The Impact Investor | ESG Investing Blog

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Climate change cases are on the rise across the world. And, investors have joined in the fight for a better planet. Various climate change investment opportunities have been made available to make this possible.

Climate change is causing many problems in the world that most of us are aware of. It’s getting hotter and drier, there is increased ice melting in the arctic, and the sea levels are rising at an alarming rate. These effects are not only a threat to the current generation and global species but also to future generations.

For this reason, more people are joining in the governments’ efforts to revert these issues. Climate change conscious investments are a major way that various individuals and organizations are trying to make a change.

As an investor, you can engage in climate change investment actively or passively. First, you can use products and services from companies promoting sustainability and environmental protection.

At the same time, you can add stocks, mutual funds, ETFs, and other investment products to your portfolio from such companies. Thorough research is crucial, like in any other form of investing. Therefore, start by doing thorough research.

melting of ice in the arctic

What is Climate Change Investment?

Investing in climate change focuses on investment opportunities that accelerate climate action. Climate change is an issue affecting the entire planet, and can’t be ignored. There’s an increasing need for different ways to combat this issue.

One way is investing in building an investment portfolio that consists of enterprises with a green income. Such companies tackle renewable, clean technology, recycling, and sustainable farming practices.

All investment opportunities that you can come up with must fall under the ESG (Environmental, Social, and Governance) investing. Before, there were few products available to would-be investors, but that’s not the case anymore.

Today, there are numerous climate change investment products you can invest in. Platforms like Earthfolio make it easier for individuals, small and large businesses to engage in eco-friendly investing. You get a financial return but direct your funds towards taking care of the planet.

This is investing in a changing climate intending to create a better environment. When you opt for climate change investment, some of the options you come across include:

For instance, if you want to invest in alternative or renewable energy companies, you can buy stocks from such companies. Some top examples to consider are:

These stocks are growing fast as more people embrace renewable energy as a better solution. All this is an effort to combat rapidly increasing climate change across the globe. The stocks ranking is through a growth model that scores such companies.

This growth model works on a 50/50 weighting of each company’s recent Year-Over-Year quarterly earnings per share. Every company requires sales and earnings to show its growth each year. It’s why the company doesn’t rely on growth for ranking only.

See Related: Best Artificial Intelligence ETFs to Invest in Today

Investing Strategies for Climate Change

Climate change investment goes beyond picking the right stocks or mutual funds to gain financial returns. The companies must focus on making the planet a better place for all through their products and services.

There’s no way of avoiding climate change as the world gets warmer each year. That’s why there’s a growing urgency and needed for fast actions to combat this. It’s now time to take action in all areas, including how you invest your money.

Investing strategies for climate change can be a guide for each investor. There are some specific areas you can focus on as you build your portfolio. It’s now easier to invest in climate change as an individual as more platforms grant access.

There are three ways to create a climate change investment strategy.

See related: 12 Worst ESG Companies | Stocks to Avoid

Alternative Energy Companies

alternative energy

One way of making a change as an investor is to create a climate investment strategy focusing on alternative energy companies.

These companies deal in wind, solar, biofuels, and geothermal energy production, and distribution across the world. That’s how you end up with quality batteries for hybrid electric vehicles.

Eco-Friendly Companies

The other way is through climate-proof practices. For instance, if a company focuses on reducing its carbon footprint, you can add its stocks to your portfolio. But, for this, thorough research and transparency from the enterprise is a must.

A good example is a supermarket chain that does its best to combat waste. All its retail stores and suppliers must use as little plastic packaging as possible for products and turn off all lights at night. While this is a small step, when it multiplies in thousands of stores, it has a tremendous effect on the climate and plastic pollution.

Yet another example is that of hybrid car manufacturers. They sell bonds to individuals and companies for electric car batteries. The money they get goes into advancing this technology which is tackling carbon emissions by the automotive industry.

However, even with these strategies, it’s important to remember the element of risk. Like any other form of investing, climate change investment carries a risk factor. It would be best if you took time to research and do your homework before you take the next step.

You still want financial returns. So doing good research helps you buy stock with a reasonable price and fundamentals that turn into a profit.  At the end of the day, you end up with an investment portfolio aligned with your values.

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Energy Conservation

The third strategy is looking for companies looking for a middle ground. Today there are many ways to build a green building from start to finish, for example.

But what happens to those that are already built? Green companies are finding ways to retrofit such buildings with alternative energy and other positive changes.

