In an occasional series, customers tell Utility Week what they want from their utility suppliers. Here, Tricia Holly Davis talks to HSBC bank.

Given the current state of the financial services sector, it might be easy to forget that most of the time banks do what they're supposed to do - namely, enabling a continuous global transfer of goods, services and currencies. If the power goes out on a trading floor at the wrong time, billions of pounds could be wiped off the stock markets in an instant. That is why consistent service delivery is paramount to banks like HSBC, says Mandeep Mangat, who leads HSBC's energy procurement team.

"We never want to be in a position where we can't supply services to our customers, so avoiding a service delay at any of our branches or where our traders operate, or anywhere that affects our core function as a bank, is our chief requirement from energy providers," he says.

With roughly 300,000 employees and 10,000 offices around the world, that is no small order. The financial turmoil a disruption to HSBC's service could cause is also why it has contingency plans in place for all its locations, and on-site generation capacity for all its data centres. "Our data centres are crucial, so we make sure that, whatever happens, information is protected," says Mangat.

Over the past few years, access to renewable energy, or low carbon power sources, has also become important to HSBC, says Mangat. In 2005, the company became the first global bank and FTSE 100 firm to pledge carbon neutrality, meaning it would take specific steps to counter the environmental impact of its everyday operations. HSBC's ability to accurately measure and reduce its energy and carbon consumption and purchase green electricity is vital to its carbon neutral plan. The bank's utility partners are therefore an important part of that plan.

"We have a stipulation in our utility contracts that a certain percentage of the energy we purchase must come from green sources," says Mangat.

Currently, he says, HSBC receives up to 90 per cent of its electricity in the UK from low carbon energy sources. However, that percentage fluctuates according to availability, and realistically it is probably lower at peak times simply because there is not enough green energy to go around.

About 4 per cent of the UK's fuel mix is renewable. Although the government has a target to increase that figure over the next decade, businesses such as HSBC worry how they will access more green energy in the interim. There are also concerns about whether the government's longer-term target is even possible given the number of barriers that exist to building new low carbon generation, such as complex planning rules.

Mangat explains that changes to UK climate change laws have only further "muddied" the water. "There is a lack of clarity about what the new green guidelines actually mean for business," says Mangat.

Mangat says there also needs to be clarification about what should qualify as "green energy". For example, some people believe that nuclear power should count as green, because it does not emit carbon dioxide. Others are staunchly opposed to nuclear being grouped in with wind and solar energy.

Mangat believes there is a huge opportunity for utility providers to work with customers such as HSBC, which have firm green energy purchasing targets in place, to gain greater access to lower carbon sources of power.

This could have a knock-on effect that benefits all companies and individuals with whom HSBC does business. As an adviser, lender and investor, HSBC can play an important role in encouraging the companies and projects it finances to manage climate change-related risks and opportunities.

Climate change events could affect the bank's decisions on where to locate its operations, because of their impact on populations, demographics, food availability and pricing and health, so there are far-reaching economic implications for the bank. Its pool of existing and prospective customers would be affected in similar ways, with the increased frequency of droughts, floods and storms having a particular impact on those relying on agriculture, transportation, tourism and the infrastructure industry.

For example, HSBC employs around 300 people in Shanghai serving 25,000 personal and commercial customers. This operation contributes £1.3 million to the company's annual pre-tax profit. The gross domestic product generated by the Yangtze delta region and Shanghai accounts for roughly 19 per cent of China's entire economy. A rise in sea levels along the lines forecast for that area of the world would have a significant negative impact on China's economy, which in turn, would have an impact on HSBC's shareholders, employees and business partners. So from HSBC's perspective, going green is as much a business necessity as it is an environmental one, says Mangat. That is the message utilities need to listen to more closely, he says.

One source of frustration for HSBC is the issue of transparent pricing. "Especially in today's economic climate, it is imperative for us to have a clear picture of the price we are paying for our energy," says Mangat. For example, he says suppliers could improve the validation of what is included in their fixed charges. "Because the charges are agreed upfront, getting firm figures later for what is built into that cost is a challenge," he says.

Getting a clear reading of the fixed charges for estimated usage versus the bank's actual consumption is also important from an environmental perspective, since HSBC's ability to live up to its carbon neutral pledge depends on it being able to accurately measure its energy consumption and associated carbon emissions. Getting more accurate data on green energy supplies is another challenge, says Mangat, because a number of suppliers are guilty of "over-selling" the amount of energy they supply as green.

Another big issue for HSBC is security of energy supply. "As a bank, we have to manage our risks in the long term and examine our ability to provide financial services to our customers over the next 15 to 20 years and beyond. Therefore, we must consider how we will serve our future energy demands and keep an open mind about all new potential energy sources," he says.

Partnering with a utility company, which could provide local power generation - preferably in the form of a low carbon energy source - might be one solution. More broadly speaking, however, Mangat says utilities need to start thinking in the longer term and treating their customers more like business partners.

"Unfortunately, many suppliers are short-sighted," he says. For instance, most utilities do not offer contracts longer than 18 months, even if it is what the customer wants. "We always want the best deal price-wise, because any savings we realise on our energy bills will filter down to our customers. But typically we're committed to a year-long or 18-month contract, even if we would be open to a lengthier commitment in exchange for better prices."

As for its water supply, Mangat says the biggest issue is a lack of competition. Water companies are also not the quickest to update their records, he says. For instance, if HSBC was to construct a new building on particular location, the fixed charges from the water supplier may not represent the correct distribution of water among the property's buildings.

Concerns aside, Mangat says utility services have vastly improved over the years. "The clarity of billing is getting better and utilities are more receptive to our needs. But, particularly in today's market, we need to be sure we are getting value for money so we can give our customers the best value for theirs."

HSB: vital statistics

HSBC employs in excess of 300,000 staff in its businesses around the world.
The organisation has 10,000 offices across the globe.
In 2008, it bought 1,516,000MWh of energy globally

What HSBC really wants:
l Continuity of service
l Access to green power
l Accurate data and billing
l Security of supply
l Competitive water utility market

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