Interest in social issues, governance, and more environmentally sustainable investments continue to build, with ETFs and ESG mutual fund assets rising globally by 53% in 2021 and setting a new overall record. ESG has grown into a buzzword within investment groups for a reason, with this form of investing developing beyond a public desire to care for people and the planet and into a solid business strategy. In this article, we’ll discuss eco-friendly asset management, including details on environmental investments, investing in eco-friendly stocks, and some of the best ESG ETFs to inform your sustainable investing and asset management.
Environmental Investments
When you’re looking at increasing your environmental investments, you seek to make the world greener with support and investment toward things such as recycling, organic groceries, power generation, sustainable fisheries, and more, as well as the various present companies that support these behaviors with their own investments and business practices. As concerns for the environment grow, climate scientists, politicians, companies, and consumers are increasing their involvement and support of green practices and initiatives. If you’re looking to expand your environmental efforts and support, it’s vital to know the top areas for green investing.
To benefit the natural world with investments, one of the major focuses to consider is renewable energy technologies, such as geothermal energy, hydroelectricity, solar energy, and wind power. Other top focuses include pollution controls, green transportation, waste reduction, alternative agriculture, and water resources. Green investments provide environmental benefits in addition to the typical profits of an investment. As public interest and green investments build, older technologies such as polluting industries and fossil fuels are set to face additional regulatory barriers and costs, which provides an ideal opportunity to market more sustainable alternatives.
Investing in Eco-Friendly Stocks
Transitioning away from fossil fuel use has helped green investing worldwide. In addition to green businesses, there have been more funds holding eco-friendly stocks. These stocks are more accessible and numerous than ever before, allowing you to align your values with your investments. In helping create a more prosperous and sustainable world, you want to avoid investing in firms that are actively environmentally dangerous. You also want to focus support on companies that lead effective shareholder advocacy programs, support public health and environmental nonprofits, and have the least environmentally detrimental practices and support.
Best ESG ETFs
ESG funds are essentially investment funds that ideally include businesses that score the highest in various social, governance, and environmental factors. These types of funds have grown significantly in popularity as people increasingly desire to allocate their money toward environmental issues. Investors betting on increased environmental responsibility and security with sizable ESG (environmental, social, and governance) fund amounts express optimism for the future. However, these funds have also taken on some levels of confusion and controversy, as some ETFs (exchange-traded funds) have included amounts from oil and gas companies.
Monitoring, regulation, and requirements of ESG ETFs are more critical than ever with their growing popularity. The SEC is still developing a framework for ESG fund handling, meaning a given business’s presence in an ESG ETF doesn’t inherently guarantee that the company is an exemplary steward of the environment or that the involved companies are environmentally sound overall. Some of the best green stocks and ESG ETFs to invest in this year are that of First Solar Inc., Tesla Inc., Fisker Inc., Stem Inc., NextEra Energy Inc., Plug Power Inc., iShares Global Clean Energy ETF, and VanEck Low Carbon Energy ETF for their practices and efforts.
First Solar Inc.
First Solar has a sizable manufacturing presence in the United States, building solar panels and expanding operations internationally. The firm will also compete more successfully with producers in China through expansion. Involved technology enables the manufacturing process to have a minimal carbon footprint in contrast to companies that manufacture with polysilicon.
Tesla Inc.
As the current top electric vehicle producer worldwide, Tesla decreases air emissions from vehicles with its products, even factoring in air pollution from generating electricity to charge the involved batteries. The business also makes traditional solar panels and photovoltaic shingles.
Fisker Inc.
A company solely making electric vehicles, Fisker Automotive has around 60,000 reservations for the Ocean SUV and anticipates around 80,000 by the end of 2022. Fisker will also begin production at a carbon-neutral factory in November.
Stem Inc.
Stem uses machine learning and artificial intelligence to reduce emissions, automatically switching between grid power, onsite electricity generation, and battery power. The enterprise claims to be among the first public US businesses to have pure-play smart energy storage.
NextEra Energy Inc.
As the world’s biggest renewable energy company, NextEra Energy plans to help increase decarbonization in the US power sector through renewable energy investments such as green hydrogen. Companies make green hydrogen using renewably produced electricity instead of fossil fuels.
Plug Power Inc.
A maker of hydrogen fuel cells and electrolyzers, Plug Power aids in producing green hydrogen. Businesses make green hydrogen using renewably-made electricity. This renewably-made electricity uses an electrolyzer to separate water into the elements of hydrogen and oxygen. Companies then use the stored hydrogen to produce electricity by means of a fuel cell.
iShares Global Clean Energy ETF
Though there is an abundance of momentum supporting green investing, investors should keep in mind that it remains a sector in its infancy. To minimize risks by diversifying, some investors can consider ETFs such as iShares Global Clean Energy. This ETF holds positions in many equities, including stocks of firms involved in solar electricity and wind generation.
VanEck Low Carbon Energy ETF
Another highly worthwhile ESG ETF is VanEck, which is consistently involved in solar, hydrogen, wind, hydro, geothermal, and biofuel technology, as well as electric vehicles, lithium-ion batteries, water-to-energy production, industrial building materials, and smart grid technologies that effectively reduce energy consumption and carbon emissions.
Managing Your Eco-Friendly Assets
There are many reasons to increase your eco-friendly stocks with some of the best ESG ETFs. For help with eco-friendly asset management today, connect with EGÉA SRI.
Disclosure:
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
