Climate change has been a point of contention for decades, but the issue is only getting more voracious. For corporations, this means tackling climate change to attain prosperity.
Investors of every echelon may move toward backing companies that have climate action plans in place. BlackRock, the world's largest money manager, may have just propelled the shift.
BlackRock aims to support climate change efforts
BlackRock released a document titled "Our 2021 Stewardship Expectations" that covers principles the company will use going forward as well as voting guidelines for shareholders.
The most noteworthy adjustment to the strategy is a shift in corporate relations. Specifically, BlackRock plans to vote in favor of its shareholders' wishes instead of leaning mainly on corporate board members for guidance. The company will likely align their capital with impact investing in the name of climate change.
Historically, BlackRock CEO Larry Fink has voiced his concerns about the climate. In a letter, he talked about "putting sustainability at the center of how we invest."
Fink said, "Sustainability-integrated portfolios can provide better risk-adjusted returns to investors. Sustainability will drive the way we manage risk, construct portfolios, design products, and engage with companies."
However, BlackRock hasn't exactly echoed Fink's sentiments — until now.
Biden administration may bring a robust climate change agenda
President-elect Joe Biden's plan for climate change and environmental justice lays out some pretty robust shifts in how the U.S. does things. It's nowhere near as aggressive as the Green New Deal, but it's worth $2 trillion.
Specifically, key goals like net-zero greenhouse gas emissions by 2050 and carbon neutral electric power by 2035 could rapidly alter the landscape across industries.
Climate change stocks to invest in for 2021
If you want to invest in the direction of climate change, these stocks may be of interest:
- BlackRock: With the company's newly vested interest in environmentalism, this massive corporation may be the way to go. You can find BlackRock on the NYSE under the ticker symbol "BLK." Year-to-date, BlackRock stock has risen 35.58 percent. There are also various funds to choose from within the corporation. It will be interesting to see BlackRock's financial health after future voting rounds that cater to the new strategy.
- PowerShares WilderHill Clean Energy: This ETF goes by the ticker symbol "PBW" on the NYSE ARCA. The basket has been on a bull run for most of 2020 and has risen nearly 158 percent. Investing in ETFs gives investors more diversity than individual stocks. ETFs can be a great way to make your portfolio more impactful in one fell swoop. Also, they are tax-efficient, which could minimize your capital gains taxes.
- Algonquin Power and Utilities Group: For some geographical diversification, Algonquin Power and Utilities Group may be worth considering. A new multi-year contract ensures that the company will retain its large clients for quite some time. The company, which trades under the ticker symbol "AQN" on the NYSE, has been in the renewable energy game for decades.
Whatever the stock or fund, climate change awareness has the potential to integrate itself into the market from end to end.