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HSBC launches climate change benchmark index

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HSBC Corporate, Investment Banking and Markets has announced the launch of the HSBC Global Climate Change Benchmark Index, together with a family of four global climate change sub-indices

HSBC Corporate, Investment Banking and Markets has announced the launch of the HSBC Global Climate Change Benchmark Index, together with a family of four global climate change sub-indices suitable as a basis for investment products.

The Global Climate Change Benchmark Index, developed by HSBC’s global research team, is a global reference index designed to reflect and track the stock market performance of companies that are best placed to profit from the challenges presented by climate change. The performance of the benchmark has been tested back to 2004 and has outperformed the MSCI World Index by around 70 per cent.

From this benchmark HSBC has established four climate change indices that can be used to create portfolios for a diverse range of investment products such as long-only funds, hedge funds, exchange-traded funds, discretionary funds and structured products.

The indices are the HSBC Climate Change Index; the HSBC Low Carbon Energy Production Index, which comprises the solar, wind, biofuels and geothermal sectors; the HSBC Energy Efficiency & Energy Management Index, which includes fuel-efficient automobiles, energy efficient solutions and fuel cells; and the HSBC Water, Waste & Pollution Control Index, which encompasses water recycling, waste technologies and environmental pollution control.

HSBC says it has responded to changing investor sentiment in global equity markets. The research team has looked at a wide range of stocks and identified around 300 companies that are well positioned to benefit from the challenges of climate change.

‘What makes this different and exciting is the index structure, which captures a highly diverse number of investment themes with very attractive risk return characteristics,’ says Joaquim de Lima, global head of quant research for equities. ‘The construction and stock selection of the indices is based purely on quantitative criteria such as value generation and liquidity, and these factors will be regularly reviewed.’

Nick Robins, head of HSBC’s climate change centre of excellence, will act as an adviser on the Global Climate Change Benchmark Index. ‘Climate change is set to be one of the defining investment opportunities in the years ahead,’ he says. ‘This index series captures both the imperative of reducing greenhouse gas emissions, and the need to adapt to the physical impact of climate change.’

Adds HSBC group chairman Stephen Green: ‘HSBC has long recognised the importance of climate change and has shown real commitment to addressing the risks and opportunities it brings. In developing tailored climate change indices, we are providing real investment solutions that enable our clients to incorporate climate change into their investment decisions.’

HSBC Corporate, Investment Banking and Markets serves government, corporate and institutional clients with a range of products and services including foreign exchange, fixed income, equities, derivatives, risk advisory, corporate and investment banking, equity sales and trading, and equity and debt capital markets.

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