Summary

The climate change investment agenda, we believe, has deepened

and broadened since the launch of the HSBC Climate Change

Indices in September 2007. Overall, low-carbon sources of power

generation have become more attractive, while high fuel costs have

underlined the win-win rationale for ramping up energy efficiency.

Climate change is also set to be a major driver of additional

investment in the water sector. The carbon markets have doubled in

size, but remain exposed to policy risk. The positive scientific,

business and policy momentum built up in 2007 is now faced with

the realpolitik of negotiations and a global economic slowdown,

suggesting an uncertain path to the culmination of climate talks in

Copenhagen next year.

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