>>> Green Stock Selloff Deepens as Tesla Sentiment Sours
by Greg Ritchie and Saijel Kishan
November 27, 2023
(Bloomberg) -- The selloff that’s ripped through green stocks looks set to continue into 2024, bringing a fourth consecutive year of losses, according to Bloomberg’s latest Markets Live Pulse survey.
The negative sentiment appears poised to engulf a wider array of green asset classes, with Tesla Inc. seen at risk of losing its place among the 10 biggest stocks in the S&P 500. Almost two-thirds of the 620 MLIV Pulse respondents said they plan to stay away from the electric-vehicle sector, and 57% expect the iShares Global Clean Energy exchange-traded fund — which is down about 30% this year — to extend its slide in 2024.
The gloomy outlook comes as green investors navigate the shock of a post-pandemic world shaped by much higher interest rates. And, there’s also the persistent political backlash in many US states, as well as an evolving regulatory backdrop that has the potential to expose greenwashing and further hurt valuations.
Chat Reynders, who’s been a sustainable investor for three decades, calls the downturn in green assets a “watershed moment” for the industry. The hype that had surrounded going green to help address climate change has led some investors to take their eye off traditional financial metrics such as supply, demand and balance sheets, he said.
“We’ll look back and say this was an era of extraordinary speculation,” said Reynders, who helps oversee about $3.5 billion as co-founder of Reynders, McVeigh Capital Management in Boston. “Whether there was a meme stock or a green stock, everyone was marketing and selling extremely hard.”
Though MLIV Pulse respondents are broadly united in their bleak view of green stocks in the near term, the picture is different when the time horizon is extended. Most respondents expect they’ll need to shield portfolios from climate risk in the coming years.
Garvin Jabusch of Green Alpha Advisors in Louisville, Colorado, said the current selloff represents “a temporary pivot of capital away from renewables.” Brent Newcomb, president of Ecofin, which manages about $2 billion out of London and Kansas City, said he sees the market downturn as a buying opportunity and he’s adding to his positions in utility stocks.
And Bill Green of Climate Adaptive Infrastructure from Mill Valley, California, said it’s “a red herring” to look at the value of publicly traded solar or wind stocks and conclude that the energy transition has stalled.
“Public markets are notoriously fickle and have, in our view, overreacted to rising interest rates and supply chain challenges,” he said.
In the MLIV Pulse survey, 38% of respondents said miners of critical minerals ranked as the best investment option among climate-related offerings. But timing the upturn is proving hard.
Investors targeting environmental, social and governance goals had hoped this year would produce a rally thanks to historic levels of support in the form of packages such as the US Inflation Reduction Act. Instead, decades-high inflation and soaring interest rates ended up hammering a lot of traditional ESG stocks, with wind and solar standing out as some of the biggest losers.
A lot of clean energy companies are capital intensive, which makes them more vulnerable to higher borrowing costs than oil and gas companies with well-established rigs and platforms. To make matters worse, wind and solar producers have been hit by project delays exacerbated by supply-chain bottlenecks, derailing plans and increasing costs.
The next green asset class expected to see a decline is EVs, as battery-powered cars remain too costly for many households struggling with the long-term fallout of inflation. Tesla shares soared almost 140% this year through a July peak, but have since dropped about 20%.
Two years ago, Tesla was valued at $1.2 trillion, briefly making it the fifth-largest company on the S&P 500. Its market value has since fallen below $800 billion, ranking it the eighth largest in the benchmark index. Almost 50% of MLIV Pulse respondents expect it to drop out of the top 10 next year. Tesla investors are also figuring out how to respond to a chief executive who regularly shocks markets with highly controversial social media outbursts.
Yet the pace of climate change is forcing an inevitable pivot toward greener technologies, necessitating more investment.
“Next year is an important one for the implementation and renewal of decarbonization targets, as Paris Accord decarbonization efforts require additional, front-loaded, net investments,” according to Barclays Plc analysts led by Maggie O’Neal. “With 2023 appearing likely to be the warmest year on record, and 2024 potentially being similarly hot, adaptation and decarbonization will remain in focus.”
Against that backdrop, two-thirds of MLIV Pulse respondents expect climate change to affect portfolio values over the next three years. That echoes previous, similar surveys, with a Bloomberg Intelligence poll published earlier this month finding that 89% of investors acknowledge that ESG metrics are here to stay. And a poll of mostly US-based Bloomberg terminal users released in August found that about two-thirds said ESG is too important to ignore, even though they dislike the label.
O’Neal at Barclays also notes that the political backdrop remains key.
“Half of the world’s population will vote in elections in 2024,” she said. “As public policy drives many of the factors making ESG material to investors today, the outcomes of these elections matter.”
>>> Republic Services, Inc. (RSG), together with its subsidiaries, offers environmental services in the United States. It is involved in the collection and processing of recyclable, solid waste, and industrial waste materials; transportation and disposal of non-hazardous and hazardous waste streams; and other environmental solutions. Its residential collection services include curbside collection of material for transport to transfer stations, landfills, recycling centers, and organics processing facilities; supply of recycling and waste containers; and renting of compactors. The company also engages in the processing and sale of old corrugated containers, old newsprint, aluminum, glass, and other materials; and provision of landfill services. It serves small-container, large-container, and residential customers. As of December 31, 2022, the company operated through 353 collection operations, 233 transfer stations, 206 active landfills, 71 recycling centers, 6 saltwater disposal wells, and 7 deep injection wells, as well as 3 treatment, recovery, and disposal facilities in 41 states; and 20 treatment, storage, and disposal facilities. It also operates 73 landfill gas-to-energy and renewable energy projects, and 12 closed landfills. The company was incorporated in 1996 and is based in Phoenix, Arizona.
New ETFs with Sustainability, ESG, and Electrification Themes
ZSC : USCF Sustainable Commodity Strategy Fund
The Fund seeks total return by providing broad exposure to commodities across three different sustainability focused themes: agriculture, renewable energy and electrification. The Fund will invest primarily in commodities derivative instruments and equity securities of issuers that are economically tied to particular commodities. The Adviser uses a proprietary methodology to select the commodities derivatives and equity securities in which the Fund invests. The Fund’s exposure to each of the three sustainability themes will be approximately equally weighted.
The Fund seeks to achieve a “net-zero” carbon footprint by purchasing carbon offset investments in an amount equal to the estimated aggregate carbon emissions of the Fund’s holdings.
- Upstream exposure to the growing sustainable agriculture, renewable energy, and electrification transition.
- Allocates higher exposures to those agricultural commodities, renewable energies and expected to be most positively impacted by the sustainable agriculture, renewable energy, and electrification transition.
- Designed sustainability to deliver these exposures while seeking a net-zero carbon outcome.
