HSBC’s climate deal with Google signals sustainable investing turn
HSBC’s climate deal with Google signals sustainable investing turn
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Two years after a senior executive of responsible investing at HSBC Asset Management resigned under pressure after making disparaging public remarks about climate change, the parent bank is back with a deal with Google GOOGL 0.00%↑ to find the next generation of sustainable investment plays.
Amid a market backdrop of plunging ESG stocks and concern about a U.S. retreat on climate under a potential second Trump administration, HSBC said it would team with Google Cloud to provide debt finance to the tech giant’s choices to join its sustainability validation program.
HSBC, which said it has a goal of providing up to $1 billion to climate tech startups, is raising its head in the climate battle at a time when rivals such as Bank of America BAC 0.00%↑ , BlackRock BLK 0.00%↑ , and others in the venture investing business are retreating on earlier goals to invest in climate mitigation efforts. High interest rates and supply chain problems crushed renewable energy projects from wind to solar last year.
The announcement is notable in that it could signal a new outlook for sustainable debt financing as rates begin to fall and that it pairs a world-leading bank with one of the largest tech companies to choose among the thousands of climate startups out there.
While perhaps not a perfect bottom-of-the-market scenario, it’s a noteworthy recommitment of a major financial player to sustainable finance after two years in the climate wilderness. . . .
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Why a ‘greenium’ is so hard to detect
. . . . Among sustainability investors, the mystery of why green bonds have lost their “greeniums,” or premiums to regular corporate “brown” bonds when they are issued has been hotly debated. Mark Hulbert finds in a new academic study that issuers might actually be diluting their premiums to make both bonds look similar, in the face of lack of demand for bonds with less return. . . .
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Editor’s picks: Wildfires in Chile; plus, betting on jets for the Super Bowl
Wildfires devastate central Chile
Fires fanned by high winds and unusually hot temperatures have devastated the Valparaíso region of central Chile, destroying thousands of homes in the coastal city of Viña del Mar, NASA’s Earth Observatory reports. The MODIS (Moderate Resolution Imaging Spectroradiometer) instrument on NASA’s Aqua satellite captured the image above of smoke billowing into the air on Feb. 3. The fires destroyed about 30 square miles of land and 6,000 homes, including entire neighborhoods in Viña del Mar, according to Chile’s National Disaster Prevention and Response Service. Earlier this week, officials reported at least 112 people died in the first and the death toll is expected to climb. The Associated Press cited Rodrigo Mundaca, governor of the Valparaiso region, where Viña del Mar and other affected cities are located, as saying he believed some of the fires could have been intentionally caused. “These fires began in four points that lit up simultaneously,” Mundaca said. “As authorities we will have to work rigorously to find who is responsible.”
Betting on jets in Las Vegas
As many as 1,000 private planes are expected to arrive at Las Vegas area airports ahead of the Super Bowl matchup between the San Francisco 49ers and the defending champion Kansas City Chiefs. And the jets will be bringing a lot of greenhouse gas emissions with them, Gerald Narciso writes for The New York Times. The report quotes Benjamin Leffel, an assistant professor of public policy sustainability at the University of Nevada, Las Vegas, as saying, “The emissions levels of a mega-event like this from air traffic, and the energy use is at least double in a day than it would be on average.” Measuring CO₂ emissions from private planes is hard, because most municipalities and public agencies don’t track them. According to the NYT article, a 2023 report by Greenpeace estimated that private plane travel worldwide emitted 573,000 metric tons of CO₂ in 2022.
Explain that: Let it snow
. . . . Snowstorms are important to the environment year-round, says the National Snow and Ice Data Center at the University of Colorado Boulder. “Because snow is highly reflective, a vast amount of sunlight that hits the snow is reflected back into space instead of warming the planet. Without snow cover, the ground absorbs about four to six times more of the sun’s energy. The presence or absence of snow controls patterns of heating and cooling over Earth’s land surface more than any other single land surface feature,” the group says. In addition, snow is critical to global food, water, travel hazards, avalanche risks, and infrastructure design. In areas that get a large majority of their water from winter snowpacks, snow droughts could mean lower water availability in the spring and summer, says the NSIDC. That also can reduce the generation of hydropower. A study published in 2020 identifies global snow-drought hotspots — Eastern Russia, Europe, and the western U.S. — where snow droughts were longer and more intense in the second half of the period from 1980 to 2018. For more information on current drought conditions in the U.S., go to drought.gov.
Words to live by . . . .
“Without far more finance, 2023’s climate wins will quickly fizzle away into more empty promises. We need torrents, not trickles, of climate finance.” — Simon Stiell, executive secretary of the UN Framework Convention on Climate Change.