Here’s a surprising statistic: Despite all the trials and tribulations – and mostly the inconsistency – over climate and clean energy policies across the world, the climate sector in the past year has performed better than the broader market for the first time since the global financial crisis (GFC).
HSBC says its Climate Change Benchmark Index has outperformed global equities by 2.0 per cent in calendar 2013 when measured against the MSCI all country world index (ACWI). On an absolute basis, the Climate sector is up 11.4 per cent in 2013 and relative to global equities it exhibits positive momentum for the first time since the financial crisis began.
HSBC credits the north American market for leading the way, where returns on climate stocks have average 13.5 per cent, followed by Europe which is up 10.8 per cent. In contrast Latin America, and Middle East and Africa have lagged badly, posting negative returns of more than 30 per cent.
What’s interesting is how this pans out with individual sectors. As the graph below shows, wind and solar investments have been among the strongest performers, gaining 50 per cent and 39 per cent respectively. Energy Efficiency & Management (EEEM) was the best performing sub sector, with transport and buildings efficiency delivering gains of 44.7 per cent and 24.5 per cent respectively.
Finance, which includes carbon markets, is the only sector to have declined, and is down 20 per cent relative to the broader market.