After all the Commodities Investments have been selected, the Adviser estimates the carbon emissions associated with each Commodities Investment. The Adviser relies on data published by governmental or multi-national organizations, scientific studies, investment bank/financial service companies, and internationally recognized environmental, social, and governance (“ESG”) research firms to make such estimates. The Adviser then calculates the aggregate carbon emissions from all Commodities Investments in the portfolio and the Fund purchases Carbon Offset Investments in the form of carbon credit futures contracts in an amount equal to the net emissions. The resulting portfolio will exhibit an approximate, net-zero carbon footprint. Carbon emissions estimates will be updated annually.
ZSB : USCF Sustainable Battery Metals Strategy Fund
As the global economy undergoes Electrification, the infrastructure necessary to produce and store energy will require substantial amounts of certain metals. This may lead to rising prices for these metals over time.
The Fund also seeks to achieve a “net-zero” carbon footprint by purchasing carbon offset investments in an amount equal to the estimated aggregate carbon emissions of the Fund’s holdings.
- Upstream exposure to the growing electric vehicle (EV) battery and electrification adoption and energy transition.
- Allocates higher exposures to those green metals expected to be most positively impacted by the EV battery and electrification adoption and energy transition.
- Designed sustainability to deliver these exposures while seeking a net-zero carbon outcome.
After all the Metals Investments have been selected, the Adviser estimates the carbon emissions associated with each of the Metals Derivatives and each of the Metals Equities chosen by the methodology. The Adviser relies on data published by governmental or multi-national organizations, scientific studies, investment bank/financial service companies, and internationally recognized ESG research firms to make such estimates. The Adviser then calculates the aggregate carbon emissions from all Metals Investments in the portfolio and the Fund purchases Carbon Offset Investments in the form of carbon credit futures contracts in an amount equal to the net emissions. The resulting portfolio will exhibit an approximate, net-zero carbon footprint. Carbon emissions estimates will be updated annually.
USCF Investments Rings The Opening Bell - 4 August 2023
>>> Targeting Toyota for Its Electric-Vehicle Heresy
Public pensions and proxy advisers try to punish the company using corporate governance as a pretext.
Wall Street Journal
By The Editorial Board
June 4, 2023
It wasn’t long ago that Toyota’s hybrid vehicles were all the rage with the climate-change left. Now progressive investors and government pension funds are targeting the Prius manufacturer in a proxy campaign because it has questioned the climate lobby’s electric-vehicle orthodoxy.
Toyota discloses its CO2 emissions and has pledged to make all its vehicles carbon neutral by 2050. This should please the climate crowd. Yet progressive investors are seeking to oust Chairman Akio Toyoda and are pushing a resolution at its June 14 shareholder meeting to make the world’s largest auto maker disclose its climate-related lobbying.
News reports say the California Public Employees’ Retirement System (Calpers) and New York City’s public-worker pension funds have voted against Mr. Toyoda’s re-election, and the proxy advisory firm Glass Lewis has recommended that shareholders do so as well. They say Mr. Toyoda deserves the boot because Toyota’s board isn’t sufficiently independent of management.
But Toyota’s corporate governance model is old news. The sudden concern suggests it is merely a pretext for punishing Mr. Toyoda for the heresy of doubting the West’s hell-bent EV transition. He made news in December when he claimed that a “silent majority” in the auto industry “is wondering whether EVs are really OK to have as a single option. But they think it’s the trend so they can’t speak out loudly.”
He also emphasized that battery-powered EVs “are not the only way to achieve the world’s carbon neutrality goals.” Toyota is promoting its hybrids and plug-in hybrids as alternatives to battery-powered EVs. Plug-in hybrids contain an internal combustion engine that can kick in when the battery runs low, which alleviates range anxiety. They are also cheaper than EVs.
A Toyota memo to auto dealers in April explained the challenges to full electrification. For instance, “most public chargers can take anywhere from 8-30 hours to charge. To meet the federal [zero-emissions vehicle] sales targets, 1.2M public chargers are needed by 2030. That amounts to approximately 400 new chargers per day.” The U.S. isn’t close to meeting that goal.
Toyota also noted that “more than 300 new lithium, cobalt, nickel and graphite mines are needed to meet the expected battery demand by 2035,” and they could take decades to develop. “The amount of raw materials in one long-range battery electric vehicle could instead be used to make 6 plug-in hybrid electric vehicles or 90 hybrid electric vehicles.”
And here’s an even more striking statistic: “The overall carbon reduction of those 90 hybrids over their lifetimes is 37 times as much as a single battery electric vehicle.” These inconvenient truths undermine the climate religion and government mandates.
Speaking of which, progressives have attacked Toyota for lobbying against aggressive EV mandates. Toyota backed the Trump Administration’s lawsuit against California’s stringent emissions rules. It also pressed West Virginia Sen. Joe Manchin to oppose a $4,500 tax credit bonus for union-made EVs. Toyota isn’t unionized and has a large plant in West Virginia.
The shareholder campaign against Toyota shows how public pension funds and the proxy advisory duopooly of Glass Lewis and Institutional Shareholder Services (ISS) work in concert to exploit corporate governance to push progressive political goals. ISS, Calpers and New York city’s pension funds have all backed the shareholder resolution calling on Toyota to disclose its climate-related lobbying.
Mr. Toyoda deserves support for speaking the truth about EVs, and it’s a shame he’s the only auto leader with the courage to do it.
>>> State Street Debuts 2 Paris-Aligned ETFs
by Dan Mika
April 22, 2022
State Street introduced two funds to the market Friday with the “Paris-Aligned” moniker, one a brand new fund and the other a reorganization of a $134 million ETF.
The SPDR MSCI ACWI Climate Paris Aligned ETF (NZAC) and the SPDR MSCI USA Climate Paris Aligned ETF (NZUS) debuted on the Nasdaq with respective expense ratios of 0.12% and 0.10%.
NZAC is the successor to the SPDR MSCI ACWI Low Carbon Target ETF (LOWC), which dropped the NYSE Arca as its primary listing exchange earlier this week. As LOWC, the fund tracked the MSCI ACWI Low Carbon Target Index and distantly trailed the $1.16 billion in assets accumulated by the iShares MSCI ACWI Low Carbon Target ETF (CRBN) despite both funds charging the same 20 basis points in expenses.
NZAC now follows the MSCI ACWI Climate Paris Aligned Index, which selects developed and emerging market companies that have half of the total emissions from direct and indirect business activity, and a 10% annual reduction in emission intensity compared to the nonadjusted MSCI ACWI Index.
