Climate change stocks outperforming the market during COVID-19 pandemic

08 April 2020

Sustainable finance is going to be even more front and centre in the post Covid-19 world, according to the Chair of Guernsey Green Finance.

Dr Andy Sloan was responding to the publication of new research indicating how companies with strong environmental credentials have been outperforming others during the Covid-19 pandemic.

“Going forward the economic rules of the game will be different, Covid-19s impact on wealth, capital, employment, inflation, production, consumption and investment cannot yet be determined,” said Dr Sloan.

“But one fact is axiomatic – sustainable finance is even more front and centre in the post Covid-19 world. Frankly it’s now probably the only form of finance left in town.”

HSBC has published a research note which highlights that, within general stock market “turmoil” of recent weeks, shares of companies focused on climate change or ESG outperformed the market over the past three months as the virus has spread.

Business Green reported that the note stated that while the environment has been directly impacted by the pandemic through reduced air travel, home working, online deliveries, and temporarily lower industrial emissions, there were also signs that ESG factors provided useful guidance for investors looking to understand how companies and sectors are exposed to the crisis.

Analysis of more than 600 global public companies with exposure to climate finance showed those with good governance practices and high levels of exposure to long-term green growth markets should find themselves better positioned to manage short-term economic shocks and the recovery.

The bank said crises such as Covid-19 allowed investors to see ESG as a defensive characteristic.

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