Ethical stocks: environmentally friendly stocks

practice for free
Updated: 20 March 2020

As you’ll know if you’ve been following our series on ethical trading, there are a lot of investors keen to find environmentally friendly stocks to invest in, and plenty of companies to choose from if you want your investments to have a positive impact on the planet. While there are many stocks that meet general ESG criteria, some companies are obviously far more committed to environmental issues than others. If this is a strong value of yours you may want to look a little deeper than general CSR assessments.

It is up to you, as a trader, to research the market and make your own decisions regarding the stocks, bonds and funds you want to invest in. It’s also up to you to find a balance between environmental responsibility, other ESG criteria, and, of course, return on investment. AskTraders does not give tailored investment advice, and you are advised to consult a professional about your investment needs. To provide you with some ideas, we’ve put together a list of some of the best environmentally friendly stocks on the market.

Enphase Energy Inc.

This California-based green energy company produces solar microinverters for residential and commercial properties. With over 940,000 Enphase installations in place across the globe, the company claims to have offset billions of pounds of CO2, while generating almost four billion kilowatts of energy. Enphase has won numerous awards and accolades, including a Solar Innovation Award from Solar Solutions in 2018. It was named one of the Grid Edge Top 20 Most Innovative Companies in 2015, and also made the Green Builder Hot 50 Products list in 2018. The company is growing and earnings estimates have only received upward revisions, with expected earnings growth of 420% for the fiscal year of 2019. The company’s ticker symbol is ENPH.

Weyerhaeuser

You might not expect a timber real estate investment trust to be on this list. Its core business, after all, involves chopping down trees for the lumber it builds with. This company, however, practices sustainable forestry and has planted more than one billion trees over the last decade, while also maintaining a commitment to responsible development and clean energy. It also does well on good governance principles, stakeholder engagement, and diversity and inclusion in the workforce. Weyerhaeuser made the Ethisphere list of the world’s most ethical companies and the Dow Jones Sustainability World Index (three years in a row). It was also named one of the Global 100 Most Sustainable Corporations in the World in 2011 and 2014, and made the Civic 50 Top 50 Most Community-Minded Companies in 2012–2013. The company has a dividend yield of 4.57% and a price to earnings ratio of 28.48. Its ticker symbol is WY.

Clean Harbors

This company is not only dedicated to social responsibility within its core operations but is also the organisation frequently called in to clean up other organisation’s messes. With emergency spill response, and end-to-end hazardous waste management as two of the services it offers, Clean Harbors was responsible for leading the clean-up effort after the Deepwater Horizon explosion and the Gulf of Mexico Oil Spill of 2010. This Massachusetts-based company was founded in 1980 and operates throughout the US, Canada, Mexico and Puerto Rico. Operating through its subsidiary, Safety-Kleen, Clean Harbors is also the largest re-refiner and recycler of used oil in North America. The company has a comprehensive sustainability program revolving around energy usage, health and safety, customer solutions and engagement. Its revenue has tripled over the last decade, with a current price to earnings ratio of 72.97. The ticker symbol you’re looking for is CLH.

Brookfield Renewable Partners

Brookfield is an energy company with its focus, as the name implies, on clean, green, renewable energy sources. Unlike many other clean energy firms, this one has diversified across hydroelectric dams, making up around 75% of its generating capacity, wind power (20% of capacity) and solar power (the remaining 5%). The company is one of the largest investors in renewable energy worldwide, with 18,100 megawatts of generating capacity. The company owns 940 power generating facilities worldwide, including 219 hydroelectric facilities. Brookfield’s commitment to corporate social responsibility goes beyond its core business activities as well. It has a strong focus on employee wellbeing, health & safety, community engagement, philanthropy, transparency, and ethical governance. Distribution growth is a specific long-term goal, with plans to buy and build many more solar and wind farms in the near future. Brookfield’s stock has been growing fairly consistently in 2019, and with a 6.5% yield, this is definitely one to watch for ethical investors. The ticker symbol for this one is BEP.

Bloom Energy

San Jose-based renewable energy firm, Bloom Energy, delivers reliable, clean, sustainable electricity to organisations worldwide. The company develops, produces, and installs Bloom Energy Servers. These are power generators that use fuels from biological sources such as methane — a gas produced as a by-product of various types of waste — but recycled by Bloom into a useable energy source. Bloom servers let organisations customise energy solutions, allowing them to reduce their carbon footprint and meet sustainability goals. Bloom provides energy solutions to over 500 sites across the globe. As well as reducing carbon emissions, its technology facilitates reduced water consumption and results in lower levels of air pollution. The company was recognised with a Frost & Sullivan Technology Innovations Award in 2018. Like many energy companies, Bloom’s stock prices can be volatile, but Zacks estimates are calling for 21% revenue growth in the fiscal year of 2019, along with an expected earnings growth of 57% and 250% for 2019 and 2020. The ticker symbol is BE.

The above stocks can be traded at most online brokers, as long as they provide individual stocks among their tradeable assets. Brokers you may want to consider include eToro, DEGIRO, and IG. Remember, you can search for individual brokers and exchanges using the name of the company or the ticker symbols provided above.

More interested in Exchange Traded Funds, where you can trade stocks, all pre-screened and selected based on ESG criteria? You will want to check out our guide to the best sustainable ETFs.