For Earth Day last week, President Joe Biden convened a virtual summit of 40 world leaders where many of the world’s most populous and most powerful countries pledged to fight climate change and spur global efforts from allies and adversaries alike.
“No nation can solve this crisis on their own as I know you all fully understand,” Biden said at the summit, while pledging to cut U.S. greenhouse gas emissions by 50-52% from 2005 levels by 2030. “All of us, all of us and particularly those who represent the world’s largest economies, we have to step up.”
With the focus on the environment, Vios Advisors at Rockefeller Capital managing director Michael Bapis said he recommends investors find companies that prioritize the environment for their portfolios.
“It’s at the forefront of everyone’s mind,” Bapis said. “People are focused on it more now than they ever have been. And ESG investing appeals not only to older folks and investors but it also really appeals to the next generation of investors, and so that’s why we believe it’s here to stay. It’s an important piece of a portfolio allocation.”
Bapis pointed to two stocks that investors might not immediately consider environmental plays: Microsoft (NASDAQ: MSFT) and Verizon (NYSE: VZ). Microsoft has said it is targeting carbon neutrality by 2035, while Verizon is targeting zero emissions by the same timeframe and has spearheaded initiatives like planning more than 20 million trees by 2030.
“Verizon, from a valuation standpoint, is very cheap,” Bapis said. “There’s a dividend that’s yielding 4%-plus in an environment where yield is hard to get.”
As for Microsoft, Bapis said that it “is just dominating the market, and that’s more of a momentum play,” adding that both names are “dominating their space, and I’ll think they’ll continue to do so.”
MKM Partners’ J.C. O’Hara said that an environmental focused ETF might be a better way to go, pointing specifically to the ICLN iShares Global Clean Energy ETF.
“The preferred way to play the ‘E’ in ESG is looking at a diverse basket of clean energy stocks, and the ETF that I’m looking at right here is ICLN,” O’Hara said. “It’s an ETF that holds 100 global clean energy stocks, everything from hydro to solar to electric. They have representation from technology sectors, the utility sector, industrials, so it’s a very diverse basket.”