Climate change stocks are companies focused on reducing the economic and environmental impact of global warming. Rising temperatures are linked to more natural disasters, flooding, and other costly disruptions that can weigh on the global economy and markets.
Swiss Re estimates climate change could reduce global economic output by 11% to 14% by 2050, potentially wiping out up to $23 trillion in GDP. Risks like these are pushing governments and businesses to invest heavily in renewable energy, electric vehicles, and emerging climate technologies.
While tackling climate change requires a global effort, some companies are already leading the shift toward a cleaner economy. Here’s a closer look at several climate change stocks positioned to benefit from that transition.
Top climate change stocks to consider
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) | $1.3 trillion | 0.00% | Automobiles |
| Brookfield Renewable (NYSE:BEPC) | $7.7 billion | 3.55% | Independent Power and Renewable Electricity Producers |
| NextEra Energy (NYSE:NEE) | $196.0 billion | 2.47% | Electric Utilities |
| Constellation Energy (NASDAQ:CEG) | $103.7 billion | 0.55% | Electric Utilities |
| GE Vernova (NYSE:GEV) | $267.2 billion | 0.18% | Electrical Equipment |
Here's a closer look at these leading climate change stocks.
1. Tesla
NASDAQ: TSLA
Key Data Points
2. NextEra Energy
NYSE: NEE
Key Data Points
NYSE: BEPC
Key Data Points
4. Constellation Energy
NASDAQ: CEG
Key Data Points
NYSE: GEV
Key Data Points
Benefits and risks of investing in climate change stocks
Investing in climate change stocks has pros and cons. Some of the benefits include:
- Robust long-term growth prospects.
- Passive income potential.
- The feeling of making a difference by investing in companies that are investing in fighting climate change.
Meanwhile, some risk factors are:
- Changing government policies.
- Varying year-to-year demand for solar panels and wind turbines due to changes in the economy, interest rates, or other factors.
- The potential for underperformance by an individual climate change company due to mismanagement, excessive debt, or competition.
How to 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.
The bottom line
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.
Related investing topics
FAQ
FAQs on climate change stocks
About the Author