These companies find different ways to save energy. Good examples are those that change from old to more energy-efficient central heating and cooling systems. The result is lower carbon emissions and energy consumption.

The companies are driving environmental change but still work with a detailed business model. They generate good returns for investors, have robust balance sheets, and have good cash flow. All these help those to attain good profit margins while tackling climate change.

Climate change investment is no longer looked upon with doubtful eyes. Many companies are working within these three strategies, plus it’s less expensive today to go green. You can choose to be a sole investor or have a fund manager to guide you.

See Related: Best Solar Crowdfunding Options for Renewable Energy Projects

5 Climate Change Opportunities for Your Portfolio

As you seek to take steps and engage in climate change investment, there are many ways to go about it. You can be an active or a passive investor.

Active investing means these changes apply in your personal life. For instance, one main climate change issue is carbon emissions by vehicles. Those with petrol or diesel engines use fossil fuels responsible for a growing percentage of greenhouse gases.

One way of tackling this is by driving an electric or hybrid vehicle. These cars use little to no fuel, thus emitting fewer greenhouse gases.

You can purchase an electric car to use from now henceforth. That’s one way of actively investing in climate change.

On the other hand, passive investing means you can trade in the company that makes the cars and electric batteries. These companies have climate change stocks to invest in, which you can add to your portfolio.

See Related: How Much is a Wind Turbine? Here’s What to Know

Alternative Energy

It’s time to jump into the deep end when it comes to energy consumption if you want to save the planet. As an investor, you can make active changes in your life as you engage in climate change investment.

For instance, you can switch off the national grid and install solar power panels in your home. You end up consuming less energy from the national grid. Unlike before, solar panels are now affordable, and you can use the power in areas of your home.

Additionally, invest in climate change stocks from manufacturers of solar panels. Some of the best stocks to have on your portfolio in terms of alternative energy include:

  • Chevron Corporation (NYSE: CVX)
  • Proterra Inc (NASDAQ: PTRA)
  • Enphase Energy Inc (NASDAQ: ENPH)
  • First Solar Inc (NASDAQ: FSLR)
  • Avangrid Inc (NASDAQ: AGR)
  • NRG Energy (NYSE: NRG)
  • Public Service Enterprise Group Incorporated (NYSE: PEG)

These companies offer the best climate change stocks to invest in. But, you can also search for mutual funds. If you want to engage in individual investing, pick platforms like Betterment. They offer you the right tools and resources to make sound climate change investment decisions.

You can also invest in alternative energy equity mutual funds. These are funds that expose you to many companies engaging in clean energy. You buy several shares in each and set them up in an equity mutual fund.

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Be sure to check out:

  • Fidelity Select Environment and Alternative Energy Portfolio (FSLEX)
  • Guinness Atkinson Alternative Energy (GAAEX)
  • Firsthand Alternative Energy Fund (ALTEX)
  • New Alternative Fund Class A (NALFX)
  • Shelton Green Alpha Fund (NEXTX)

Electric Cars

electric cars

Rising climate change calls for drastic changes in the car industry. Transport is responsible for 29% of greenhouse gas emissions causing climate change.

Many people rely on vehicles to get from point A to B and back. But is there an alternative to fossil fuels? Car manufacturers are now answering this question by advancing electric car technology.

Some vehicles rely only on electric batteries to run, while others are hybrids. The results so far are positive as this reduces greenhouse gas emissions.

You can be part of this by purchasing an electric or hybrid vehicle. As a result, you become an active investor and tackle climate change head-on.

Also, you can add electric vehicle manufacturers to your climate change investment portfolio. Some climate change investment stocks you can purchase here include:

  • Ford
  • General Motors (GM)
  • Tesla
  • Magna
  • Ferrari

Some top-performing ETFs invest in electric cars. For instance:

  • The First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)

See Related: Best Investments for Young Adults

Sustainable Real Estate

Real estate has a great role to play when it comes to tackling climate change. By engaging in sustainable or green investing, the real estate industry can help attain climate and environmental goals. As the industry grows, this need becomes more apparent.

Keeping in mind climate change investment is crucial when making investing decisions. As you take action on your plans, seek out sustainability even in the real estate companies you engage in.

Every new real estate project that you invest in must have set climate and environmental goals. Adhering to them goes a long way in saving the planet from impending doom. Try and pick the best real estate investments for climate change in accordance with your values.

