Nigel has been in the regulated financial services industry for nearly a decade, has previously owned a financial brokerage and has written many times for sites relating to personal finance and trading.
The world is changing.
Newer, eco-friendly businesses have sprouted up, and mindful investors seek more sustainable and environmentally aware companies for investing opportunities. Many sustainable and environmentally friendly stocks were made available for investors in conjunction with the effort.
This is the result of the rapid escalation of the climate crisis, and as debates intensify, progress isn’t just around the corner – it’s already here. Companies worldwide are starting to turn over a new, greener leaf from vehicle manufacturing and power generation to waste management.
Green stocks are shares of companies whose primary business is beneficial to the environment. These environmentally friendly stocks are likely to be concentrated in alternative energy, pollution control, carbon abatement, and recycling.
Essentially, eco-friendly or green stocks mostly attract significant interest from investors who care about environmentally-friendly market leaders.
However, almost all green stocks rely heavily on government subsidies and tax incentives. These subsidies may suffer as governments grapple with the economic slowdowns, and as the cost of conventional energy sources, like oil and natural gas, stays low.
In this article, we’ve outlined some environmentally friendly stocks & ethical investments for your portfolio.
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.
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.
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.
Founded in Tel Aviv in 2007, eToro is the world’s leading social trading and investing platform. Since introducing the world’s first-ever social trading platform back in 2010, eToro has been at the forefront of the fintech revolution. They offer a fantastic range of ethical stocks and ETFs that can be traded with 0% commission.
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.
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.
Green stocks are designed to help the environment by directing portions of the capital raised towards projects related to clean energy, habitat restoration, and renewable energy, among others.
Investors who are aware of and care about the climate crisis are more likely to buy green stocks. The buying and selling of these eco-friendly products will help in making environmentally friendly projects a success.
Green stocks provide investors with an opportunity to earn tax-exempt income. The stocks will also give investors the benefit of knowing that their investment proceeds are being used in a responsible, positive manner.
Higher demand for green stocks equates to lower borrowing costs. Lower borrowing costs means reduced expenditures, which are either passed down to the investor in the form of a dividend or used to lower the operating costs for exchange-traded funds (ETFs) or bonds.
The above sustainable and green stocks can be traded at most online brokers, as long as they provide individual stocks among their tradable assets. Brokers you may want to consider include eToro, DEGIRO, and IG. Remember, you can search for individual brokers and exchanges using the company's name 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.
Green chip stocks are shares of companies whose primary business is beneficial to the environment. Green chip stocks are likely to be concentrated in areas such as alternative energy, pollution control, carbon abatement and recycling.
Yes, green stocks are legit. However, green stocks may be a riskier investment as it is hard to gain profit. As an investor, you need to choose your green stocks wisely.
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