Climate change stocks are publicly traded companies with businesses geared towards reducing the impact of climate change on the global economy. Climate change has the potential to have a devastating impact on the economy and stock market. The rise in temperatures from global warming is linked to more natural disasters, coastal flooding, and a range of other issues.
According to a report by Swiss Re, a leading global insurance provider, the effects of climate change could slash global economic output by 11% to 14% by 2050. That could wipe out as much as $23 trillion of global gross domestic product. Such a decline in global economic output would have a significant effect on the stock market.
Dire warnings like that are driving governments and companies to get serious about reducing carbon emissions to lessen the impact of climate change. They're pouring trillions of dollars into renewable energy and electric vehicles (EVs) to reduce fossil fuel use. They're also investing in emerging climate tech to further the fight against climate change.
It will take a global effort to reduce carbon emissions to push back against the effects of climate change. However, clear leaders are emerging in this battle by helping to accelerate the shift toward a cleaner future.
Here's a closer look at a few companies helping to lead the charge against global warming. They stand out as some of the best climate change stocks to consider buying.
Top climate change stocks to watch
Many companies are taking their social responsibility seriously by working to offset their carbon emissions to reduce the long-term impacts of climate change. Several are emerging as ESG investing leaders by spearheading efforts to increase renewable energy production and reduce fossil fuel use. Meanwhile, others are investing in emerging climate tech, which could help to reduce the impact of global warming.
Among the top climate change stocks to consider are:
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Tesla (NASDAQ:TSLA) | $1.5 trillion | 0.00% | Automobiles |
| Brookfield Renewable (NYSE:BEPC) | $7.1 billion | 3.76% | Independent Power and Renewable Electricity Producers |
| NextEra Energy (NYSE:NEE) | $169.4 billion | 2.79% | Electric Utilities |
| Constellation Energy (NASDAQ:CEG) | $110.8 billion | 0.44% | Electric Utilities |
| Ge Vernova (NYSE:GEV) | $184.7 billion | 0.18% | Electrical Equipment |
Here's a closer look at these leading climate change stocks.
1. Tesla
NASDAQ: TSLA
Key Data Points
Tesla (TSLA -4.20%) is on a mission to accelerate the global transition to sustainable energy. It has almost single-handedly driven the adoption of electric vehicles. The company is a leader in the sector, producing both luxury vehicles and more affordable cars. It also produces zero-emission semis, mid-sized SUVs, and trucks.
EVs are only part of Tesla's sustainable energy ecosystem. The company also manufactures an array of solar energy and battery storage products to increase renewable energy usage. It aims to make climate tech products more accessible and affordable to more people, helping to accelerate the adoption of clean transportation and energy production. One way it has done that is by bringing EV battery production in-house to reduce costs.
Tesla is also driving towards autonomy. It's investing heavily in autonomous driving technology to support its plans to launch a robotaxi. The company is also developing a humanoid robot (Optimus). These initiatives will help increase efficiency and reduce carbon emissions.
2. NextEra Energy
NYSE: NEE
Key Data Points
NextEra Energy (NEE -0.33%) is a global leader in producing energy from the wind and sun. It's also a world leader in battery storage. The electric utility is among the biggest in the U.S. and has a large-scale energy business that operates clean energy generating assets, natural gas pipelines, and electricity transmission lines.
The company's focus on renewable energy has paid big dividends over the years. NextEra has increased its earnings per share at a 10% compound annual growth rate over the past decade, which is three times faster than its rivals. That's helped power above-average dividend growth and market-beating total returns.
NextEra Energy has a vast pipeline of renewable energy and battery storage development opportunities as it continues to lead in decarbonizing the power grid. The company expects to grow its renewable energy operating capacity to around 75 gigawatts (GW) by 2027, which would be larger than the installed renewable energy capacity of all but seven countries. It's also investing in emerging climate tech, such as green hydrogen, which uses renewable energy to electrolyze water and produce emissions-free hydrogen. The fuel has a range of potential uses in the energy, industrial, and transportation sectors and could help further reduce emissions.
3. Brookfield Renewable
NYSE: BEPC
Key Data Points
Brookfield Renewable (BEPC +0.58%) is a global leader in decarbonization. Its operations enable companies to avoid more than 250 million tonnes of carbon each year.
Brookfield operates one of the world's largest renewable energy platforms. It owns hydroelectric, wind (onshore and offshore), solar (utility-scale and distributed generation), and energy storage facilities across five continents. It primarily sells the power it produces under long-term contracts to users such as electric utilities and large corporate power buyers. The company is also a leading developer of renewable energy assets. It has over 270 GW of renewable power assets currently operating or in its development pipeline.
The company also has a growing sustainable solutions platform. It has investments spanning carbon capture and storage, biofuels production, materials recycling, global nuclear services, solar panel manufacturing, and e-fuels.
Brookfield's global scale has made it a partner of choice for companies and governments seeking to achieve their carbon reduction goals. That's helping power above-average earnings growth. It expects to grow its funds from operations (FFO) by more than 10% per share annually over the next decade. That should support its plan to increase its dividend by 5% to 9% per year.
4. Constellation Energy
NASDAQ: CEG
Key Data Points
Constellation Energy (CEG -0.16%) is the nation's largest producer of carbon-free energy. It has more than 32.4 GW of power-generating capacity, 90% of which is carbon-free energy. It has the nation's largest nuclear power fleet, which complements its hydro, wind, and solar energy resources. The company provides its carbon-free energy to more than 20 million homes and businesses.
Constellation Energy agreed to buy Calpine to create the country's leading producer of clean and reliable energy. The combined company will operate almost 60 GW of zero- and low-emissions power sources, including nuclear, natural gas, geothermal, hydro, wind, solar, cogeneration, and battery storage.
Constellation Energy is also helping jump-start the country's nuclear power renaissance. It's working to restart Three Mile Island Unit 1, which it shut down for economic reasons several years ago. However, technology giant Microsoft (MSFT +1.22%) signed a 20-year power purchase agreement for all 835 megawatts of the unit's capacity to support its cloud and AI power needs. Constellation also signed a 20-year nuclear power deal with Meta Platforms (META +0.28%) for 1.1 GW of power from its Clinton Clean Energy Center starting in mid-2027.
5. GE Vernova
NYSE: GEV
Key Data Points
GE Vernova (GEV +0.80%) was formed in 2024 following the merger and spin-off of General Electric's former energy businesses: GE Power, GE Renewable Energy, GE Digital, and GE Energy Financial Services. The company has three operating segments:
- Power: The company provides gas-fired electricity generation solutions to utilities and other power producers.
- Wind: GE Vernova is an industry leader in manufacturing and servicing wind turbines.
- Electrification: The company's technology helps modernize and digitize the electricity grid.
The company's wind and gas turbines produce about 25% of the world's electricity. It has a significant backlog of projects that support the growing demand for lower-carbon electricity. That should power growing revenue and profitability for GE Vernova in the coming years.
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How to invest in climate change stocks
Anyone can invest in climate change stocks. Here's a step-by-step guide on how to add one to your portfolio:
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Leading the charge to battle climate change
Dire warnings about the catastrophic impact of climate change are worrisome. However, they've spurred governments and other institutions to get more serious about taking steps to blunt its effects by reducing carbon emissions as quickly as possible.
Several companies have stepped up to lead the charge to a more sustainable world. These climate change stocks should benefit from continued investment in the sector. That should help make the world a better place over the long term while creating value for shareholders in the process.
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