NZUS’ index follows the same rationale for its index, which uses large and midcap companies in the U.S. as its investable universe. It’s taking on the iShares Paris-Aligned Climate MSCI USA ETF (PABU), which has $618 million in assets since launching in February and that follows the same index.
>>> 11 Best Recycling Stocks To Buy Now
by Hamna Asim
December 21, 2022
In this article, we discuss 11 best recycling stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Recycling Stocks To Buy Now.
The global waste recycling services market was valued at $57.69 billion in 2021 and is expected to be worth $88.01 billion by 2030, indicating a compound annual growth rate of 4.8% during the forecast period of 2022 to 2030. The high volume of global economic activities has heightened the demand for recycling of waste materials.
The recycling sector has become an integral part of the urban infrastructure since it ensures the protection of both the human health and environment. In addition to higher urbanization and the expanding industrial sector, the growing agricultural production leads to more wastage from the agro-industries, thus driving the demand for the waste recycling services across the globe.
There are new entrants looking to resolve the lags in the waste management and recycling industry. For example, solar panels are considered green hardware, but older versions of panels are turning into hazardous waste. Thus, a California-based startup, SolarCycle, is using that waste by recycling parts of the older panels and disposing them off for profit. SolarCycle asserts that it can cheaply extract about 95% of the important materials in solar panels, like silver, silicon, copper, and aluminum. These can then be recycled or repurposed, resulting in an efficient circular solar economy.
Some of the best recycling stocks to invest in include Waste Connections, Inc. (NYSE:WCN), Waste Management, Inc. (NYSE:WM), and Republic Services, Inc. (NYSE:RSG).
We selected the following recycling stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm.
Best Recycling Stocks To Buy Now
11. Montrose Environmental Group, Inc. (NYSE:MEG)
Number of Hedge Fund Holders: 8
Montrose Environmental Group, Inc. (NYSE:MEG) was founded in 2012 and is headquartered in North Little Rock, Arkansas. It is an environmental services company in the United States, operating through three segments – Assessment, Permitting and Response, Measurement and Analysis, and Remediation and Reuse. It provides its services to the technology, media, chemical, energy, power and utility, industrial and manufacturing, financial, and engineering industries, as well as local, state, provincial, and federal government entities.
On December 12, BofA analyst Andrew Obin upgraded Montrose Environmental Group, Inc. (NYSE:MEG) to Buy from Neutral, citing a forecast for accelerating earnings growth in 2023. Montrose Environmental Group (NYSE:MEG) stock also rose on December 12 after the company announced it had acquired Huco Consulting, a company focused on safety and ESG goals, to expand its range of environmental services.
According to Insider Monkey’s data, 8 hedge funds were bullish on Montrose Environmental Group, Inc. (NYSE:MEG) at the end of the third quarter of 2022, compared to 9 funds in the last quarter. Richard Driehaus’ Driehaus Capital is the largest stakeholder of the company, with 342,461 shares worth $11.5 million.
Like Waste Connections, Inc. (NYSE:WCN), Waste Management, Inc. (NYSE:WM), and Republic Services, Inc. (NYSE:RSG), Montrose Environmental Group, Inc. (NYSE:MEG) is one of the best recycling stocks to consider buying.
Here is what Baron Funds specifically said about Montrose Environmental Group, Inc. (NYSE:MEG) in its Q2 2022 investor letter:
“Montrose Environmental Group, Inc.(NYSE:MEG), an environmental services company, underperformed during the quarter. Despite reiterating guidance for 2022, Montrose underperformed as the market penalized high-growth companies generally. We continue to remain positive on the company’s prospects and ability to achieve or beat its long-term growth target of over 20% per year. We remain particularly excited about Montrose’s potential to benefit from increased government regulation around PFAS chemical contamination and methane emissions.”
10. Quest Resource Holding Corporation (NASDAQ:QRHC)
Number of Hedge Fund Holders: 9
Quest Resource Holding Corporation (NASDAQ:QRHC) is a Texas-based company that provides solutions for the reuse, recycling, and disposal of waste streams and recyclables in the United States. It offers disposal and recycling services for motor oil and automotive lubricants, oil filters, scrap tires, goods destruction, food waste, plastics, cardboard, metal, glass, mixed paper, construction debris, and regulated and non-regulated solid, liquid, and gas wastes. Even without gaining new clients, existing customers will likely expand operations and require more waste services, making Quest Resource Holding Corporation (NASDAQ:QRHC) one of the premier recycling stocks to invest in.
On April 18, EF Hutton analyst Chip Moore initiated coverage of Quest Resource Holding Corporation (NASDAQ:QRHC) with a Buy rating and a $13 price target. As a leading national provider of waste and recycling solutions, Quest Resource Holding Corporation (NASDAQ:QRHC) is "differentiated" by its asset-light, national footprint, and ability to handle comprehensive waste streams, the analyst told investors. He noted that the company has also developed "valuable" data warehousing capabilities, offering full waste-stream services for its clients.
According to Insider Monkey’s data, 9 hedge funds were long Quest Resource Holding Corporation (NASDAQ:QRHC) at the end of September 2022, with collective stakes worth $29.5 million, compared to 7 funds in the prior quarter worth $14.7 million. Nelson Obus’ Wynnefield Capital is the leading position holder in the company, with 2.5 million shares worth $21.7 million.
Here is what Long Cast Advisor specifically said about Quest Resource Holding Corporation (NASDAQ:QRHC) in its Q2 2022 investor letter:
“Quest Resource Holding Corporation (NASDAQ:QRHC) borrowed heavily to purchase Rome RWS, Inc., and with results from the acquired company not yet fully on the income statement, the debt ratios expanded and equity valuations declined. Management – and really the Board – is undertaking a high skill maneuver of integrating its largest acquisition to date, carrying an unprecedented level of debt all concurrent with the long planned retirement of the long tenured CFO. It’s a little more exciting than necessary but the valuation is undemanding and the opportunity set is quite large.
Since I’ve long written about what this company could look like if it leaned more deeply into utilizing technology within its two-sided marketplace, I’ll be closely following the XPO Logistics (XPO) spinoff of the truck brokerage business, expected in 4Q22. Truck and waste brokerage share some similar dynamics and as I’ve long noted, the technologist at XPO worked at Oakleaf concurrently with QRHC CEO Ray Hatch. Technology was a big enabling factor at Oakleaf and in XPO’s +10x growth. I think it would have a similar function for QRHC were management to wisely invest time and resources in its development.”
