Negative sentiment around the failure to reach a detailed agreement at Copenhagen will only have a short term impact on environmental markets, say fund managers.
Heads of state and government are due to sign an agreement at the UN climate change summit today. However, most expectations are that any deal will not be legally binding and future negotiations will be needed to ensure firm targets. There also rumours that leaders have been asked to extent the talks until tomorrow.
Managers recognise there will be some fallout from Copenhagen but believe the longer term outlook remains positive.
"I still believe a political agreement will be reached, though this will not meet the demands of environmental groups and scientists and overall is likely to be bearish for clean energy stocks in the short-term," Henderson head of SRI research Seb Beloe says.
"However, it is also clear that the deadline set for the completion of the talks this weekend is also an artificial deadline and that we can expect real progress to continue in the New Year with a legal agreement still expected by mid-year in Bonn or certainly by COP16 in Mexico."
Charlie Thomas, who manages Jupiter's £307m Ecology fund as well as the £42.5m Green trust and the €11m Climate Change Sicav says he also believes the next few years are important.
"If you look at the short term impact then we don't anticipate anything major. I think when we will see the difference is the next one to two years as the issues get fleshed out, that is when the investment strategy comes into play."
Impax Asset Management chief executive Ian Simms thinks some areas will see an immediate boost.
"The obvious big winner is energy efficiency. Investment will step up whether that be in the areas of building or transport. Forests are also worth highlight as these are the first climate change talks where incentives have been provided to stop countries chopping down trees," he says.
However, Nicola Donnelly, co-manager of WHEB Sustainability fund, says: "I think the reality is people and markets are cynical. They will only react when money is on the table and when analysts can get details they can translate to companies."
