribute to the Group's commitment to regularly test the resilience of the balance sheet and profit and loss under multiple scenarios of varying severity. In addition to oversight of capital and liquidity risk, the GRC also reviewed and provided challenge to ongoing plans to improve balance sheet velocity across the Group through better distribution enabling further, targeted origination and ensuring effective use of capital to support revenue growth. As part of its regulatory obligations, the Group is required to show how its resolution strategy could be carried out in an orderly way and identify any risks to successful resolution. The GRC continued its oversight of the Group's progress in developing its capabilities towards the Bank of England's requirements for recovery and resolvability. In February 2023, the GRC reviewed the planned approach for 2023 post-wind-down business restructuring analysis, prior to submission to the PRA. The GRC reviewed and recommended the 2023 Resolvability Assessment Framework self-assessment to the Board for approval. The Chairs of the GRC and the GAC both received comprehensive briefings prior to the presentation of the framework.


	HSBC faces risk from the possibility of losses resulting from the failure of a counterparty to meet its agreed obligations to pay the Group.	The GRC reviewed updates on the strategy and approach to managing credit risk and credit risk capabilities. The GRC received regular updates on the Group's expected credit losses and provisions, and the credit risk arising from the wholesale portfolio and mortgage books. Throughout the year, the GRC focused on oversight of management's enhancement objectives for wholesale credit risk management, in particular to improve the Group's approach to country and industry concentration risks. The GRC continued its emphasis on building even stronger credit capabilities for specialty sectors, the development of stronger portfolio management capabilities and further improving the Group's credit risk culture. A key focus area continued to be offering support to our retail customers experiencing financial difficulty, by maintaining appropriate tools and treatments and ensuring that conduct and good customer outcomes was a priority.

	HSBC is exposed to risks where controls supporting the reporting of its financial statements are not effective, resulting in material error or misstatement.	While the GAC maintains primary responsibility in relation to internal financial control systems, with further detail on pages 266 to 271, the GRC receives reports on entity level control assessments to enable the oversight of the effectiveness of such controls in support of the Group's financial reporting. The GRC also receives relevant audit reports that provide an assessment of control effectiveness for financial reporting risks.

	Resilience risks could lead to a situation where we may be unable to provide our customers with critical business services due to significant disruption. Technology risks could cause unmanaged disruption to any IT system within HSBC, as a result of malicious acts, accidental actions or poor IT practice, or IT system failure.	The GRC continued its oversight of the Group's implementation of operational resilience capabilities in line with PRA and FCA policies. The GRC reviewed and challenged the operational resilience self-assessment against regulatory expectations, and worked with management to ensure that ownership and the delivery of resilience outcomes were embedded within the business and with function leaders. The GRC also received reports on system incidents and outages experienced across the Group, including reports on immediate actions being taken to enhance system continuity for, and communicate with customers, and measures being implemented to improve resilience-related controls to prevent reoccurrence. The GRC regularly reviewed reports on the Group's technology risk profile, as well as receiving bi-annual updates in relation to the risk and control environment, as well as the current threat landscape and emerging risks. The GRC (working with the newly-created Group Technology Committee as appropriate) will consider further the risks and opportunities inherent in the use of AI (generative and advanced) in 2024. The GRC maintained a strong focus on understanding the Group's data risk landscape, its data strategy and data management programme. The GRC collaborated with the GAC and the Technology Governance Working Group on data strategy, the execution plan and timeline for data remediation, the governance approach and the investment model. Further details on the joint meetings are included in the 'Collaboration with GAC/GRC/Technology Governance Working Group' section on page 275.

	There is a risk that HSBC's products and services could be exploited for criminal activity, including fraud, bribery and corruption, tax evasion, sanctions and export control violations, money laundering, terrorist financing and proliferation financing.	The GRC reviewed the Group's approach to managing its financial crime risk across geographies and businesses. This included reviewing updates to the Group's financial crime policy, enhancing the approach to insider risk, and monitoring the fraud landscape and strategies for managing fraud risk. The ongoing Russia-Ukraine war has necessitated continued oversight of the ever-changing and increasingly complex international sanctions landscape in which the Group and its customers operate, as well as the Group's approach to managing its compliance with multiple and differing sanctions regimes globally.

	People are central to everything HSBC does and it is essential to manage the risk of not having the right people with the right skills, and to ensure staff always have the customer's interest at the forefront.	The GRC monitored people risk and employee conduct, with support from the Group Chief Human Resources Officer and Group Chief Risk and Compliance Officer. The GRC considered people risk issues with a focus on the four 'c's: capacity, capability, culture and conduct. It also considered remuneration risks, and strategies to retain talent and acquire new capabilities in key areas. Of key importance, the GRC placed strong emphasis on policies and practices relating to conduct and fairness to customers, especially vulnerable customers given heightened macroeconomic pressures and stress on customers across markets. The GRC met in November to review the Group's risk and reward alignment framework to promote sound and effective risk management in meeting PRA and FCA remuneration rules and expectations.