9. Li-Cycle Holdings Corp. (NYSE:LICY)
Number of Hedge Fund Holders: 15
Li-Cycle Holdings Corp. (NYSE:LICY) is headquartered in Toronto, Ontario, and the company engages in the lithium-ion battery resource recovery and lithium-ion battery recycling business in North America. On October 13, the company announced that it has initiated commercial operations at its lithium-ion battery recycling facility in Alabama. The facility, which is based in Tuscaloosa, uses patented technology to recycle and directly process full EV battery packs without any dismantling through a submerged shredding process that produces no wastewater. Li-Cycle Holdings Corp. (NYSE:LICY) is one of the premier recycling stocks to invest in.
On December 15, ??Citi analyst P.J. Juvekar maintained a Buy recommendation on Li-Cycle Holdings Corp. (NYSE:LICY) but lowered the firm's price target on the shares to $7.50 from $8. The analyst observed that while there is an inclination to go back to cyclical chemical names after having lagged in 2022, he has decided to "stay defensive" going into 2023.
According to Insider Monkey’s data, 15 hedge funds were long Li-Cycle Holdings Corp. (NYSE:LICY) at the end of September 2022, and Zilvinas Mecelis’ Covalis Capital is the leading position holder in the company, with 11.6 million shares worth $61.8 million.
8. Heritage-Crystal Clean, Inc (NASDAQ:HCCI)
Number of Hedge Fund Holders: 19
Heritage-Crystal Clean, Inc (NASDAQ:HCCI) is an Illinois-based company that provides parts cleaning, hazardous and non-hazardous waste, and used oil collection services to small and mid-sized customers in the industrial and vehicle maintenance sectors in the United States and Canada. The company also provides containerized waste management, wastewater vacuum, antifreeze recycling, and field services. Heritage-Crystal Clean, Inc (NASDAQ:HCCI) is one of the leading recycling stocks to invest in.
On October 19, Heritage-Crystal Clean, Inc (NASDAQ:HCCI) reported Q3 non-GAAP earnings per share of $1.01 and a revenue of $172.22 million, outperforming Wall Street estimates by $0.21 and $17.23 million, respectively. The Q3 revenue increased nearly 40% compared to the prior-year quarter.
Needham analyst James Ricchiuti on October 21 maintained a Buy rating on Heritage-Crystal Clean, Inc (NASDAQ:HCCI) but trimmed the firm's price target on the shares to $40 from $43 as he noted that the company delivered "another impressive quarterly report." Oil business margins are forecasted to shrink in Q4 as a result of downtime in Heritage-Crystal Clean, Inc (NASDAQ:HCCI)’s refinery, which may have contributed to the pullback in shares, but it is "unwarranted," the analyst wrote in a research note.
According to Insider Monkey’s data, 19 hedge funds were long Heritage-Crystal Clean, Inc (NASDAQ:HCCI) at the end of September 2022, compared to 16 funds in the last quarter. Chuck Royce’s Royce & Associates is the largest stakeholder of the company, with 1.15 million shares worth $34 million.
Meridian Funds made the following comment about Heritage-Crystal Clean, Inc (NASDAQ:HCCI) in its Q3 2022 investor letter:
“Heritage-Crystal Clean, Inc (NASDAQ:HCCI) is an environmental services company focused on machine parts cleaning, used oil collection, oil re-refining, and hazardous and non-hazardous waste services. Our rationale for investing in this company includes the recurring revenue stream it generates from its environmental services business unit and substantial growth opportunities in the re-refinery and used oil collection segments. Continued strong execution and higher oil prices contributed to the stock’s solid performance during the period. Notably, Heritage-Crystal Clean’s oil business segment generated record revenue in the second quarter and saw segment margins improve to 41%, as the spread between base oil sales and the cost of collecting used oil widened. The company’s core environmental services segment also recorded record quarterly revenue. We believe the environmental, social, and governance (ESG) story at Heritage remains under appreciated by the market as the company collects used motor oil and recycles it for reuse. We have high conviction in the long-term growth story for the company, but trimmed our position in the stock during the period as the share price appreciated.”
7. PureCycle Technologies, Inc. (NASDAQ:PCT)
Number of Hedge Fund Holders: 23
PureCycle Technologies, Inc. (NASDAQ:PCT) was founded in 2015 and is headquartered in Orlando, Florida. The company produces recycled polypropylene (PP) and holds a license for restoring waste PP into ultra-pure recycled resin. Its recycling process separates color, odor, and other contaminants from plastic waste feedstock to turn it into virgin-like resin. PureCycle Technologies, Inc. (NASDAQ:PCT) is one of the best recycling stocks to consider. At the end of September 30, the company had total liquidity of $416.1 million, including $215.0 million of cash, cash equivalents, and debt securities available for sale and $201.1 million in restricted cash.
On November 11, Cowen analyst Thomas Boyes maintained an Outperform rating on PureCycle Technologies, Inc. (NASDAQ:PCT) but lowered the price target on the shares to $11 from $15. The analyst said as expected, pellet production at Ironton shifted into January and said the facility is still forecasted to fully ramp at the end of 2023.
According to Insider Monkey’s third quarter database, 23 hedge funds were bullish on PureCycle Technologies, Inc. (NASDAQ:PCT), with collective stakes worth $407.7 million, compared to 23 funds in the prior quarter worth $400.6 million. Daniel Patrick Gibson’s Sylebra Capital Management is the leading stakeholder of the company, with more than 29 million shares worth $235.5 million.
6. Casella Waste Systems, Inc. (NASDAQ:CWST)
Number of Hedge Fund Holders: 23
Casella Waste Systems, Inc. (NASDAQ:CWST) operates as a vertically integrated solid waste services company in the United States. The company offers resource management services including solid waste collection and disposal, transfer, recycling, and organics services to residential, commercial, municipal, institutional, and industrial customers. The company lifted its full-year 2022 revenue guidance to between $1.065 billion and $1.080 billion from a prior range of $1.035 billion to $1.050 billion. The consensus revenue came in at $1.04 billion.
On October 24, Jefferies analyst Stephanie Moore initiated coverage of Casella Waste Systems, Inc. (NASDAQ:CWST) with a Buy rating and a price target of $95, down from $103. The company offers superior pricing power given its Northeast concentration, as well as the ability to see accelerated margins from operating leverage and efficiency investments, the analyst told investors in a research note. She added that Casella Waste Systems, Inc. (NASDAQ:CWST) is also the only public waste company its size not to be acquired, which provides "downside support to valuation on a takeout potential".
According to Insider Monkey’s data, 23 hedge funds were long Casella Waste Systems, Inc. (NASDAQ:CWST) at the end of the third quarter of 2022, compared to 17 funds in the prior quarter. Jim Simons’ Renaissance Technologies is the largest position holder in the company, with 686,959 shares worth $52.5 million.
In addition to Waste Connections, Inc. (NYSE:WCN), Waste Management, Inc. (NYSE:WM), and Republic Services, Inc. (NYSE:RSG), Casella Waste Systems, Inc. (NASDAQ:CWST) is one of the leading recycling stocks to monitor.
