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Profit and planet: Best climate change investments

Profit and planet: Best climate change investments
Nemanja Curcic

Climate change is a trending topic today more than ever. The world is gradually going greener every year, and the effort has grown to include businesses, investors, scientists, and politicians. If you are looking to help tackle the sustainability issue and earn at the same time, we will show you the best climate change investments you can make.

Best climate change investments

Focusing on the environment is one of the three key pillars of ESG investing, the other two being social and governance. 

ESG investing represents the conscious effort by investors to put funds into businesses that contribute to planet conservation and sustainability (environment), people-oriented efforts like employee treatment and customer service (social), and the ethics of how the company is run (governance).

There are many ways your principal can both further the cause of eco-awareness and potentially provide you with hefty returns. Today’s article will show you some common approaches that qualify as some of the best climate change investments.

Renewable energy 

Our society’s decades-long reliance on fossil fuels has been the primary factor behind greenhouse emissions and climate change. Therefore, switching to alternative energy sources to generate electricity and run the industry has become a global goal. As such, there are several investments you make in this domain, including solar, wind, and nuclear stocks, ETFs, and mutual funds.

Recommended video: Renewable Energy 101 | National Geographic

Solar energy

Relying on the sun to generate electricity is one of the most familiar and developed forms of renewable energy today. Companies like NextEra Energy (NYSE: NEE), First Solar (NASDAQ: FSLR), and Brookfield Renewable (NYSE: BEP) have accrued billions in market capitalization and investments in solar power plants. 

Furthermore, hedge funds predict their profitability will only grow as the world’s solar power needs increase. Therefore, investing in these solar energy companies can bring high returns when the market reaches its full potential.

You can also invest in solar ETFs that track groups of green energy companies rather than buy individual stocks. Some of the most prominent ones include iShares Global Clean Energy ETF (ICLN), Invesco Solar ETF (TAN), and First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN).

Wind energy

Producing and distributing energy using wind turbines is another familiar form of renewable energy that investors can freely utilize to contribute to a greener world and more greens in their wallets.

Some of the most prominent companies with significant wind power generation capacities that you can invest in include General Electric (NYSE: GE), Dominion Energy (NYSE: D), and Vestas Wind Systems (OTC: VWDRY).

If you prefer to invest in a wind ETF rather than individual companies, the most popular wind energy ETF is the First Trust Global Wind Energy ETF (FAN).

Nuclear energy

People remain divided about nuclear energy. The currently prevalent form, nuclear fission, uses uranium, a non-renewable fuel source. However, even in that form, it is much more cleaner, safer, and eco-friendly than coal or oil.

That said, there are ongoing efforts to establish commercially viable nuclear fusion plants with near-limitless supply and no downsides related to fossil fuels or the current radiation pollution concerns.

Despite the ongoing efforts, we still have to build a commercially viable nuclear fusion facility. That said, there are several companies engaged in nuclear fusion research and development that you can invest in, such as Chevron (NYSE: CVX), Cenovus Energy (TSX: CVE), and Eni (NYSE: E). If the nuclear fusion project takes off, the returns of the early bird investors will be enormous.

Electric vehicles

Carbon emissions from traditional, fossil fuel-run cars remain a key contributor to total greenhouse gas emissions in our atmosphere. Fortunately for the climate, Tesla (NASDAQ: TSLA) decided to focus on mass-producing electric vehicles (EVs) and essentially created a market for electric cars that is growing by the day.

BYD (HKEX: 1211) has since replaced Tesla as the top company by the number of electric cars produced, which highlights the potential of Chinese electric car company stocks you can choose to invest in.

As batteries used in electric car vehicles are tightly interlinked with renewable energy storage products, you can also choose to invest in lithium-related companies and car battery businesses on the market.

Alternative agriculture

Traditional agriculture and animal husbandry are also critical contributors to greenhouse gas emissions (14.5% of all human-caused greenhouse gas emissions), which is one of the main reasons behind the development of lab-grown and plant-based meat.

Recommended video:  The Meat of the Future: How Lab-Grown Meat Is Made

Companies like Beyond Meat (NASDAQ: BYND), Steakholder Foods (OTC: MTTCF), and Agronomics (LSE: ANIC) have invested significant amounts in creating meat-like alternatives that pose far less risk to the human environment but also remain attractive options for many vegetarian and vegan customers.

Many of these food products remain too expensive for the average consumer, but further research is bringing the prices down. Once they start competing with traditional foods, the returns for early investors could be substantial.

Best climate change investments – the bottom line

Climate change is the biggest problem of our generation, as unsustainable practices severely harm our environment. Numerous legislative and societal efforts actively encourage a lower carbon footprint and more eco-sustainability, so we can assume that the global industry will follow the same pattern.

ESG investing already advocates scoring companies based on their ethical practices and their impact on the environment. If the trend gains traction, early endeavors in some of the best climate change investments could yield significant returns in a greener future. That said, caring for the planet already brings profit to many. Why not board the eco-friendly, electric train yourself?

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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