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Stimulus packages trigger climate outperformance, says HSBC

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Government measures focused on creating a sustainable low-carbon economy have added to the strong performance seen in the climate change sector, according to the latest quarterly review

Government measures focused on creating a sustainable low-carbon economy have added to the strong performance seen in the climate change sector, according to the latest quarterly review of the HSBC Climate Change Index.

HSBC Global Banking and Markets Research found that between January 2004 and June 2009 climate change investments have outperformed global equities despite the recent dislocation in the market and the continuing economic downturn.

The outperformance by the HSBC Global Climate Change Benchmark index versus global equities over this period currently stands at 46 per cent.
 
This outperformance largely pre-dates recent stimulus packages which have seen the energy efficiency and energy management component of the index, the recipient of the largest share of climate stimulus funds, post the strongest sector return up 16 per cent year to date after the announcement of the Chinese and US packages.

Joaquim de Lima, global head of quant research for equities, says: ‘Over the past eight months policymakers and governments have chosen to include some form of climate component in their economic recovery plans. The upshot is that globally, we have seen governments allocate a rising proportion1of their stimulus packages towards laying the foundations for growth within a sustainable low-carbon economy.’

Additionally, companies that are fully engaged with climate change and derive over half of their revenues from climate-related activities registered the strongest performance nearly every year, suggesting that those fully engaged with tackling climate change have already seen significant outperformance.

‘Despite a turbulent market, climate change investing remains not only valid, but essential for growth. The data contained in the report suggests that companies that are strongly committed to tackling climate change are already seeing the most growth and are best placed to gain from stimulus packages,’ says de Lima.

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