Energy

HSBC: risk and return

March 22, 2011

Global

March 22, 2011

Global
Our Editors

The Economist Intelligence Unit

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HSBC, a global financial services firm headquartered in the UK, has developed a range of responses relating to climate adaptation, from both a risk perspective and in terms of opportunity. On the risk front, it released a report in 2009, focused on the G20, which assesses the risk to different countries from expected climate impacts, in terms of food losses, water stress, and rising healthcare costs. This assessment is intended to advise both the bank and its clients on looming risks, but can also help to shape future products. One clear example is the bank's entry into the crop insurance market, developing, together with Allianz, a German insurance and financial services group, an offering for Brazilian farmers, to help them deal with climate-related losses.

Later this year, HSBC's Brazilian insurance arm will introduce a new climate offering: an insurance product for individuals that will provide cover to clean and repair homes and cars that are affected by weather events. The product also provides warnings and information to consumers, says Fernando Moreiro, the CEO of HSBC Insurance Brazil. "It's basically a 24-hour service that gives information about climate and risks of flooding. And if you've been flooded, then we would clean your home or car." Mr Moreiro plans to sell this in conjunction with finance products offered by the bank and believes it will create a huge new market. "If you asked me about the biggest impact, it's more about homes and businesses; the real impact in terms of changing consumer culture, it's much more on the people side. What we are planning will really go to the next level."

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