The bank says the global reference index has been designed to reflect and track the stockmarket performance of key companies that are best placed to profit from the challenges presented by climate change. The performance of the benchmark has been tracked back to 2004 and the bank says it has outperformed the MSCI World Index by around 70%.
From this benchmark, HSBC has established four investable climate change indices that can be used to create portfolios for the likes of long-only funds, hedge funds, exchange-traded funds, discretionary funds and structured products. The indices are: an HSBC climate change index; the HSBC low carbon energy production index (including: solar, wind, biofuels and geothermals); the HSBC energy efficiency and energy management index (including: fuel efficiency autos, energy efficient solutions and fuel cells); and the HSBC water, waste and pollution control index (including: water recycling, waste technologies, environmental pollution control).
In creating these indices, HSBC says it has responded to changing investor sentiment in global equity markets.
"Climate change is set to be one of the defining investment opportunities in the years ahead," says Nick Robins, head of HSBCÆs climate change centre of excellence, who will act as an adviser on the HSBC Global Climate Change Benchmark Index. "This index series captures both the imperative of reducing greenhouse gas emissions and the need to adapt to the physical impact of climate change."
Stephen Green, group chairman of HSBC adds: "In developing tailored climate change indices we are providing real investment solutions which enable our clients to incorporate climate change into their investment decisions."
The HSBC research team says it has looked at a wide range of stocks and identified approximately 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."