Responsible business report 2020 2020 Responsible business report, hsf, herbert smith freehills,

RESPONSIBLE BUSINESS REPORT

2020

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Home Welcome The view from the top Digital transformation: Enabling digital Compliance disrupted: The forces shaping the future ESG – An evolving opportunity for banks Leaving it late? Legislative fixes for LIBOR provide a glimmer of hope Operational resilience: Braving the unknown Unlocking the data-driven bank An unprecedented year – global regulatory update Expanding horizons: The new banking workplace In the spotlight: Syndicated lending Mitigating government risk through economic crisis or political change Recalibration and resilience: Lending in Covid-19

This year has been an extraordinary year. The human cost and disruption caused by the Covid-19 global pandemic are difficult to overstate. In addition to the pandemic, in the last 12 months, we have also seen bushfires devastate large areas of Australia, widespread protests and calls for racial justice following the killing of George Floyd, as well as a mounting international movement pushing climate protection into the global consciousness in a way that we have not seen before. I have been proud of our firm’s response to these challenges, which has emphasised our passion for justice and deepened our commitment to our clients, our people and our communities."

JAMES PALMER, CHAIR AND SENIOR PARTNER

We, like others in the legal profession, have adapted to a completely different way of working in response to the pandemic. We hope that we will continue to adapt and evolve and to come through this global crisis stronger than before in terms of how we serve our clients, how we engage with and motivate our people, and of our underlying business objectives and performance.

Mental health and wellbeing

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In the wake of the BLM movement, we've had deep conversations with our people about how we could do more to improve the ethnic diversity across the firm and build a supportive, respectful environment where everyone, regardless of race, can thrive. Despite working for some time to further diversify the make-up of the firm, those conversations made it clear that more had to be done. In response to this, we unveiled our “10 Actions for Change”, an ethnicity framework and measure of accountability for every region in our global network to create meaningful change, for our people and our communities. We know that progress against the Actions is only a step on our journey to address these challenges but that should not deter us from setting goals.

Ethnicity

REFLECTIONS FROM A COMMUNITY

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We have developed innovative ways of working to enable continued delivery of our pro-bono and citizenship programmes across the network. We also continue to build on our relationship with our global charity partner, Médecins Sans Frontières, who continue to work tirelessly around the world supporting the pandemic response.

Social impact

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2019/2020

75,000

hours

HSF shares our commitment to independent access to medical treatment, regardless of race, gender, ethnicity, age or religion… We are very grateful to all those at HSF who so generously support our work – together we really have a positive impact on the lives of so many.” RUTH MOLLOY, MAJOR DONOR MANAGER, MSF AUSTRALIA & MSF NEW ZEALAND

Pro bono hours

Through our work with clients, we have observed an increasing focus on Environmental, Social and Governance initiatives across all sectors.

Our clients

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CASE STUDY Advising AGL Energy on its A$600 million sustainability-linked loan

CASE STUDY Advising BP on its first move into offshore wind

CASE STUDY Advising HSBC GAM on the launch of its flagship green bond fund

CASE STUDY Supporting the growth of social impact firms with Zamo Capital

CASE STUDY

We are delighted to be working with bp as it pursues its new strategy to transform from an international oil company into an integrated energy company. We recently advised bp on its first move into offshore wind, through a new strategic partnership with Equinor. As part of the deal, bp will purchase a 50% interest in Equinor’s Empire Wind and Beacon Wind assets for US$1.1 billion, with Equinor remaining as the operator. Empire Wind is located offshore New York City, with a total area of 80,000 acres, and is expected to have an installed capacity of 2 gigawatts. Beacon Wind is located offshore Massachusetts state with a total area of 128,000 acres, and is expected to have an installed capacity of 2.4 gigawatts. Both will provide clean and reliable energy to more than one million households.

Advising BP on its first move into offshore wind

2018/2019

67,000

hours

2017/2018

63,000

hours

As a leading global law firm, we are clear about our own responsibility to contribute to a sustainable future. By leveraging the skills, enthusiasm and insights of our people around the world, we continue to aim to make a sustained positive impact on many of today's social and environmental challenges.

Sustainability

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ACTIONS FOR CHANGE

Address barriers to recruitment

Improve retention

Deliver anti-racism workshops

Better inform and track approach

Invest in research

Engage meaningfully with our clients

Increase mentoring and work experience oppprtunites

Support diversity within our supply chain

Increase pro bono support

Hold regional executives accountable

Our people

Social impact

Our clients

Sustainability

The report

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Finally, 2020 saw the start of the ‘Decade of Action’, an initiative by the UN to accelerate delivery of the Sustainable Development Goals (SDGs), and I am delighted to share with you our fourth communication on progress, a report that not only demonstrates our commitment to the SDGs and the UN Global Compact (UNGC) Principles but also recognises the challenges we face. We still have a lot to do and will continue to embed the principles of the UNGC and SDGs in our day-to-day activities to support positive change in sustainable business practices, which we know is a key motivation for so many of our people. I hope you enjoy reading the case studies and updates within the full report.

