Himalayan glaciers, hacked emails and low carbon investment appetite

How does public opinion about climate science affect investment in low carbon equities? HSBC has charted low-carbon equities’ performance relative to world markets since the IPCC’s landmark fourth assessment, published during 2007:
HSBC chart of Global Climate Change Index and MSCI World Index rebased from early 2007.

They point out that the HSBC Global Climate Change Index only fell 18.2 per cent from the launch of the IPCC’s fourth assessment report in 2007 until the hacked CRU emails were published in November 2009, while the MSCI World Index fell 22.8 per cent in the same period.

But since the CRU email incident, the Climate Change Index only rose 2.1 per cent compared to 4.8 per cent for the MSCI World Index.

Looking a little closer, it’s interesting to see just where the rate switched:  HSBC chart of Global Climate Change Index and MSCI World Index rebased from Nov 2009

However, HSBC’s analysts believe that the market impact of climate science doubts may be reaching a floor and could pick up in the second half. They say three independent reviews into climate science – the key one being the Inter Academy Council review of the IPCC reports, due by August, will assuage doubts about climate science — adding that the IPCC’s general meeting in October and its reports, due out some time in H2, on renewable energy and managing the risks of extreme events will also provide opportunities for a confidence boost.

They conclude:

Overall, we expect the rest of the year to separate the frivolous from the fundamental aspects of climate science, with the urgency of action being reaffirmed.

We can only conclude that these analysts don’t read too many climate sceptic blogs, then. But perhaps investors don’t, either.

Related links:

Climate science: The IPCC controversy explained - FT Energy Source
Phil Jones, but not climate science practices, exonerated – FT Energy Source

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