Climate Conscious Investing

As the world continues to go green, everyone continues to look for innovative ways to reduce the human impact on the environment. This has continued to lead to a rise in climate conscious businesses, which inherently has led to an increase in climate conscious investing. Investing with the environment in mind can come in different forms, and we are here to help you get a small glimpse of what is out there. 

Publicly Available Investments into Climate Focused Companies or Subsectors

Green Energy: Green energy is a large focus for many companies and individuals. Below are a few of the top renewable energy sources with companies and passive investments affiliated with each:

  • Solar Power: Some companies looking to harness the power of the sun with solar panels, include First Solar, JinkoSolar and Sunpower. However, to get broader exposure to Solar Power investing outside of just pure play solar panel companies, one can look into the Invesco Solar ETF (TAN). 
  • Wind Power: As wind power continues to gain momentum as a source of renewable energy, a few companies that are focused in the space include NextEra Energy Partners and, in Europe, Vestas Wind Systems. Furthermore, a broad and passive investment in wind power would include investing in First Trust Global Wind Energy ETF (FAN).
  • Hydro (Water) Power: There are not many companies that are solely operating in the hydropower space, however, there are a few that have a substantial amount of hydropower within their business model. PG&E, Idacorp, and Brookfield Renewable Partners have a large amount of hydropower exposure within their operations. 

Green Transportation: As electric vehicles (EV) gain in popularity, the technology behind them continues to evolve. With this evolution, there are other opportunities for EV vehicles beyond the likes of Tesla, as well as alternative ways of powering the vehicles. Some companies that operate in the space include Tesla, Canoo, Archer and Ballard Power Systems.

Waste Reduction / Recycling: One of the basic practices for individuals and businesses to perform is appropriate waste management and recycling practices. If you are looking to invest in recycling / waster reduction, pure play investments would consist of waste management companies that have a large component of recycling. These include Republic Services and Waste Management.

Organics: Organic food may be slightly more expensive, but that extra coin is worth it for the environment. Although there are not many pure play public companies to invest in, it is worth considering United Natural Foods, a wholesale distributor of healthy and organic foods.

Technology: Where there is innovation, there is new technology. For this reason, Energy Impact Partners has set up an index that tracks public technology companies focused on sustainability, energy efficiency and reducing greenhouse gas emissions. Following this index can show that it pays the atmosphere and one’s wallet to put the environment first. Take a look through the EIP Index (pictured above) for other public investment opportunities.

Up and Coming New Companies and Technologies Combating Climate Change

Are you more of an early adopter or interested in what is being developed? Some of the new climate focused companies are fascinating to learn about. Although these companies are generally backed by venture capitalists, and therefore not publicly available for investment, individuals can participate by investing in climate focused venture capitalists, looking for them as they become public, or helping scale the companies through word of mouth or as a customer. In the end, what is best for the environment is best for us all.

Some of the more interesting companies we have come across include the below:

  • ZeroAvia: Hydrogen-powered aviation start up that envisions renewable powered aviation with minimal emissions.
  • AlgiKnit: A New York based startup turning ocean algae into bio-yarn to transform the fashion ecosystem
  • AeroFarms: Transforming agriculture with vertical farming. This company is going pubic in a reverse merger for Spring Valley Acquisition, which is trading today under ticker SV.

A great follow is the Climate VC newsletter that puts out new climate focused investment deals, as well as helpful information, on a weekly basis.

What could bigger corporations be doing to make a larger impact?

Many people are looking for the US banking system, which is considered by many to be “Too Big to Fail,” to start to incorporate climate change risk into their risk management frameworks when considering lending to corporations. The liquidity that US Banks provide to US companies is a lifeline that could lead to substantial operational and behavioral changes by big corporations if the banks start to consider alternative climate risks when submitting for credit approval. 

Traditional institutions like Morgan Stanley and new values and ESG based investment companies like Open Invest are helping highlight the importance of good stewardship for companies to secure investment. 

As you can see, there are a number of opportunities where individuals can invest directly into companies that have an environmental impact, companies that incorporate climate risks to their operational decisions, or even up and coming new companies and technologies that are looking to combat climate change head on. Regardless of your investment appetite, seeing these opportunities emerge, and generate returns, is a net positive for our global environment and will continue to push the conversation forward.

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