Suppose you believe in the effects of global warming. In that case, you’ll likely know that initiatives like the 2023 United Nations Climate Change Conference, more commonly known as COP28, are at the forefront of the fight against climate change. COP28 is a group of countries that works to foster nature-positive investments that tackle climate change.
One of the ways we, as investors, can help the environment is to invest in ESG companies that align with the agenda's goals. ESG is one of the metrics that have grown in acceptance as another attribute in evaluating a potential company to add to one's portfolio. It quantifies a company's impact on society and the environment. This makes it much easier for investors to look for investments that fit their environmental goals.
True, ESG can potentially impact some sectors and industries more than others. Indeed, while market players prepare for the results of the COP28 conference, investors anticipate the decisions agreed upon by the attendees to fight against climate change.
This article focuses on three companies with great potential and high ESG marks, as indicated by several data providers.
Starbucks Corp (SBUX)
Starbucks Corp is the world’s largest coffee chain and arguably one of the most well-known brands worldwide. It operates in various countries by selling different varieties of coffee beverages, ground coffees, roasted coffee beans, and ready-to-drink beverages. It also owns brands like Starbucks Reserve, Seattle's Best Coffee, Teavana, Ethos, and Princi. It’s one of the companies that have been active in making steps to provide its community and partners with an equitable workplace and environment.
SBUX has a solid commitment to achieving a resource-positive future. It boasts a 2030 environmental goal that prioritizes the reduction of its carbon, water, and waste footprints to half. It has extensively contributed to regenerative agricultural practices, adopted eco-friendly operations, and offered sustainable menu options. Starbucks's strategy involves sourcing 100% renewable energy for its stores, helping reduce single-use plastic use, supporting coffee farmers with disease-resistant trees, and initiating restoration activities for the pursuit of forest conservation. This strong environmental commitment has made Starbucks one of our top choices.
Analyst Ratings
Analysts rate SBUX as a “Moderate Buy” based on 10 Strong Buys, 1 Moderate Buy, and 14 Hold recommendations. The mean target price for SBUX is $113.68, and the high target price is $136.00, a potential upside of 36.20%.
Tetra Tech Inc. (TTEK)
Tetra Tech, Inc. is a consulting and engineering services provider specializing in providing comprehensive environmental services to support the growth of the protection, conservation, and creation of sustainable environments. TTEK operates in both commercial and government agencies in the U.S. and worldwide. The company’s operations help clients by providing consultation and engineering services in sustainable infrastructure, project management, engineering, and environmental projects.
Tetra Tech and its business are committed to sustainability and fighting climate change. Its latest sustainability report highlights the significant strides that the company has made in communities and climate change mitigation. The company monitors ESG metrics and focuses on ecosystem restoration, renewable energy, and environmental preservation. Its 1 Billion People Challenge has tremendously impacted the environment with its initiatives for clean energy and reducing over 101.2 million metric tons of CO2e. TTEK aligns its projects with global standards like the United Nations Sustainable Development Goals. This strong commitment to sustainability has put TTEK on our ESG to-buy list.
Analyst Ratings
Analysts rate TTEK as a “Moderate Buy” based on 2 Strong Buys, 1 Moderate Buy, and 2 Hold recommendation. The mean target price is $192.00, and the high target price is $215.00, representing a potential profit of 35.83%.
General Electric Company (GE)
The last company on our list is a considerable household name. General Electric Company is a high-tech industrial company that operates in the Power, Renewable Energy, and Aerospace sectors. The company offers aftermarket services and solutions in hydro, hybrid renewables, and onshore and offshore wind in its renewable energy sector. Its power segment builds products and technologies that help harness resources like oil, gas, diesel, nuclear, and fossil to produce electric power.
GE has been making significant strides in its initiatives to combat climate change. The company has various climate change initiatives to help shape the global energy transition. Its efforts for decarbonization have led to breakthrough technologies like its Haliade-X offshore wind turbines. General Electric also plans to reach carbon neutrality by 2030 and net-zero emissions by 2050.
Its subsidiary, GE Vernova, collaborates with companies to find lower carbon LNG solutions and improve hydrogen capabilities turbines to align with their forward-looking approach. Its expertise in each of its industry sectors spells an excellent future for GE to address everyone's climate change and sustainability needs, making it a part of our to-buy list.
Analyst Ratings
The company is also rated a “Moderate Buy” based on analysts' 8 Strong Buy, 1 Moderate Buy, and 5 Hold recommendations. The mean target price is $125.61, and the high target price is $150.00, an upside of 26.20%.
Final Thoughts
COP 28 is an important event that helps set the pace for initiatives against climate change. These changes can impact how investors see potential investments depending on their alignment with the goals set by the conference and how they deploy their capital into sustainable companies. Investors looking to capitalize on this potential catalyst can start looking at companies with a high environmental focus on their sustainability goals. However, this shouldn’t be the sole qualification for investing. Remember, sustainability is just one aspect of identifying investment companies; profitability and other financial factors should always be considered.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