5. GFL Environmental Inc. (NYSE:GFL)
Number of Hedge Fund Holders: 28
GFL Environmental Inc. (NYSE:GFL) is a diversified environmental services company operating in Canada and the United States. The company offers non-hazardous solid waste management, infrastructure and soil remediation, and liquid waste management services. Its solid waste management business includes the collection, transportation, transfer, recycling, and disposal of non-hazardous solid waste for municipal, residential, and commercial and industrial customers.
On November 2, GFL Environmental Inc. (NYSE:GFL) reported a Q3 non-GAAP EPS of $0.20 and a revenue of $1.83 billion, topping market estimates by $0.04 and $570 million, respectively. It is one of the premier recycling stocks to invest in.
CIBC analyst Kevin Chiang on December 14 raised the firm’s price target on GFL Environmental Inc. (NYSE:GFL) to C$50 from C$46 and maintained an Outperform rating on the shares.
According to Insider Monkey’s data, 28 hedge funds were long GFL Environmental Inc. (NYSE:GFL) at the end of Q3 2022, compared to 25 funds in the last quarter. Robert Pohly’s Samlyn Capital is the largest stakeholder of the company, with 4.5 million shares worth $114.3 million.
Here is what Ave Maria specifically said about GFL Environmental Inc. (NYSE:GFL) in its Q2 2022 investor letter:
“GFL Environmental Inc. (NYSE:GFL) is a growing solid waste management company. In the first quarter of 2022, revenue increased 11.3% on an organic basis and 27.4% including acquisitions. At the company’s investor day in May, the management provided increased free-cash-flow guidance for 2022, 2023 and 2024., which looks very positive.”
4. Clean Harbors, Inc. (NYSE:CLH)
Number of Hedge Fund Holders: 30
Clean Harbors, Inc. (NYSE:CLH) is a Massachusetts-based company that provides environmental and industrial services in North America. The company operates through two segments, Environmental Services and Safety-Kleen Sustainability Solutions. The Safety-Kleen Sustainability Solutions segment offers pickup and transportation services for hazardous and non-hazardous containerized waste for recycling or disposal. Clean Harbors, Inc. (NYSE:CLH) is one of the leading recycling stocks to invest in.
Baird analyst David Manthey on November 3 raised the price target on Clean Harbors, Inc. (NYSE:CLH) to $155 from $150 and maintained an Outperform rating on the shares. The analyst sees a good setup for ongoing solid pricing and deferred waste streams, perhaps cushioning results, while PFAS/reshoring/increased blended oil sales could also augment his view.
According to Insider Monkey’s data, 30 hedge funds were long Clean Harbors, Inc. (NYSE:CLH) at the end of September 2022, with combined stakes worth $497 million, compared to 28 funds in the prior quarter worth $408 million. Ian Simm’s Impax Asset Management is the largest position holder in the company, with 1.12 million shares valued at $123 million.
Meridian Funds made the following comment about Clean Harbors, Inc. (NYSE:CLH) in its Q3 2022 investor letter:
“Clean Harbors, Inc. (NYSE:CLH) is a leading hazardous waste treatment, storage, and disposal management company in North America and one of our longer-term holdings. Particularly impressive are its hazardous waste incinerators, which are nearly impossible to replicate. We also like its oil re-refinery business which is gaining recognition as a sustainable source of motor oil. Through cost controls and price increases, the company was successful in managing the inflationary environment during the period. Utilization of its incinerator network reached 90% during its most recently reported quarter and pricing increased 18% from a year ago. High and increasing base oil prices provided an additional boost to its re-refinery business, widening the spread between the price Clean Harbors charges for its refined oil and the price it pays for used oil. A resurgence in U.S. manufacturing activity and the accretive acquisition of HydroChemPSC also contributed to investors’ enthusiasm for the stock. Although our long-term outlook for Clean Harbors remains upbeat, we trimmed our position in the stock due to the company’s high debt balance as a result of the acquisition. We also believe the economic slowdown may eventually impact Clean Harbors, which operates in a late-cycle industry and therefore tends to have a delayed response to economic developments.”
3. LKQ Corporation (NASDAQ:LKQ)
Number of Hedge Fund Holders: 32
LKQ Corporation (NASDAQ:LKQ) was incorporated in 1998 and is headquartered in Chicago, Illinois. The company deals in auto replacement parts, components, and systems used in the repair and maintenance of vehicles. LKQ Corporation (NASDAQ:LKQ) provides scrap metal and other materials to metals and automotive recyclers. The company raised its latest quarterly dividend by 10% to $0.275 per share, which was paid to shareholders on December 1. The board also authorized a $1 billion increase and one-year extension to its stock repurchase program, lifting the aggregate repurchase authorization to $3.5 billion through October 25, 2025.
On July 12, MKM Partners analyst Scott Stember initiated coverage of LKQ Corporation (NASDAQ:LKQ) with a Buy rating and a $68 price target. Prospects for LKQ Corporation (NASDAQ:LKQ)’s North American business “have never been better” and the effective scaling of the European business has yielded gains in segment sales and profits, said the analyst, who added that “LKQ has turned into a cash flow-generating machine.”
According to Insider Monkey’s data, 32 hedge funds were long LKQ Corporation (NASDAQ:LKQ) at the end of September 2022, compared to 31 funds in the earlier quarter. ValueAct Capital is the leading stakeholder of the company, with 12.5 million shares worth $592 million.
Bonsai Partners mentioned LKQ Corporation (NASDAQ: LKQ) in its first-quarter 2021 investor letter. Here’s what they said:
“LKQ is the largest provider of alternative collision and mechanical automotive parts in the United States. In Europe, they are the leading distributor of general automotive maintenance parts and supplies. Its shares appreciated 20.1% during the quarter.
During the quarter, LKQ shared its fourth-quarter results: showing a slight revenue decline and a nearly 30% increase in quarterly profit Vs. the same period last year. COVID has proved a surprising catalyst for my investment thesis which revolves around optimizing their recent large acquisitions that were never efficiently integrated.
Admittedly, in addition to LKQ’s quarterly performance, thematically, there has been broad enthusiasm for “re-opening” trades, of which, LKQ has been a beneficiary. Most importantly, the prior overhang related to LKQ’s debt burden is now all but behind us. Their net debt to EBITDA ratio now sits below 2x, a stark change from the near 3x leverage ratio before the pandemic. At that time, LKQ’s leverage had the potential to spiral upward to nearly 4-5x if the business experienced a prolonged shutdown. It’s good to be past this issue.”
