The economic incentive, where it makes economic sense for both consumers and corporates to invest in climate solutions, has clearly reached an inflection point.
Before the financial crisis, the climate and environment scene was mostly driven by politics, in areas such as subsidies and regulation. Today, it is all about economics. Investing in climate solutions is a rational decision for consumers and enterprises.
Companies understand improving sustainability is vital to remaining competitive in today’s world. At the same time, taking positive action for the environment is something society as a whole is getting behind. However, the impact of climate and environment as a driver of company cash flows remains under-researched and underestimated by most market participants.
We focus on three main investment areas in the climate and environment space – innovators within the alternative energy sector, companies aiming at resource efficiency, as well as adapters focusing on environment protection. Below are five stocks at the forefront of providing a positive contribution in climate solutions and environmental protection.
Trimble is a technology and software provider whose solutions allow users to collect, manage and analyse information easier and faster in order to gain greater efficiency and productivity. Trimble solutions are used primarily in the construction industry mostly through Building Information Modelling, but also in the agricultural and the transportation sectors.
American Water Works
American Water Works is one of the largest water and wastewater utilities in the US and will be a clear beneficiary of increasing US water infrastructure spending. The company is providing clean, safe, reliable and affordable water services and will help to improve, restore and protect the US water supply.
ASML is the largest global supplier of photolithography systems used by chipmakers for processes that enable innovative technology solutions for our society. ASML’s advanced equipment makes computing cheaper and reduces energy consumption across multiple applications from automation technology to cloud servers and zero-emission vehicles.
Wacker Chemie is a global leader in the manufacture of high purity polysilicon used in solar photovoltaic panels. This material improves the efficiency and lowers the manufacturing costs of these panels. The company also produces silicon that is used in batteries and many other applications that enable better resource efficiency in consumer, construction and industrial end markets.
Weyerhaueser is one of the world’s largest timberland owners and is dedicated to growing and harvesting trees in a responsible and renewable way. This goes hand in hand with protecting biological diversity, water quality and the ecosystem in general. The wood produced is sold to its customers as an alternative to other carbon-heavy materials like steel and cement, thereby contributing to a more sustainable society.
Thomas Sørensen and Henning Padberg, portfolio managers of the Nordea 1 – Global Climate and Environment Equity fund