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Earth Day, celebrated every year on Apr 22, is a global event designed to raise awareness about environmental issues and promote sustainable living. As we face the increasing impacts of climate change, it's crucial to be not only environmentally conscious in our daily lives but also in our investment decisions.
Green investing, also known as sustainable, socially responsible, or impact investing, is the practice of investing in companies and projects that have a positive environmental impact. This involves selecting investments that prioritize environmental, social, and governance (ESG) factors, as well as considering the long-term effects of business practices on the environment and society (read: Low Volatility ETFs to Play Stock Market Volatility).
Reasons for Green Investing
Combating Climate Change: Investing in green companies helps support the transition to a low-carbon economy and reduces the severity of climate change.
Managing Risks: Companies that prioritize ESG factors are often better prepared to handle the financial risks associated with climate change, such as regulatory shifts or physical damage from extreme weather events.
Aligning Value With Investment: Green investing supports businesses that align with environmental values, helping to create a more sustainable future.
Attractive Returns: Research has shown that companies a strong ESG performance can outperform their less sustainable counterparts in the long run.
How to Invest?
Investors could incorporate green investing into their portfolio by choosing companies with strong environmental records committed to reducing their carbon footprint, minimizing waste, and conserving resources. These players are focused on the ESG criteria and support companies developing and promoting clean energy, energy efficiency, and environmental technologies (read: Moat ETFs Are Beating S&P 500: Here's Why).
Here, we highlight five ETFs that could make for excellent portfolios for the long term:
Invesco MSCI Sustainable Future ETF provides exposure to companies that focus on offering products or services that contribute to a more environmentally sustainable economy by making more efficient use of global resources. It tracks the MSCI Global Environment Select Index and holds 165 stocks in its basket. American firms take the largest share at 42%, while China rounds off the next spot with 15% of assets.
Invesco MSCI Sustainable Future ETF has AUM of $290.4 million and charges 56 bps in annual fees. It trades in an average daily volume of 15,000 shares.
Etho Climate Leadership US ETF is the first diversified, fossil-free, sustainable and responsible U.S. ETF that invests in companies which are more climate efficient and ESG sustainable than their peers. It tracks the Etho Climate Leadership Index and uses a 5-level positive and negative screening process to select companies that align with high ESG guidelines, and have lower pollution levels and strong operational efficiency versus their sector and industry peers. ETHO holds a broad basket of 259 securities.
Etho Climate Leadership US ETF has amassed $172.9 million in its asset base while trading in an average daily volume of around 5,000 shares. It charges 47 bps in annual fees from investors.
iShares Global Clean Energy ETF provides global exposure to 98 companies that produce energy from solar, wind and other renewable sources by tracking the S&P Global Clean Energy Index. The United States and China take the top two spots in terms of country exposure with a 43.5% and 11.9% share, respectively (read: China on High Growth Trajectory: ETFs That Are in Momentum).
iShares Global Clean Energy ETF has AUM of $4.8 billion and charges 40 bps in annual fees and expenses. It trades in a heavy volume of 3 million shares and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Global X CleanTech ETF seeks to invest in companies that stand to benefit from the increased adoption of technologies that inhibit or reduce negative environmental impacts. This includes companies involved in renewable energy production, energy storage, smart grid implementation, residential/commercial energy efficiency, and the production and provision of pollution-reducing products and solutions. Global X CleanTech ETF follows the Indxx Global CleanTech Index and holds 41 stocks in its basket.
Global X CleanTech ETF has accumulated $116.2 million in its asset base and charges 50 bps in annual fees. It trades in a volume of 23,000 shares a day on average.
Invesco MSCI Green Building ETF follows the MSCI Global Green Building Index, which comprises companies that provide exposure to the environment impact theme of “green building.” Green building companies include the design, construction, redevelopment, retrofitting, or acquisition of green-certified properties to promote mechanisms for raising capacity for effective climate change mitigation and adaptation. GBLD holds 92 stocks in its basket, with Japanese firms making up for 24.7% of assets. This was followed by a 24.5% share in the United States and 13.9% in Singapore.
Invesco MSCI Green Building ETF has amassed $5.9 million in its asset base and charges 39 bps in fees per year from investors. It trades in an average daily volume of 2,000 shares.
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ETFs for Green Investing Ahead of Earth Day
Earth Day, celebrated every year on Apr 22, is a global event designed to raise awareness about environmental issues and promote sustainable living. As we face the increasing impacts of climate change, it's crucial to be not only environmentally conscious in our daily lives but also in our investment decisions.
