HSBC share price flat on carbon neutral commitments

The HSBC [HSBC] share price gained 9.4% in the year-to-date (through 21 July), closing at $27.66. The HSBC share price made rapid gains in the year to 8 March, when it closed 21.3% up at $30.66. A slight pullback over the subsequent weeks saw the HSBC share price sink to an intraday low of $28.56 on 25 March, which it hit again on 22 April.

Since then, the HSBC share price has made gains, closing the first half of the year up 14.1% at $28.85 on 30 June. However, the HSBC share price has since tumbled in July, losing 4.1% throughout the month to close 21 July at $27.66. This leaves the HSBC share price 17.3% above its level in the 12 months prior. 

  

HSBC share price goes ESG

Almost half the world’s assets under management are now managed by investors committed to cutting their portfolios’ carbon emissions to net-zero by 2050, according to the Financial Times. The increase in commitments means that fund managers are nearing a tipping point where the majority of global assets will be managed by similarly pledged investors.

HSBC Asset Management joined Amundi, Sumitomo Mitsui Trust Asset Management and Franklin Templeton in the latest round of asset managers signing up to the Net Zero Asset Managers initiative. The programme, which was launched last December in the run-up to the five-year anniversary of the Paris Agreement, recognises the central role that the investment industry has to play in limiting global warming.

Initially, 30 investors with $9trn in managed assets pledged to bring their portfolios carbon neutral by 2050, based on former Bank of England governor Mark Carney’s Task Force for Climate-related Financial Disclosures (TCFD) reporting framework.

Between them, HSBC and the other new signatories bring the total number of investors to 128 and the amount of assets covered by the pledge to $43trn. According to data from Willis Towers Watson, as reported by the Financial Times, the total assets managed by the industry is at $100trn, meaning almost half the world’s assets now belong to portfolios committed to becoming carbon neutral in the next three decades.

“This marks a fundamental tipping point across the investment sector and a significant boost in efforts to tackle climate change,” Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, told the Financial Times.

“As the world moves to a net-zero carbon future, we are committed to playing our part in addressing climate change, both as a business and as stewards of our clients’ assets” - Nicolas Moreau, CEO of HSBC Asset Management

 

“As the world moves to a net-zero carbon future, we are committed to playing our part in addressing climate change, both as a business and as stewards of our clients’ assets,” Nicolas Moreau, CEO of HSBC Asset Management, told Institutional Asset Manager. “HSBC Asset Management is proud to be part of this important initiative and contribute to an industry-wide push to achieve net-zero emissions by 2050.”

The HSBC share price was flat on 6 July, the day news broke that it had joined the pledge, indicating perhaps that investors are yet to be convinced that cutting its portfolio’s emissions will be beneficial for the HSBC share price.

Activists, however, feel that while it is welcome news that so many institutional investors have pledged to decarbonise their portfolios, pledges need to be backed by concrete action. “Pledges are the easy part,” Catherine Howarth, CEO of Share Action, told the Financial Times. “They need to be backed by forceful engagement with the many high emitters in the corporate community that have been dragging their feet.”

The UN-convened Net Zero Asset Owner Alliance, with $6.6trn in assets under management, advocates a global carbon price floor and ceiling which rise over time in order to incentivise the required investment in low-carbon industry.

“Pledges are the easy part. They need to be backed by forceful engagement with the many high emitters in the corporate community that have been dragging their feet” - Catherine Howarth, CEO of Share Action

 

Green investments prove profitable

It’s a good time for investors to be going green, with major ESG and clean energy stocks enjoying a positive performance in the past 12 months.

The iShares MSCI USA ESG Select ETF [SUSA], which tracks an index of US companies with positive ESG characteristics, gained 39.4% in the 12 months to 21 July, more than double what the HSBC share price gained in the same period. BlackRock [BLK], an HSBC competitor and signatory to the Net Zero Asset Managers Initiative, is the fund’s sixth-largest holding weighted at 1.66% on 20 July.

Clean energy has done especially well in that period, with the iShares Global Clean Energy ETF [ICLN] up 57.1% on its level from 12 months ago. However, investor enthusiasm for clean energy stocks has slowed so far in 2021, with the fund falling well behind the HSBC share price for the year-to-date (through 20 July) with losses of 18.6%. iShares’ MSCI USA ESG ETF, though, has continued its positive run, gaining 18.3% in the same period.