With the climate crisis on the rise and change having a devastating impact on the economy and stock market, there has been a rise in investment opportunities for investors searching for climate change or green energy stocks. As per the recent report published by Swiss Re, a leading global insurance provider, the effects of the climate crisis can slash global economic output by 11% to 14% by the year 2050. This holds the potential to wipe away almost $23 trillion of global gross domestic product. Such a dramatic decline in global economic output will possibly affect the stock market.
Many businesses are taking it as their social responsibility to offset their carbon emissions as well as to reduce the long-term impacts of climate change. Many emerging ESG investing leaders are spearheading efforts to boost renewable energy production while reducing the use of fossil fuels. Meanwhile, others are investing in climate tech, which holds the potential to reduce the impact of global warming.
Investors are exploring new opportunities to invest in climate change stocks as they contribute to the global cause. Many organizations are choosing to allocate their funds to climate change stocks to maximize their return on their investments. The approval of one of the most significant climate change support packages in the history of the US occurred on August 8, 2022. The inflation reduction plan includes programs and incentives worth $370 billion. The goal is to identify and accelerate energy and climate action in the next decade.
Read more: Investing in Energy Stocks: Hottest Green Energy Stocks to Invest in 2023
Popular Climate Change Stocks to Watch Out for in 2023
A perception still exists among investors that even the best climate change stocks to buy cannot prove to be profitable. However, a recent McKinsey & Company report asserts quite the opposite. Sustainable companies today use fewer resources and work towards increasing their efficiency by reducing operating budgets. As per the report, the reduction can amount to as much as 60%. Therefore, it is vital for investors to go green in order to lead an organization to get green.
Let's closely evaluate some of the companies helping to lead the charge against global warming. These organizational stocks can be considered some of the best climate change stocks to consider buying.
Unilever (UL)
Many who follow Unilever (NYSE: UL) beyond their core business of delivering consumer goods are equally aware of their ranking in the list of best climate change stocks to buy. After all, the company has always been investing in various positive initiatives. During the coronavirus pandemic, when the deep-seated issues came to the forefront, Unilever committed to racial justice. Unilever recently joined other organizations in order to promote peace in conflict zones. Recently, the company also issued a statement stating that climate change is now emerging as a real climate crisis. And to find a solution, the company announced different go-green initiatives across its business verticals as well as its value chain. They are also encouraging their partners, along with other organizations, to push net-zero commitments.
IBM
Once considered a laggard in the broader tech ecosystem, IBM has successfully turned itself around lately, and the company has been focusing on relevant initiatives like cloud computing. They are paying a big dividend to make their sustainable initiatives attractive under any circumstance. IBM wears many hats, including being one of the best climate change stocks to buy. To prominently respond to the global climate emergency, the company has been employing artificial intelligence (AI) and hybrid cloud to accelerate the discovery of climate mitigation and to foster adaptation solutions. They are also improving their carbon emission performance by optimizing and capturing as well as preparing their enterprises to tackle the impact of climate change.
Read more: The Future of Corporate Sustainability: 2023 Predictions
Mondelez (MDLZ)
Widely renowned for its confectionaries, Mondelez (NASDAQ: MDLZ) is also garnering global attention for its ethical principles. Mondelez has pledged to make its snacks the right way to achieve its goals of global preservation needs and to serve its customers. The company primarily focuses on sustainably sourced key ingredients. However, one of the reasons why Mondelez is considered one of the best climate change stocks to buy is because they are not just focused on embracing trees but also feature programs that promote human rights. Another aspect that makes MDLZ one of the best climate investment stocks to buy is their viability.
Johnson & Johnson (JNJ)
Considered one of the biggest names in the healthcare sector, Johnson & Johnson (NYSE: JNJ) provides its investors with solid market performance. In the trailing year, the company's shares dipped more than 2%. However, this price action beat the benchmark equities index during the same period. It is, therefore, safe to admit that JNJ does not steer stakeholders wrong. Johnson & Johnson is considered the best climate change stock to buy by investors due to the company's several programs that are driven to support the environment. Along with tackling the urgent healthcare needs globally, the company has pledged to help in reducing the generated plastic waste. The company's consumer health unit has sworn $800 million to make its products more sustainable through 2030.
Read more: Adopting Leading ESG Practices can enhance Corporate Value. How?
NextEra Energy
A global industry leader in wind and solar generation, NextEra Energy will be recognized as one of the best renewable energy companies in 2023. Founded in 1984, the company is the largest renewable energy producer, including wind and solar, worldwide. Its power plants are mainly in Florida, and the company manages other parts of the power resource system. In addition to selling to its end users, the company also trades under PPAs.
NextEra Energy also happens to be one of the renewable energy stocks to watch out for, as it envisions a cleaner future. The company consistently invests in climate change. NextEra Energy has also published its Zero Carbon Blueprint driven by a goal to operate Net Zero by the year 2045. With a thorough strategy, the brand has been working to drive the $4 trillion market opportunity to decarbonize the US economy, along with enhancing the deployment of renewable energy. Furthermore, NextEra received the aristocrat distinction in 2022, as its yearly dividend rate increased for more than 25 years in a row.
Honda (HMC)
It might seem a little bit odd to consider automaker Honda as one of the top climate change stocks to buy, as its combustion-powered automobiles do impose a carbon footprint, and the company is not the most aggressive in terms of pivoting toward electric vehicles. But all said, the company's legendary reliability has been contributing to reducing waste overall, which rates Honda positively for the environment. Honda also has several EVs planned to be launched in its future product pipeline. Moreover, the automaker is also targeting an ambitious goal to achieve carbon neutrality across its products and corporate activities by 2050. Honda's management also seeks to eradicate fatalities involving Honda motorcycles and cars. The brand's stocks rank among the top climate change stocks due to the underlying enterprise putting humans first.
Read more: Forecast: Top Venture Capital Market Trends In 2023
Final Thoughts
Dire warnings are driving governments and companies to present serious means to reduce carbon emissions to lessen climate change impact. Organizations and governments are pouring trillions of dollars into renewable energy and electric vehicles (EVs) to reduce fossil fuel consumption. Sustainable investing funds and multiple green energy stocks are gaining much popularity among environmentally aware investors. They are also investing in emerging tech to fight against climate change.
It is vital to note that the best climate change stocks to buy present investors with a critically ethical tone. It assists them in mitigating and hopefully reversing the consequences of prior activities and taking new and sustainable actions. While it will take a global effort to lower carbon emissions and push back against the effects of climate change, organizational leaders are joining this battle to accelerate the shift toward a cleaner future.
With a presence in New York, San Francisco, Austin, Seattle, Toronto, London, Zurich, Pune, Bengaluru, and Hyderabad, SG Analytics, a pioneer in Research and Analytics, offers tailor-made services to enterprises worldwide.
A market leader in Investment Insights, SG Analytics assists in strengthening investment decisions by leveraging custom research support. Contact us today if you are in search of an investment research firm that offers tailored research support across a broad range of asset classes.
