The hazards of climate change and the need for restorative measures are felt across the business landscape, which is why investors are increasingly looking at the ESG ratings of companies they are choosing to invest in. The channeling of funds towards driving sustainability has become the concern of a huge chunk of investors, who are now showing keen interest in smart investing in green stocks.
If you are considering an investment in ESG companies, you are actually signing up for high future returns. As the focus on maintaining business sustainability is increasing with each passing year, your smart investing strategies should pick the right avenues. Let’s take you through some ways you can go about investing in ESG.
ESG Stocks
One of the most recommendable ways to join the sustainability bandwagon is to invest your money in ESG stocks of companies that you feel will perform well in the future. The best way to evaluate a company’s ESG capabilities is by checking its impact report—a statement that’s released to highlight its sustainability and social initiatives. The report can give you an insight into how the company is handing ESG issues, reducing carbon emissions, and creating a positive impact on the world. Fuel-Tech (FTEK), Invesco MSCI Sustainable Future ETF (ERTH), VanEck Vectors Environmental Services ETF (EVX) are a few companies you can consider for your ESG investment.
ESG Funds
Sometimes, it’s recommended that you avoid screening individual stocks to know if they meet the ESG criteria. An alternative investment solution would be to put your money in an ESG fund. These funds include only those companies that meet the criteria for inclusion. This means that you will know where your money is being channeled. ESG funds are also considered a great option for investors looking to create a diverse portfolio of ESG stocks. The best part: you don’t have to do all the hard work. Shelton Green Alpha Fund (NEXTX) and 1919 Socially Responsive Balanced Fund (SSIAX) are ESG funds doing great in the present times.
Robo-Advisors
If you wish to go off the traditional investment route, you can go for a robo-advisor that offers ESG investing options. Finding such robo-advisors for your ESG investment needs shouldn’t be a difficult task, as the internet has a huge deal of options to offer. After you have identified the robo-advisor of your choice, you need to indicate to them that you are keen on investing in ESG funds. Henceforth, they take care of pretty much everything. You just have to deposit the money regularly and your investment will continue as per a preset plan.
Green Power Stocks
Another great ESG investment avenue for you would be green transportation. Although on a smaller scale, research is underway to use fuel-cell technology to create an alternative powering method for automobiles. Millions of consumers are waiting for this technology’s fruition. Businesses that operate in this space include Ballard Power Systems (BLDP), the producer of cells for vehicles and power backup systems. Also, FuelCell Energy (FCEL) is worth considering because it focuses on offering power options to various industrial and commercial facilities.
Waste Management Stocks
Lastly, you can consider investing in ESG stocks of waste management companies that have large recycling facilities. Companies such as Waste Management (WM) and Republic Services (RSG) are worth considering, especially during times when recycling has become a standard practice across the globe. Most people are becoming increasingly aware that they can reprocess metal, paper and glass and reuse them. However, the number of recyclable things continues to grow. Vegetable oil, Waste oil, cell phones, batteries, computers, and auto parts can have a second life. So, companies engaged in recycling these items can have great return-generating potential for investors.
