Back to top

Image: Bigstock

Protect Our Earth With 5 ETF & Stock Investing Strategies

Read MoreHide Full Article

Today marks the 54th year of Earth Day observations. The day honors the importance of conservation initiatives to protect the environment. Global warming has now become a burning issue, raising awareness among mankind.

So long it has been believed that global warming leads to climate change causing drought in one region and flood in others. But as an eye-opener, economists have come up with the theory that global warming can cause job losses, recessions and even a tumbling stock market.

This makes it important for investors to be socially responsive while creating their investment portfolio. Let’s take a look what’s hot and what’s not on the occasion of Earth Day. Investing with a focus on Earth Day involves considering companies and funds that prioritize environmental sustainability and responsibility. Here are some ETF and stock investing strategies for Earth Day:

Renewable Energy

 Look for stocks and ETFs that invest in companies involved in renewable energy sources such as solar, wind, hydroelectric, and geothermal power. These ETFs often include companies engaged in manufacturing solar panels, wind turbines, and other renewable energy technologies.

Zaks Rank #1 (Strong Buy) Nextracker Inc. (NXT - Free Report) is a provider of intelligent, integrated solar tracker and software solutions used in utility-scale and distributed generation solar power plants.

Zaks Rank #3 (Hold) Invesco Solar ETF (TAN - Free Report) is comprised of companies in the solar energy industry. The fund charges 67 bps in fees.

Water Management Investing

Invest in companies involved in water conservation, purification, and distribution. These companies play a crucial role in addressing water scarcity and ensuring access to clean water, which is essential for both human well-being and ecosystem health. As the global population grows and the global water crisis is intensifying, this thematic investment avenue emerges.

Zacks Rank #2 California Water Service Group (CWT - Free Report) is one of the largest investor-owned water utilities in the United States. Along with its units, it provides regulated and non-regulated high-quality water and wastewater services to nearly 2 million people.

Zacks Rank #2 Invesco Water Resources ETF (PHO - Free Report) tracks the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries.

Disaster Recovery Strategy

Investing in stocks related to disaster recovery in can be a strategic idea given the rise global warming and other natural calamities. Companies that provide essential services or products during and after natural disasters fall in this category.

Notably, companies that specialize in repairing or rebuilding roads, bridges, and buildings can be crucial after events like hurricanes, earthquakes, or floods. Zacks Rank #1 (Strong Buy) Sterling Infrastructure Inc. (STRL - Free Report) operates through subsidiaries within segments specializing in E-Infrastructure, Building and Transportation Solutions principally in the United States.

Procure Disaster Recovery Strategy ETF (FIXT - Free Report) consists of globally listed stocks and depositary receipts. The fund charges 75 bps in fees.

ESG (Environmental, Social, and Governance)

Since the overall wellbeing of this planet should be remembered on this occasion, a focus on ESG (environmental, social and governance) investing should be pivotal. About 50 ETFs holding $86.7 billion employ ESG guidelines, according to data. 

Agreed, ESG investing has underperformed lately due to too many political implications, but retail investors exhibit reduced polarization regarding investment in accordance with ESG principles. ETFs that typically invest in companies with strong sustainability practices and positive environmental footprints are good options here.

Zacks Rank #3 Microsoft Corp. (MSFT - Free Report) is known for its commitment to becoming carbon negative by 2030, Microsoft also invests in sustainable data centers and renewable energy. Microsoft wants to achieve 100 percent renewable energy consumption by 2025.

iShares ESG Aware MSCI USA ETF (ESGU - Free Report) comprises of U.S. companies that have positive ESG characteristics while exhibiting risk and return characteristics similar to those of the parent index. The Zacks Rank #3 fund charges 15 bps in fees.

Carbon Strategy

As summer heats up, so does the carbon market. Carbon allowances have been on a steady upward climb lately. Cap-and-trade markets issue carbon allowances equivalent to one ton of carbon dioxide. Participants must account for their emissions at the end of each year through an equivalent amount of carbon allowances. As countries strive to reduce emissions, carbon allowances stand to benefit

Most major carbon allowance markets have built-in tightening mechanisms that decrease the supply of allowances over time. The combination of a reduced supply and increasing demand is likely to exert upward pressure on the price of carbon allowances in the years to come.

KraneShares Global Carbon Strategy ETF (KRBN - Free Report) tracks the most liquid segment of the tradable carbon credit futures markets.

Published in