Green Climate Fund (GCF) Comments Off on Green Climate Fund (GCF)

What is the Green Climate Fund (GCF)?

The Green Climate Fund (GCF) has been set up within the framework of the UNFCCC as a financial support system to help developing countries in embracing mitigation practices to counter climate change. The GCF is located in Incheon, South Korea. A Board comprising 24 members run this fund and supported by a Secretariat.

The main objective of GCF is to respond to climate change by investing in low-emission and climate-resilient development. GCF focuses on the critical aspect of reducing or limiting greenhouse gas (GHG) emissions in developing countries.

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Rising electricity demand, growing energy security concerns, the impact of climate change, and the improving competitiveness of clean technologies have combined to see clean energy make a remarkable return to favor with public market investors in 2013, according to a new report by HSBC.

In its latest Quarterly Index Review, HSBC says its Global Climate Change Benchmark Index (CCI) has delivered a 19.8 percent return year to date, outperforming the MSCI ACWI (All Countries World Index) by 2.7 percent, and marking the first year since 2007 in which the climate sector has outperformed global equities.

hsbc-cci-performance

The report notes that 2013 has also seen a resurgence in public market deals in the sector and investment flows — in particular, secondary-offering and IPOs — a trend HSBC connects with growing confidence in the climate sector.

“On a risk-reward basis, the Climate Change theme has outperformed global equities across all regions except North America in the year to date,” says the report. “The excess returns in Asia Pacific, Europe and globally have more than compensated investors for the additional risks they have endured.”

The report’s authors, HSBC analysts Joachim de Lima and Vijay Sumon, say Energy Efficiency & Energy Management (EEEM) shone through as the strongest performing sector for the year to date, posting a 29.3 per cent return. This was followed by Low Carbon Energy Production (LCEP) and Environment and Land Use Management (ELUM) which returned 15 percent and 14.8 percent respectively. The only sector to have posted a negative return is Climate Finance, down 4.3 percent.

In the LCEP, wind and Solar are highlighted as two of the strongest performing themes, up 72 percent and 65 percent respectively (see graph below). 2013 is also the first year since 2010 that both wind and solar have registered positive returns.

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