2. Waste Connections, Inc. (NYSE:WCN)
Number of Hedge Fund Holders: 33
Waste Connections, Inc. (NYSE:WCN) is a provider of non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada. The company offers collection, landfill disposal, and recycling services to residential, commercial, municipal, industrial, and exploration and production customers. It is one of the top recycling stocks to monitor. Waste Connections, Inc. (NYSE:WCN) raised its latest quarterly dividend by nearly 11% to $0.255 per share, which was distributed to shareholders on December 1.
On October 24, Jefferies analyst Stephanie Moore initiated coverage of Waste Connections, Inc. (NYSE:WCN) with a Buy rating and a $165 price target. The analyst said the stock is best-in-class amongst its waste peers with above-average pricing growth and margins due to its suburban market exposure, as well as the exclusivity from its franchise contracts. The analyst added that she views it has a clear line of sight into at least low double digit revenue growth in 2023.
According to Insider Monkey’s Q3 data, 33 hedge funds were long Waste Connections, Inc. (NYSE:WCN), compared to 34 funds in the prior quarter. Bill & Melinda Gates Foundation Trust is the biggest stakeholder of the company, with 2.15 million shares worth $290.4 million.
Conestoga Capital Advisors made the following comment about Waste Connections, Inc. (NYSE:WCN) in its Q3 2022 investor letter:
“Waste Connections, Inc. (NYSE:WCN): WCN is a leading waste management service company that provides collection, recycling, transfer and disposal services in North America. This top ten holding performed well during the quarter given the consistency of its business model with stable volumes, strong pricing power and healthy margins.”
1. Republic Services, Inc. (NYSE:RSG)
Number of Hedge Fund Holders: 41
Republic Services, Inc. (NYSE:RSG) is an Arizona-based company that offers environmental services in the United States. The company provides collection and processing of recyclable materials, collection, transfer and disposal of non-hazardous solid waste, and other environmental solutions. It is one of the best recycling stocks to invest in. On October 27, Republic Services, Inc. (NYSE:RSG) reported a Q3 non-GAAP EPS of $1.34 and a revenue of $3.59 billion, outperforming Wall Street estimates by $0.12 and $60 million, respectively.
BMO Capital analyst Devin Dodge on December 7 downgraded Republic Services, Inc. (NYSE:RSG) to Market Perform from Outperform with a price target of $148, down from $152. Republic Services, Inc. (NYSE:RSG) has meaningfully outperformed the market this year, indicating robust industry conditions, strong execution, and an investor preference for defensive stocks, the analyst told investors in a research note. While solid waste stocks normally outperform deep into a recession, the much anticipated economic pullback has meaningfully been reflected in the relative share price performance, noted the analyst. As such, he sees lower potential returns over the next 12 months. Despite the downgrade, he still believes Republic Services, Inc. (NYSE:RSG) could be attractive for individuals with a longer investment horizon.
According to Insider Monkey’s data, 41 hedge funds were long Republic Services, Inc. (NYSE:RSG) at the end of Q3 2022, compared to 33 funds in the last quarter. Richard Chilton’s Chilton Investment Company is a notable position holder in the company, with 1.38 million shares worth $188.5 million.
>>> BlackRock, State Street CEOs Highlight ESG Backlash at Davos
by Daria Solovieva
January 20, 2023
Environmental, social and governance investing issues made headlines at the World Economic Forum in Davos, as big bank CEOs and asset managers lamented the state of sustainability efforts facing increased scrutiny from investors and regulators globally.
Larry Fink, chief executive and chairman of BlackRock Inc., kicked off ESG discussions on the opening day of the forum by recognizing the firm took a $4 billion loss as a result of the backlash against ESG investing. BlackRock’s iShares is the world’s biggest ETF issuer.
“The attacks are now personal,” Fink told the Davos, Switzerland crowd. “They are trying to demonize issues.”
Yie-Hsin Hung, president and CEO of State Street Global Advisors, also noted politicization of ESG issues in the U.S., calling the anti-ESG backlash “challenging” in an interview with Financial News.
Regardless of the backlash, demand for global adoption of ESG standards is growing, along with increasing numbers of high-profile advocates.
Brian Moynihan, CEO Of Bank of America Corp., said at the forum on Wednesday that official global standards on sustainability and climate were needed to “align capitalism with what society wants from it,” according to a CNBC report.
Alignment on definition and metrics, and support from high-profile advocates, which has long dominated ESG industry events and discussions, will be critical to the long-term success of these ideas.
Net Benefit for the Industry?
Longtime ESG industry players and evangelists see 2022 as a blip and remain bullish on long-term ESG performance and outlook, despite mounting criticism and politicization of the terms.
“Let politicians punch it out between themselves; we're focused on finance,” said Elysabeth Alsano, CEO of VegTech Invest and advisor on the VegTech Plant-based Innovation & Climate ETF (EATV). The ETF was certified as carbon neutral by Ethos ESG this week, saying that its companies can now avoid carbon emissions “by replacing animal products for a less carbon intensive food and materials supply system.”
Alsano thinks the criticism of ESG will ultimately help the efforts.
“Very few ETFs are run by sector experts, and I think this onslaught against ESG is only going to make the authentic voices rise to the top,” she noted.
Alsano said the ESG industry is a “big basket” that includes a variety of sectors, trends and variables. One way for ESG investors to navigate uncertainty is to stay focused on specific themes.
“Pick your megatrends that you believe in that you think are going to be better for the planet,” she said. “We believe in the megatrend of a global shifting food supply system—I don't have to believe because I already see it happening.”
EATV is up 5.6% year to date and was down 24.45% last year, according to ETF.com data.
>>> ESG Funds Could Face 'Tons of Closures'
March 29, 2023
Environmental, social and governance funds may be facing a watershed moment as billions of dollars in assets have cleared out of the segment this year alone.
Once-bullish assets managers are increasingly shying away from the politically charged investment strategy and are stripping the terminology from exchange-traded funds. Some analysts are even predicting a major course correction.
“The demand for ESG ETFs was so grossly overestimated,” said Eric Balchunas, senior ETF analyst at Bloomberg Intelligence. “There’s going to be tons of closures coming up.”
Political backlash and trailing returns have investors running for the hills. Domestic ESG-labeled ETFs have collectively lost $5.8 billion year to date, Bloomberg data shows, on top of the $2.1 billion lost in the fourth quarter of 2022.
For comparison, billions of dollars poured into the industry just two years ago, with ESG funds hauling in nearly $32 billion in 2021, Strategas data shows. ESG fund launches also ballooned, as 209 ESG-listed ETFs with $90 billion in assets hit U.S.-listed markets in the last two decades, according to etf.com data.
