Climate Change Stocks – How Investors Can Profit From The Green Revolution

Key takeaways

• Investors who want to get returns on their cash while also helping out the environment are spoiled for choice these days
• There a wide range of different approaches to climate-friendly investing, but not all of these are going to be right for everyone
• Some companies that fit well in this space have also seen phenomenal growth over the past five years, like Enphase Energy (+4,220%), Tesla, (+850%) and First Solar (+200%)

Every investor has issues that are important to them. Some want to support businesses that hire American workers. Others want to invest in tech that helps push the world forward. And some just want to maximize profits, and couldn’t care less about what they’re actually invested in.

Of those issues, fighting climate change is one that’s high on the priority list for many investors.

It’s been decades now since the first ‘green’ investment funds became available, and funding and capital contributions have been an important part in the efforts to slow climate change. While it’s nice to think of a world where everyone makes the right choices purely out of the kindness of their hearts, the reality isn’t so warm and fuzzy.

The truth is that investors need to see a return on their money in order to be incentivized to do it. Luckily, there are now a huge number of individual company stocks and broad ETFs that allow investors the potential to generate gains, while also supporting the causes that are important to them.

Want to learn more about the challenges of green investing, and some companies that are making waves in clean energy? Read on.

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It then automatically rebalances the Kit in line with these predictions. While it’s not a full ESG investment proposition, it gives investors access to some of the latest and most exciting companies in the sustainability and clean energy sectors.

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The challenge with ‘green’ investing

It sounds like a pretty simple concept to begin with. Investing in stocks that help the environment. But actually, it’s a lot more complicated than it looks at first glance.

Because to start with, there’s no agreed worldwide consensus on what constitutes a ‘green’ stock and what doesn’t. For example, there are sources of renewable energy that aren’t endorsed by environmentalists, even though they are renewable.

Nuclear power is a perfect example of this, with some believing that it has a huge future in providing the world with sustainable energy, while others look at the nuclear disasters that have occurred and believe it’s not worth it.

Even tech like wind farms can be controversial. The energy generation itself isn’t the problem, but they do potentially cause harm to birds and other animal habitats. Again, some activists believe that some large scale wind farms do more harm than good, and wouldn’t want to invest in the companies that back them.

Let’s take that a step further, and consider companies who most would believe have no place in a green portfolio — oil companies. While some investors want to exclude them completely, others believe that the only way to create change is to become activist investors in these companies, pushing for more research and development funding for renewable alternatives.

So if you’re an investor who wants your money to be used to help fight climate change, it’s vitally important that you clarify exactly what that means for you.

Climate stock sectors and companies

Within the clean and renewable energy sector, there are a large number of different companies to invest in directly, as well as ETFs that provide a large amount of diversification and management.

Here are some examples of some of the most popular investments in this space.

Stocks

Tesla

Probably one of the first companies that comes to mind when we talk about green tech is Tesla. While electric vehicles are much more widespread now, much of that is thanks to the efforts of Elon Musk and Tesla, who popularized it from quirk to the mainstream.

Tesla stock isn’t for the faint hearted, with the eccentric billionaire CEO causing wild swings in the price with crazy tweets and ideas. Nevertheless, so far it’s been a great long term bet for many investors as the stock is up over 850% over the past five years.

First Solar

Based out of Arizona, First Solar is one of the largest manufacturers of solar panels. Their panels are used in solar farms whose sole purpose is to generate electricity for the grid, but solar tech is also used in a wide range of other applications too.

Particularly in hot countries, solar panels are used to help power homes, provide hot water, run street lights and remote communications equipment. They even use them on the International Space Station.

First Solar’s stock price is up almost 200% over the past five years.

Enphase Energy

Where First Solar helps create renewable energy and Tesla uses it, Enphase Energy acts as the middleman. They create battery systems and electric vehicle charging stations, that allows this to be used functionally in our day to day lives.

While Enphase charging stations are attached to the electricity grid, which isn’t solely powered by renewable energy, it’s a vital piece in the chain to make electric vehicles more usable.

Enphase Energy stock is up a whopping 4,220% over the last five years.

Vestas Wind Systems

Wind power is just about the oldest form of renewable energy there is. Even before electricity was invented, humans harnessed wind to power our ships and windmills to run agricultural machinery. Wind farms from Vesta Wind Systems are a lot more complex these days, but the basic concept remains the same.

It’s another winner from a financial point of view, with Vestas stock up 115% over the past five years.

ETFs

If you’re looking for a broader level of diversification and want to invest in clean energy via ETFs, there are some great options for investors.

Some examples include:

First Trust NASDAQ® Clean Edge® Green Energy Index Fund

This fund aims to broadly mimic the NASDAQ Clean Edge Green Energy Index (try saying that 10 times fast), by investing in green energy companies. Some of the largest holdings in the fund include companies like ON Semiconductor, Tesla, First Solar, SolarEdge, Albermarle, Rivian and Plug Power.

iShares Global Clean Energy UCITS ETF

This ETF has a similar objective, but instead aims to benchmark against the S&P Global Clean Energy Index. Some of the major holdings in the fund include Vestas Wind Systems, First Solar, Plug Power and Consolidated Edison.

The bottom line

Investing in a way that helps prevent the pace of climate change is a nobel ideal. But there are many different paths to do it, and none of them are right or wrong. The first thing any activist investor needs to do is get clear on what they’re trying to achieve and what their values best align with.

From there, it’s easier to narrow down which particular companies or investment funds match those objectives.

For investors who want to invest in clean energy with a cutting-edge AI twist, the Clean Tech Kit from Q.ai is an option to consider. While not a full ESG investment, our AI invests in a range of different climate-friendly sectors like electric vehicles, renewable energy, wastewater and smart grid technology.

Every week our AI predicts the performance and volatility of the assets in this investment universe, and then automatically rebalances the Kit in line with these predictions.

Download Q.ai today for access to AI-powered investment strategies.