The report

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Read full 10 actions for change here

CASE STUDY

In May, we advised HSBC Global Asset Management (GAM) on the launch of its flagship green bond fund: HSBC Real Economy Green Investment Opportunity GEM Bond Fund. This fund will use both public and private capital to build climate change mitigation capacity in emerging market economies. The aim is to enable investors to achieve real economic impact to deliver against the Paris Agreement, the UN Sustainable Development Goals, and the Green Impact Framework which has been issued by HSBC GAM. So far, HSBC GAM has raised US$474 million for the fund, including a US$75 million commitment by anchor investor the IFC, a member of the World Bank Group, and a US$75 million commitment by HSBC. Seven private investors have joined HSBC and IFC, with others expected to commit later this year.

Advising HSBC GAM on the launch of its flagship green bond fund

CASE STUDY

In December we advised AGL Energy, the Australian gas and electricity supplier, on its innovative A$600 million syndicated sustainability-linked loan – the first of its kind issued by an Australian energy company in the Asia-Pacific region. The deal was awarded Most Innovative Deal at FinanceAsia’s Achievement Awards in 2019 in Australia and New Zealand. With the support of Australia and New Zealand Banking Corporation, BNP Paribas and Herbert Smith Freehills as sustainability co-ordinators, AGL was able to issue a product that incentivises efficiency and improvement in AGL’s emissions performance

Advising AGL Energy on its A$600 million sustainability-linked loan

CASE STUDY

Zamo Capital was created to catalyse the impact investment industry in the UK, with a funding vehicle that provides equity and debt investments in social impact firms, as well as providing expertise and support as they grow. This year we have been thrilled to work alongside Zamo Capital on its partnership with Big Society Capital. Uniting capital, expertise and ideas, they are creating opportunities for investors and enterprises, and ultimately, better lives for individuals. Our London office advised on all aspects of the partnership structure, including: the establishment of Zamo Capital and the funding vehicle; negotiating the ongoing relationship between Zamo Capital and Big Society Capital; and completing detailed regulatory and tax analysis of the funding vehicle and management entity. Among other things, the partnership has enabled Zamo Capital to support enterprises that address issues such as quality affordable care for the elderly, critical health care challenges and homelessness.

Supporting the growth of social impact firms with Zamo Capital

15%

By 2020, we will reduce our global carbon footprint by

10%

reduction in energy use by 2020

30%

By 2020, we will reduce our paper consumption by

2016

2019

vs.

27%

13%

43%

REDUCED BY

PROGRESS

Address barriers to the recruitment of Black, First Nations, Asian and minority ethnic people

Improve retention of Black, First Nations, Asian and minority ethnic colleagues, and improve representation in more senior roles

Deliver anti-racism workshops in addition to global D&I programmes

Better inform and track our approach through robust data collection and analysis, and target-setting where appropriate

Invest in research and continue listening to our people (including leavers) and communities

Engage meaningfully with our clients on anti-racism

Increase mentoring and work experience opportunities for young people from Black, First Nations, Asian and minority ethnic backgrounds

Support diversity within our supply chain and support businesses and social enterprises owned by Black, First Nations, Asian and minority ethnic people

Increase pro bono support for organisations that address racial inequality

Hold regional executives accountable for progress on ethnic diversity

Our people

MSF DRC: Two motorcycle riders hold their bikes as they cross the Lomela river (Boende, Democratic Republic of Congo) on a pirogue. They're on their way to health posts supported by Médecins Sans Frontières. © MSF, 2020.

MSF Mali: Nafisatou, a Médecins Sans Frontières team member, shows a group of young girls in the Segou region of Mali the proper handwashing technique to protect themselves from COVID-19. © MSF/Lamine Keita, 2020

MSF Brazil: In Tefé, Brazil, Médecins Sans Frontières helped train staff at the regional hospital to manage patients with COVID-19. We also helped prepare a primary healthcare boat which travels to remote areas in the region. © Diego Baravelli/MSF, 2020.

MSF Greece: Many refugees and asylum seekers in Greece have faced eviction from their homes in the economic fallout from the COVID-19 pandemic. Médecins Sans Frontières referred those in the gravest need to our care facility in Athens. © MSF, 2020.

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We recognise the challenges facing our clients in the energy sector, as they seek to provide more energy to a growing global population whilst dramatically reducing emissions. We see our role as providing leadership and support to our clients as they navigate this transition. LEWIS MCDONALD, GLOBAL HEAD OF ENERGY

Sustainability is a very important objective for the firm across our global network. This project reflects our commitment to seeking new ways, or better leveraging existing ways, of operating and delivering first-class arbitration services to our clients in a smarter, greener and more sustainable manner. PAULA HODGES, PARTNER AND GLOBAL HEAD OF INTERNATIONAL ARBITRATION

Modern Slavery and Human Trafficking Statement

Accessibility

Legal and Regulatory

Report Fraud

Whistleblowing

Sustainability

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We are committing to reducing our overall greenhouse gas (GHG) emissions and then balancing that lower figure with emissions removed from the earth’s atmosphere to reach a net sum of zero. We are planning to do so in a number of ways, including: using clean energy; working with those suppliers who are also committed to reducing emissions; and supporting initiatives that remove any carbon dioxide that the firm produces from the atmosphere.

Committing to net-zero emissions by 2030

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Our emission reduction target is backed by science-based targets aligned with the requirements of the Paris Agreement, which seeks to limit global warming to 2° Celsius above pre-industrial levels, but the firm will pursue changes to limit warming to 1.5°, and will be verified by the Science Based Targets Initiative (SBTi), an organisation formed by the United Nations, World Wide Fund for Nature, CDP and others to encourage and measure corporate climate action.