Climate investor confidence should return in H2: HSBC

LONDON (Reuters) - Confidence in climate change investments should return in the second half of this year as the global economy recovers and a U.N. climate panel review reaffirms the severity of climate change, an HSBC report said.

Both public opinion and investor confidence was dented by the disappointing outcome to U.N. climate talks in Copenhagen and intense scrutiny of the integrity and accuracy of climate science, Nick Robins the head of HSBC’s climate change center said in a report on Thursday.

The equity value of climate investments have underperformed, with the HSBC Climate Change Index rising 2.1 percent compared to 4.8 percent for MSCI World Index between November and April.

Nearly all countries have witnessed a decrease in concern in the past two years on the back of the economic crisis, the report said.

Recent controversy over the release of stolen emails from the Climatic Research Unit at the University of East Anglia and an error in a U.N. climate panel’s report about the disappearance of the Himalayan glaciers, has also affected public trust in industrialized nations.

“We believe that any market impacts over climate science may be nearing its floor, with the results of the three independent reviews confirming the integrity of the climate science,” the report said.

For the rest of this year, HSBC identified four factors that should catalyze a revival in public concern and market confidence.

A review on the U.N.’s Intergovernmental Panel on Climate Change (IPCC) will be finalized at the end of August and governments will meet in October to take any remedial measures.

“We believe that practical steps to strengthen the IPCC’s procedures would represent a positive outcome from this saga. The IPCC also has the opportunity to regain momentum with its special report on renewables later in the year,” Robins said.

Warmer weather should also underpin public concern about climate change. Last year, the UK Met Office projected that 2010 would be the warmest year on record, outstripping 1998. Already the first quarter of 2010 one of the hottest on record, in spite of a fierce winter in parts of the Northern hemisphere.

There is a strong correlation between public concern and economic growth rates in the United States, which together with a strengthened IPCC and warmer weather could underpin pragmatic policy action, the report said.

After a top-down focus on a global climate deal in 2009, the theme for 2010 is on national efforts to promote green growth, particularly in East Asia.

Reporting by Nina Chestney; Editing by William Hardy