Governments across the world are putting in measures that promote sustainability. This makes it easier to access climate change investment opportunities that can accord you good returns in real estate.

Additionally, you can become an active investor by building a green home. From the foundation to the appliances in your house, keep sustainability at the forefront.

Alternatively, you can choose to add green stocks and ETFs to your portfolio. Top examples of doing more research on are:

  • Camden Property Trust (CPT)
  • Alexandria Real Estate Equities (ARE)
  • Prologis (PLD)
  • Welltower (WELL)

If you want private market exposure, there are several great real estate investment platforms out there that offer sustainable real estate investment opportunities:

See Related: Impact of Climate Refugees on World Economies

Tech Companies

Many parts of the world rely on computers and digitization. Computer manufacturers are responsible for part of the increasing climate change. That’s why tech companies must also be part of the change the world needs.

As you get ready to begin climate change impact investing, consider adding these companies to your portfolio. Some are getting more conscious of their manufacturing processes for computer parts. At the same time, companies like HP have active recycling drives worldwide to ensure their products don’t end up in landfills.

These top tech companies have products you can buy to use at home. But you can also engage in their stocks and mutual funds. For instance:

  • Apple
  • Microsoft
  • Amazon
  • Alphabet
  • Hewlett Packard

These companies are engaging in active research and development to create sustainable products and services. New technologies and innovations promote energy efficiency that can be scaled and is more affordable in the long run.

Without technology, it’s hard for many other industries to achieve sustainability. For example, digitization plays a key role in using electric cars and in manufacturing electric car batteries.

Take Microsoft founder Bill gates. He created the TerraPower, which is a nuclear wave reactor that moves from place to place. It’s 50 times more efficient than normal reactors and easy to scale economically.

It uses depleted uranium that would otherwise end up as waste to produce energy. This solves the issue of nuclear waste that many countries have.

As a climate change investor, following up with such creations is crucial. It shows which companies are working toward sustainability goals. Adding this to your climate change investment portfolio is in line with your values.

Tech companies are also adopting AI to improve products and service delivery. AI and climate change transform the investment sector in many ways.

See related: Reasons Why You Need ESG Investing

Agribusiness

Is agribusiness engaged in climate change? Sustainable agribusiness is a concept gaining momentum in the world. As much as climate change affects the food and agriculture business, these companies play a role in the rising climate change cases.

Through manufacturing processes, the companies contribute to carbon emissions. Growing crops using pesticides and fertilizers leads to water pollution. So, agribusiness needs to engage in more sustainable practices.

Climate change investors are changing tactics when it comes to agribusiness. There’s more focus on companies promoting ESG factors. The only issue is this industry lacks mutual funds and ETFs. There are only a few stocks to pick from. A great option to gain direct exposure to agribusiness is through farmland crowdfunding or private REITs, some of our favorite platforms include:

Profitability in this area will take time which was the case with renewable energy. There are more calls for top agribusiness companies to engage in sustainable practices tackling climate change.

The agriculture industry is responsible for almost 10% of greenhouse gases. But, more technologies and innovations are coming up to bring down this percentage.

Companies promoting good innovations and technologies you can look into include:

  • Novozymes (NVZMF)
  • Royal DSM (DSM)
  • Bayer AG (BAYN)
  • Corteva Agriscience (CTVA)
  • Trimble Navigation (TRMB)
  • AgEagle Aerial Systems (UAVs)

There’s increasing technology reliance by farmers. These technologies make farms more sustainable and even include using drones. Some go as far as cutting emissions and waste, which are key contributors to climate change.

Climate change investment for agribusiness is relatively new due to numerous complexities. But, more agribusiness companies can engage in sustainability. Governments are putting policies in place to ensure this is the case for years to come.

See Related: Best Climate Change Charities

What is GMO Climate Change Investment Fund?

GMO Climate Change Investment Fund uses an approach based on valuation when making investments. This is the best way to deliver exceptional service to clients who stay with the firm for a long time. It is what drives the GMO investment team.

According to GMO, it’s better to stand apart from other investors by following across market cycles. This results in creative opportunities for climate change investment.

GMO adheres to ESG factors which it sees as having a long-term impact on companies and the world. Investors can access mutual funds, separately managed accounts, and private funds.

There are different equities available for investors, including climate change funds. This is a mutual fund that comes with risks that investors must take into consideration.

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