Save the earth and invest with us

This Saturday at 8.30pm, millions of people around the world are expected to turn off their lights as part of "Earth Hour", a grassroots movement that aims to send the world's political leaders a signal that they are demanding action on the issue of climate change. Hong Kong is onboard, and so is RBS who is one of the corporate sponsors in Hong Kong.

So the bank took the opportunity to highlight the effort -- and then tout its own green investment opportunities -- in a neat marketing move that underscores how sustainable investment projects are not only on the drawing board but are actually under way, despite, and in some cases because of, the global economic downturn.

"The climate change threat that we face is bigger than the financial crisis we are now in," said Laura Weeks, director of development for WWF Hong Kong, who explained the premise of Earth Hour at the briefing in Hong Kong yesterday.

Earth Hour was launched two years ago by WWF's Sydney office in an attempt to prod recalcitrant Australian politicians into action on climate change. An estimated two million Sydney residents turned off their lights in 2007. The politicians took note (work towards legislation on lowering emissions is now underway), and so did the world. Last year, 371 cities in 35 countries joined the show and the number of participants leapfrogged to around 53 million. This year, some 1,500 cities and towns in more than 75 countries have signed on and promoters are hoping the event will attract close to a billion people.

In Asia, expect to not be able to see the New World Centre in Shanghai, Taipei 101 and the Petronas Twin Towers, because they are all shutting off their lights for an hour on Saturday night. Two IFC in Hong Kong, along with approximately 1,500 other buildings, and hundreds of bars, restaurants and clubs have all agreed to turn off their lights too.

"What you get from a lot of leaders is 'we aren't hearing a demand from our constituency that we put this issue front and centre, what we're hearing from them is fix the economy'," says James Leape, director general of the WWF's global network. "The danger in the financial crisis is that it will be used as an excuse to defer action on climate."

But RBS experts point out that the financial crisis may well spur some investment in green initiatives as governments from China to the US turn to infrastructure and energy projects to stimulate the economy. And investors can take advantage of this opportunity. The firm is trying to capture the attention of green-oriented investors (the sort who are planning to shut off their lights this Saturday) and make them take a look at the bank's environment-focused structured product offerings, such as its Risk Stabilised Water Index and its RBS Green Index, which have both outperformed the MSCI World Index over the past few years. The firm also unveiled yesterday yet another product connected to its water index.

"Water is a valuable commodity with escalating global demand and numerous supply constraint problems. The population boom and rise in demand for better quality food and drinking water, particularly in emerging markets, is likely to increase. Investment in water resources and associated infrastructure has attracted considerable interest among institutional and private investors around the world," explains Shane Edwards, managing director and global head of equity derivatives pricing and structuring at RBS.

The bank launched a new equity structured product linked to its Risk Stabilised Water Strategy Index, which tracks the performance of a basket of 10 global companies involved in the water industry, across infrastructure, waste-water treatment, desalination and irrigation. The aptly named Risk Stabilised Water Strategy-Linked Structured Product is capital-protected, has a five-year maturity and can be denominated in either Australian or US dollars.

To overcome the surge of volatility levels in global equity markets, RBS has introduced a volatility stabilisation mechanism to the product. This technique adopts a dynamic participation level at various stages of the product life. Put simply, it increases exposure to the strategy during periods of low volatility and decreases exposure during periods of high volatility. This mechanism aims to stabilise the risk level and enhance the return of the index, because historically volatility has been highest when equity markets experience a downturn.

As Edwards says in great marketing-speak: "Climate change creates new challenges, opportunities and risks. We aim to bring together related product areas from across the bank and develop solutions to help clients manage the risks associated with climate change and also take advantage of new opportunities."