Among the biggest losers has been the largest ESG index fund, the iShares ESG Aware MSCI USA ETF (ESGU), which has shed nearly $6.3 billion year to date, and recently posted its largest one-day loss of $4 billion, etf.com data shows. BlackRock declined to comment about the movement.
The fund reflects a broader, bubbling anti-ESG sentiment.
“ESG has gathered a lot of baggage, is the word I use,” Balchunas said. “It's political baggage, return baggage. It's just become a political football of a term.”
The criticism of ESG-focus investment strategy and methodology did not emerge this year, but it has been simmering in recent months.
Several ETF providers have even gone so far as to drop the ESG label. In February, VictoryShares ETFs, which manage almost $8 billion across 25 U.S.-listed products, removed “ESG” from two of their bond ETFs.
In August, Idaho-based Inspire ETFs also shed “ESG” from eight of their fund titles.
“Due to the escalation of leftist intolerance and rancor in recent months, we no longer desire to identify our investment approach as being part of the ESG category,” said Inspire Investing CEO Robert Netzly in a company statement announcing the changes.
It’s not only issuers citing concerns about ESG, Republican-led states have pulled out more than $1 billion from BlackRock, parent of the world’s largest ETF issuer and ESGU’s issuer, iShares.
On the other side of the aisle, Democrats have criticized the firm for not being ESG enough. In September, New York City Comptroller Brad Lander slammed the firm for the “fundamental contradiction between BlackRock’s statements and actions.”
Evolving ESG Tactics
Asset managers are also adjusting their stances on ESG seemingly in reaction to the changing public sentiment. BlackRock CEO Larry Fink has tempered his usual optimistic tone on ESG investing, reframing the issue as investment opportunities as opposed to socially conscious investments in his latest letter to investors.
Vanguard, the second largest ETF issuer, pulled out of the net zero climate effort in December, an investment industry initiative to tackle climate change.
In another telling example, Hypatia Capital launched in January the Hypatia Women CEO ETF (WCEO), bringing a fund to market that specifically focuses on the performance of U.S. public companies with female CEOs. While gender diversity on boards and in executive ranks is a high-profile governance issue, neither of the funds were tagged with an ESG label.
“Now, we believe that ESG in general is an overlay concept,” said Patricia Lizarraga, managing partner of Hypatia Capital, during an Exchange Traded Fridays podcast in March. “We are not picking our stocks for E, for S or for G. We are saying that women CEOs outperform.” (lol)
To be sure, ESG remains a focus for firms as they launch funds. More than a quarter of respondents said they would be most keen to launch a fund with “broad consideration of ESG issues” as compared to any other theme, according to a recent HSBC ESG Sentiment Survey. More than a third of the 422 individuals surveyed also indicated that ESG would be mainstream in a decade.
In the first half of 2022, the number of ESG-labeled mutual funds and ETFs jumped 23%, according to a December report by Cerulli Associates.
“Recent political pressure has not deterred most firms,” said Michele Giuditta, Cerulli’s director of institutional practice, in an interview with etf.com in December. “Managers are committed to ESG, and I don’t think this is going to change their plans.”
Underperformance Weighs on Investors
The underperformance of ESG has also added to the segment’s woes. The funds, which can charge a heftier expense ratio but carry many of the same investments as benchmark index counterparts, is contributing to the problem, said Mark Neuman, CIO of Constrained Capital.
“What happens is, once returns go sour, people start to take notice,” he said in an interview with etf.com. “Guaranteeing promises that everyone wins and nobody loses and everyone does better— that sounds like fantasyland, not like reality.”
Funds like ESGU and the second largest ESG index fund, the Vanguard ESG US Stock ETF (ESGV), have slightly underperformed the benchmark SPDR S&P 500 ETF Trust (SPY) in the trailing 30 days. The funds have dipped 0.8% and 0.7%, respectively, trailing SPY, which has slumped just 0.2% during the same period.
While the difference between the two may seem minimal, those lagging returns are weighing on investors hunting for returns amid whipsawing markets and bank runs, Neuman said.
And while some investors may choose to keep or add ESG products to their holdings in the future, they may not be the core of most portfolios moving forward, said Bloomberg’s Balchunas.
“There'll be a niche,” he said. “ESG ETFs will exist, but they’ll be fringe.”
>>> Investing in ESG ETFs
By Alison Plaut
Jan 17, 2023
Interest in environmentally sustainable investments, social issues, and governance is on the rise. Doing good can also be a wise long-term investment strategy. Last year, ESG mutual funds and ETFs rose by 53% to $2.7 trillion. ESG (environmental, social, governance) has become a buzzword in investment circles for good reason. ESG ETF investing has become about more than caring for people and the planet; it’s also become good business.
The Standard & Poor’s 500 ESG Index has outperformed the broader S&P 500 for the past 10 years. For more than 20 years, companies with high ESG values have shown consistent resilience and growth. During the 2018 and 2020 market contractions, companies with strong ESG track records showed greater ability to bounce back.
Understanding ESG ETFs
Exchange-traded funds, or ETFs, are collections of stocks and bonds. Investors can purchase shares of an ETF, which invest according to specific objectives. ETFs are similar to mutual funds in that they’re a group of stocks and bonds. Investors can buy shares of either mutual funds or ETFs, but ETFs differ from mutual funds in two key ways.
First, ETFs can be bought or sold throughout the trading day. They trade like stocks on major exchanges. Mutual funds can only be bought or sold once per day.
The second key difference is pricing. ETF prices fluctuate throughout the day as they are bought and sold. Mutual funds are priced once daily on their net asset value.
ETFs can be either passive or active. Passive or indexed ETFs track a stock index such as the S&P 500. Active ETFs are actively managed with the goal of outperforming average index performance.
ETFs generally charge fees. This fee is listed as an annual percentage and is called an expense ratio. A lower expense ratio means more money to invest. Most ETFs pay dividends. Investors can have the dividends paid as cash, or they can be automatically reinvested.
ESG is a broad term for companies choosing to demonstrate a commitment to protecting the environment, social responsibility, and/or transparent governance. Companies may choose to focus on one of these areas or all three. Another term for ESG is sustainable investing or green investing.
Here is what each area of ESG covers:
Environmental: Companies demonstrate concern for the environment when they choose to reduce their total carbon footprint, use sustainable energy, work in LEED-certified buildings, reduce waste, develop clean tech, and/or give back to environmental causes.
Social: Social responsibility occurs when a company commits to paying living wages, accepting product liability, protecting data, and providing a healthy and safe work environment.
Governance: Governance encompasses transparent company ownership and control, diversity, board independence, financial transparency, and ethics.
ESG ratings can provide insight into a company’s long-term performance. ESG risks, such as unsafe working conditions, lack of board independence, energy dependence, or questionable accounting practices can have serious financial consequences.
