The HSBC UK Pension Scheme (£27.8 billion ($36.7 billion) is going to pump $328 million into British renewable energy.
The bank’s pension plan, which manages the benefits of 190,000 members, will put the money mostly toward acquiring wind farms and solar plants. The announcement comes during the British government’s “Green GB Week,” which promotes the benefits of low-carbon growth.
Mark Thompson, CIO of HSBC Bank Pension Trust UK, told IPE.com that green investments “make clear financial sense,” as the bank, and pensions like it, want “steady, inflation-adjusted income streams.”
“Renewable infrastructure assets provide this return profile and are largely uncorrelated with traditional capital markets,” he said.
Although HSBC has not decided which businesses it will pick up, the pension plan wants to have a renewable energy portfolio large enough to power homes in an area about the size of Oxford, the university town which has a population of 150,000.
Renewable energy accounts for about 30% of Britain’s electricity.
“Renewable energy infrastructure can provide attractive risk-adjusted returns for investors seeking predictable cash flows derived from real assets over the long term,” Russell Picot, chair of the UK bank’s trustee board, said. He added that renewables and other inflation-linked assets “are well-suited to provide the income required to meet our long-term pension liabilities.”
Greencoat Capital, a specialist firm, will manage the commitment.
By Chris Butera