Green investing, also known as sustainable, socially responsible, or impact investing, is the practice of investing in companies and projects that have a positive environmental impact. This involves selecting investments that prioritize environmental, social, and governance (ESG) factors, as well as considering the long-term effects of business practices on the environment and society (read: Low Volatility ETFs to Play Stock Market Volatility).
Reasons for Green Investing
Combating Climate Change: Investing in green companies helps support the transition to a low-carbon economy and reduces the severity of climate change.
Managing Risks: Companies that prioritize ESG factors are often better prepared to handle the financial risks associated with climate change, such as regulatory shifts or physical damage from extreme weather events.
Aligning Value With Investment: Green investing supports businesses that align with environmental values, helping to create a more sustainable future.
Attractive Returns: Research has shown that companies a strong ESG performance can outperform their less sustainable counterparts in the long run.
How to Invest?
Investors could incorporate green investing into their portfolio by choosing companies with strong environmental records committed to reducing their carbon footprint, minimizing waste, and conserving resources. These players are focused on the ESG criteria and support companies developing and promoting clean energy, energy efficiency, and environmental technologies (read: Moat ETFs Are Beating S&P 500: Here's Why).
Here, we highlight five ETFs that could make for excellent portfolios for the long term:
Invesco MSCI Sustainable Future ETF (ERTH - Free Report)
Invesco MSCI Sustainable Future ETF provides exposure to companies that focus on offering products or services that contribute to a more environmentally sustainable economy by making more efficient use of global resources. It tracks the MSCI Global Environment Select Index and holds 165 stocks in its basket. American firms take the largest share at 42%, while China rounds off the next spot with 15% of assets.
Invesco MSCI Sustainable Future ETF has AUM of $290.4 million and charges 56 bps in annual fees. It trades in an average daily volume of 15,000 shares.
Etho Climate Leadership US ETF (ETHO - Free Report)
Etho Climate Leadership US ETF is the first diversified, fossil-free, sustainable and responsible U.S. ETF that invests in companies which are more climate efficient and ESG sustainable than their peers. It tracks the Etho Climate Leadership Index and uses a 5-level positive and negative screening process to select companies that align with high ESG guidelines, and have lower pollution levels and strong operational efficiency versus their sector and industry peers. ETHO holds a broad basket of 259 securities.
Etho Climate Leadership US ETF has amassed $172.9 million in its asset base while trading in an average daily volume of around 5,000 shares. It charges 47 bps in annual fees from investors.
iShares Global Clean Energy ETF (ICLN - Free Report)
iShares Global Clean Energy ETF provides global exposure to 98 companies that produce energy from solar, wind and other renewable sources by tracking the S&P Global Clean Energy Index. The United States and China take the top two spots in terms of country exposure with a 43.5% and 11.9% share, respectively (read: China on High Growth Trajectory: ETFs That Are in Momentum).
iShares Global Clean Energy ETF has AUM of $4.8 billion and charges 40 bps in annual fees and expenses. It trades in a heavy volume of 3 million shares and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Global X CleanTech ETF (CTEC - Free Report)
Global X CleanTech ETF seeks to invest in companies that stand to benefit from the increased adoption of technologies that inhibit or reduce negative environmental impacts. This includes companies involved in renewable energy production, energy storage, smart grid implementation, residential/commercial energy efficiency, and the production and provision of pollution-reducing products and solutions. Global X CleanTech ETF follows the Indxx Global CleanTech Index and holds 41 stocks in its basket.
Global X CleanTech ETF has accumulated $116.2 million in its asset base and charges 50 bps in annual fees. It trades in a volume of 23,000 shares a day on average.
Invesco MSCI Green Building ETF (GBLD - Free Report)
Invesco MSCI Green Building ETF follows the MSCI Global Green Building Index, which comprises companies that provide exposure to the environment impact theme of “green building.” Green building companies include the design, construction, redevelopment, retrofitting, or acquisition of green-certified properties to promote mechanisms for raising capacity for effective climate change mitigation and adaptation. GBLD holds 92 stocks in its basket, with Japanese firms making up for 24.7% of assets. This was followed by a 24.5% share in the United States and 13.9% in Singapore.
Invesco MSCI Green Building ETF has amassed $5.9 million in its asset base and charges 39 bps in fees per year from investors. It trades in an average daily volume of 2,000 shares.