	As a result of operating in multiple jurisdictions globally, HSBC is exposed to risks associated with inappropriate market conduct or breaching related financial services regulatory standards or expectations.	The GRC and its members actively engage with regulators and act on feedback. The Committee closely monitors the progress of any regulatory remediation activities, with support from the Group Chief Risk and Compliance Officer as well as principal subsidiary risk committee chairs. Throughout the year, the GRC had oversight over reports providing feedback from regulators, including a summary of regulatory deliverables to ensure HSBC remains in line with regulatory standards and expectations.
	HSBC is exposed to the risk of financial loss, legal or regulatory action resulting from contractual risk, dispute management risk, breach of competition law or intellectual property risk.	The GRC oversees and receives regular updates on key legal developments and material legal issues from the Group Chief Legal Officer. The updates also cover material litigation and regulatory enforcement matters and an overview of the legal risk profile of HSBC.

	If models have been inadequately designed, implemented or used, or do not perform in line with expectations and predictions, then HSBC can face risks from inappropriate or incorrect business decisions arising from their use.	The GRC continued to oversee the Group's progress in managing model risk through the Group Chief Risk and Compliance Officer's Group risk profile report. The GRC oversaw the progress in achieving our model risk vision, strengthening our model risk management capabilities and addressing regulatory requirements across global jurisdictions. In particular, the GRC reviewed the PRA Supervisory Statement 1/23 and the impact on the Group. The GRC reviewed the new guidance, potential resource implications and the planned programme of changes across all three lines of defence. It also noted the enhanced governance expectations in relation to model oversight.

	Environmental, social and governance risks present significant risks to organisations both in terms of their own operations and how they engage with stakeholders and communities.	The GRC remained focused on climate risk and greenwashing risk. The GRC received reports on climate risk management and energy policies, while maintaining oversight of delivery plans to ensure that the Group develops robust climate risk management capabilities. The GRC approved the 2023 internal climate scenario analysis and nature scenario analysis pilot in July 2023. The outcomes will be used to respond to multiple regional regulatory climate exercises as well as meeting regulatory expectations on incorporating climate change within the Group's strategic plans and ICAAP.

Committee evaluation

2022/2023

During 2023, the GRC implemented the recommendations of the 2022 committee evaluation conducted by Lintstock in consultation with the Group Company Secretary and Chief Governance Officer and Chief Risk and Compliance Officer. This included the need for continued focus on the quality of reporting, the importance of focusing limited agenda time to the most critical issues, and further clarity in roles and coordination between the GRC and other Board committees. The outcomes of the evaluation were reported to the Board, and progress was tracked by the GRC through the year.

2023/2024

During the year, the annual review of the effectiveness of the Board committees, including the GRC, was conducted externally by Independent Board Evaluation. The review determined that the GRC continued to operate effectively.

Areas for enhancement were identified, including the need for: increased focus on the most significant enterprise risks recognising the breadth of the risk agenda; continued close engagement with subsidiaries; and enhancement of induction programmes for new members given the complexity of much of the subject matter under discussion. A review of escalation parameters and filters will also be undertaken by the GRC in 2024.

The outcomes of the evaluation have been reported to the Board and the GRC will track progress in implementing recommendations during 2024.

Further details of the annual review of effectiveness can be found on pages 260 to 261.

The Committee will continue to monitor progress to deliver enhancements in response to feedback from the evaluations in 2024.

Focus of future activities

The GRC's focus for 2024 will include the following activities:

- oversee risk transformation activities to develop even stronger risk management capabilities, including the continued enhancement of the Group's risk appetite and risk management framework, especially in light of continued geopolitical and macroeconomic headwinds;

- continue to assess the Group's operational resilience capability and the implementation of enhancements to the operating model;

- continue to oversee treasury risk to strengthen our capital and liquidity management capabilities;

- monitor delivery against our climate ambitions and the development of appropriate data and model management tools and capabilities;

- continue the oversight of recovery and resolution planning activities to assess our resolvability capabilities if such situation arises;

- continue the oversight of the delivery of technology-related programmes including the data remediation programme, and enhancement of the Group's IT systems/platform;

- continue to oversee financial crime risk and the strengthening of the financial crime control framework, including proactive management by the business; and

- assess our strategic opportunities and risks including exposures to digital currencies or assets and use of timely application of technology such as machine learning or artificial intelligence.

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