Companies that have demonstrated a commitment to the environment have consistently performed better than competitors. Choosing a company with a high ESG rating can make good long-term financial sense.
ESG ratings measure a company’s long-term environment, social, and governance risks. The higher the ESG rating, the lower the total risk. One of the most widely used ESG rating systems is the MSCI USA. The system measures risk across industry-specific issues, which are weighted by potential impact. The industry-specific scores and weighted scores are combined to give each company a score between 0 and 10 and are then converted into letter grades from CCC to AAA.
Companies with ESG scores of AA to AAA are considered ESG leaders with lowest ESG risk. Average ESG scores range from BB to A. A company with a high ESG score demonstrates strong commitment to ESG. This can also translate to lower risk for investors. Investors can use the ESG score for supplemental financial analysis. For investors committed to environment, social, and governance values, a high ESG score can also be a filter for selecting investments.
Keep in mind that an average ESG rating may not indicate a commitment to social responsibility or environmental issues. Companies can score at average levels with good corporate governance, strong data privacy, and transparent accounting.
For example, many are making the argument that Amazon (NASDAQ:AMZN) is not a true ESG stock. Amazon rates highly in corporate governance and data security but has an average carbon footprint and scores poorly on labor management. It is rated as BBB under the MSCI ESG ratings and is found in many ETF ESG portfolios without demonstrating a commitment to the environmental or social aspects of ESG.
6 Top ESG ETFs in 2023
iShares ESG Aware MSCI USA ETF (NASDAQ:ESGU) $19.6 billion Created in 2016, iShare ESG Aware tracks the S&P 500 index. It has reported a -16.24% one-year return, a 8.17% three-year return, and a 11.65% five-year return.
Vanguard ESG U.S. Stock ETF(NYSEMKT:ESGV) $5.7 billion An indexed ETF with exclusionary principles. It has yielded an 19.25% one-year return, 7.40% three-year return.
iShares Global Clean Energy ETF (NASDAQ:ICLN) $5.1 billion An ETF focused on global clean energy production. It posted a 6.71% one-year return, a 21.45% three-year return, and a 18.66% five-year return.
iShares ESG Aware MSCI EAFE ETF (NASDAQ:ESGD) $6.7 billion An exclusionary ESG ETF. It recorded a -10.79% one-year return, a 2.64% three-year return, and a 6.15% five-year return.
Vanguard ESG International Stock ETF (NYSEMKT:VSGX) $3.0 billion An ETF of international stocks. It reported a -14.55% one-year return, a 1.14% three-year return.
Nuveen ESG Mid-Cap Growth ETF (NYSEMKT:NUMG) $341.8 million An ESG ETF focused on small and mid-sized U.S. companies. It posted a -16.2% one-year return, and a 10.68% five-year return.
1. iShares ESG Aware MSCI USA ETF
iShare ESG Aware tracks the S&P 500 index. It holds an MSCI ESG quality score of 8.91 and a AAA rating. The ETF has 320 holdings, and its largest positions are with Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon, and Tesla (NASDAQ:TSLA).
Fund areas of exclusion are:
UN Global Compact violators
Its performance closely mirrors the S&P 500 and is a good foundation investment for investors interested in exclusionary filters for ESG. As long as it performs as projected, it should closely match the S&P 500.
2. Vanguard ESG U.S. Stock ETF
The Vanguard ESG ETF holds about 1,500 U.S. stocks. It is an indexed or passive ETF that uses exclusionary principles. Companies excluded include those that derive revenue from production, supplying, or retailing:
Conventional military weapons
Companies are also screened for workplace and board diversity. Any violations of labor rights, human rights, anti-corruption, or environmental standards also can disqualify companies. Its largest holdings include Apple, Microsoft, Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG), Amazon, and Tesla. The ETF can be a good choice for investors interested in social impact and investing in U.S. companies.
3. iShares Global Clean Energy ETF
iShare Global Clean Energy ETF tracks the S&P Global Clean Energy Index. It has an MSCI score of 8.7 and a rating of AAA. It specifically focuses on clean energy production, equipment, and technologies and has holdings in 83 companies. There are significant positions in wind and solar energy.
The ETF’s largest holdings include Vestas Wind Systems (OTC:VWDRY), Enphase Energy (NASDAQ:ENPH), Consolidated Edison (NYSE:ED), and Orsted (OTC:DOGE.F). For investors who want to put their funds in sustainable energy and hold for the long term, this can be a good choice. Although its recent performance has been good, the ETF also poses greater risks than the other choices listed here.
4. iShares ESG Aware MSCI EAFE ETF
iShares ESG Aware has 452 holdings, with a total MSCI score of 9.8 and a AAA rating. The fund is more evenly distributed across business sectors. Its fund distribution includes 17.82% in financials, 15.20% in industrials, and 12.92% in healthcare. The largest holdings are in Nestle (OTC:NSRGY), ASML Holding (NASDAQ:ASML), Roche Holding (OTC:RHHBY), and AstraZeneca (NASDAQ:AZN).
Fund exclusion areas are:
UN Global Compact violators
This fund has underperformed the S&P 500, but it may still be a good long-term buy-and-hold investment.
5. Vanguard ESG International Stock ETF
The ETF holds between 3,000 to 4,000 stocks. Its regional allocation includes 37% in European companies, 26.05% in emerging markets, and 26.80% in the Pacific. The indexed passive fund uses ESG exclusionary principles.
Vanguard ESG International screens companies that derive revenue from the production, supplying, or retailing of:
Conventional military weapons
Companies are filtered for workplace and board diversity. To be included, companies must also meet the U.N. Global Compact principles. The largest holdings are in Taiwan Semiconductor Manufacturing (NYSE:TSM), Nestle, and Samsung Electronics (FRA:SSUN). Toyota (NYSE:TM), Alibaba Group (NYSE:BABA), and AstraZeneca also make the top 10 largest holdings.
6. Nuveen ESG Mid-Cap Growth ETF
This small ETF focuses on mid-cap growth U.S. companies. It is an interesting opportunity for investors looking to support growing U.S. ESG companies. The fund is up 15.6% in the past five years, although it dropped 20.33% during the first few months of 2022. With 59 total positions, the portfolio is heavily invested in information technology (34.08%) and healthcare (20.69%).
Top portfolio positions include Cadence Design Systems (NASDAQ:CDNS), Cheniere Energy (NYSEMKT:LNG), Ulta Beauty (NASDAQ:ULTA), and Tractor Supply Company (NASDAQ:TSCO).
The bottom line
ESG is one additional tool investors can use to guide investment decisions. The historical growth performance and resilience during market contractions indicate long-term viability for ESG-focused companies and the S&P 500 ESG index. While investors can select