We believe that steering companies with more questionable records, or in more polluting industries, towards sustainable practices should help to manage investment risks over the long term, improve returns and benefit the planet. Here are three stocks that are proving themselves and working towards reducing their carbon footprint.
An eco-conscious cement maker
HeidelbergCement (Frankfurt: HEI) is a global leader in aggregates, cement and ready-mixed concrete production. The main component of cement is clinker, a by-product of sintering limestone (heating it so that the minerals fuse together). Its production is carbon-emission intensive.
HeidelbergCement has been increasingly focused on growing its share of the market’s sustainable low-carbon products, designing factories that operate with alternative raw materials and fuels. Currently, the company allocates about 80% of its research and development (R&D) spend on reducing energy consumption in its
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
manufacturing process.
In June 2021, the firm announced plans to build the world’s first carbon-neutral cement plant in Sweden. This is expected to start operations in 2030. In 2019, it became the first cement company to announce an emissions-reduction target that is in line with the Paris Agreement on climate change, which aims to prevent a rise in the Earth’s temperature over 2°C by 2050.
Playing a part in renewable energy
Steelmaker ArcelorMittal (Amsterdam: MT) is committed to achieving net-zero carbon emissions by 2050 and has a broad and flexible transition strategy in place. The company has identified three distinct pathways that have the potential to deliver a significant reduction in carbon emissions: clean-power steelmaking, using hydrogen and electrolysis; circular-carbon steelmaking, which uses circular-carbon energy sources that remove carbon dioxide from the atmosphere – such as waste biomass – to replace fossil fuels; and fossil-fuel carbon capture and storage, where the current method of steel production is maintained but the carbon is then captured and stored or reused, rather than emitted into the atmosphere.
The company is also making new steel products that help their customers’ transition to a low-carbon future, such as materials for wind turbine construction. As the second-largest steelmaker in the world, it is well positioned to develop the required technology and capture the potential competitive advantage.
Carbon footprint improvement
BP (LSE: BP) aims to get to net zero across its operations by 2050 or sooner. It is also aiming for a 50% cut in the carbon intensity of products it sells by 2050 or sooner. The firm plans to install methane measurement at all major oil and gas processing sites by 2023 and reduce methane intensity of operations by 50%. It also intends to increase the proportion of investment into non-oil and gas businesses over time.
We believe the oil and gas sector as a whole faces a profound challenge in adapting to the energy transition. But we think BP is better placed than others to manage the transition effectively due to the greater operational flexibility it has developed in the years since the Deepwater Horizon oil spill, caused by the explosion of an oil rig off the coast of Louisiana.
-
Gold’s allure and why you should never 'pay a premium for graded coins'It is easy to become distracted by the beauty of gold, but remember why you buy it, says Dominic Frisby
-
A rebound in UK's commercial property – should you invest?UK commercial property's three-year bear market finally appears to be over, says Max King
-
Investment opportunities in the world of Coca-ColaThere is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
-
Streaming services are the new magic money tree for investors – but for how long?Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn
-
Trainline: a cheap cash machine for investorsOpinion Trainline’s shares have slumped owing to concerns about growth, but the sell-off seems overdone
-
Look to British stocks to lead the charge as the Magnificent Seven falterOpinion Gervais Williams, fund manager, The Diverse Income Trust, picks three British stocks where he'd put his money
-
'Pension funds shouldn't be pushed into private equity sector'Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.
-
Greg Abel: Warren Buffett’s heir takes the throneGreg Abel is considered a safe pair of hands as he takes centre stage at Berkshire Hathaway. But he arrives after one of the hardest acts to follow in investment history, Warren Buffett. Can he thrive?
-
Who will be the next Warren Buffett?Opinion There won’t be another Warren Buffett. Times have changed, and the opportunities are no longer there, says Matthew Lynn.
-
Will Comstock crash – or soar?Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
