Photo:Singapor3, Creative Commons, Flickr
Among banks and investment companies that are playing the green card, British bank HSBC Holdings (NYSE: HBC) is really a good sport with its triple threat: a climate change index, a climate change fund, and a climate confidence index. The HSBC Global Climate Change Index is composed of companies that contribute to environmental improvement, such as water-treatment companies and clean-energy firms. It can be traded and it has reported a back-tested return of 125%, outperforming the MSCI index by 70%.
On top of that is the Climate Change Fund, a quantitative fund designed to outperform its climate change index, like a computer that is programmed to beat its chess master.
An experienced financial professional expressed skepticism about the returns of investing in climate change indexes: giant companies could afford to take the risk, but individual fund managers and John Doe are probably going to pass.
And then there is the amusing Climate Confidence Index. It tries to quantify elements that are qualitative and subjective in nature: concern, confidence, commitment and optimism. How much do I love thee? Let me count the ways. In bar charts and percentages.
Here is an interesting finding from April 2007 in the prospectus:
Europeans, particularly the French and the Brits (who run HSBC), are among the most pessimistic and skeptical about the present and future state of climate change. The Chinese are the most optimistic and confident, although China did not sign the Kyoto Protocol.
What the HSBC is doing might be a lot of thunder and very little rain, but you have to give them credit for trying. It’s an innovative gesture, and a penny is better than no penny.