5 ETFs to Consider During Climate Week

It is Climate Week in New York City, which of course reminds ETF afficionados about—ETFs (what else?!).

Running from Sept. 17-24, Climate Week is the largest annual event of this type, with more than 400 planned events across Manhattan. There are Climate Week celebrations across the globe at different times of the year, run by the United Nations and organizations such as Climate Group, who runs the NYC program. 

When climate change is the issue, ETFs are the answer, at least for investors pursuing ways to potentially profit from whatever their views happen to be.

Investing in Climate Change

Here, without forecasts or favor, are a set of ETFs that represent different angles through which to invest in issues related to the climate change through investment in baskets of stocks. 

Using etf.com’s ETF screener, I quickly found several sub-themes to narrow the list. Those climate change-related themes included Environment, Renewable Energy, Low Carbon, Water and Nuclear Energy, which combine for 75 ETFs, merely a partial list of the ways the ETF industry has seized the opportunity to provide an outlet for investors. Here’s a sampler from each of those five areas.

5 'Climate Change' ETFs

Environment: Goldman Sachs Future Planet Equity ETF (GSFP) 

Goldman Sachs launched this widely diversified actively managed environmental ETF just over two years ago, and it has accumulated $137 million in assets. Its managers consider five main themes, each of which has several sub-themes: Clean Energy, Resource Efficiency, Sustainable Consumption, Circular Economy (recycling, waste management, etc.) and Water Sustainability. This is a focused, 51 stock ETF, and at 29 times trailing 12-month earnings, it is not cheap, but intriguing as a longer-term consideration. 

Renewable Energy: iShares Global Clean Energy ETF (ICLN) 

At more than $3.3 billion in assets, ICLN is one of the largest climate-centered ETFs. It owns stocks in areas including hydroelectric, ethanol, solar and wind. Those industries have collectively had a rough 2023, leaving ICLN down about 20% year to date. 

Low Carbon: Xtrackers MSCI USA Climate Action Equity ETF (USCA)

A new but quickly sizeable ETF in this space, USCA has amassed more than $2.2 billion since its April 4, 2023, launch. It angles its large and mid-cap portfolio toward stocks of companies it judges to be leading on climate transition. It also eliminates from consideration those “involved in controversial business activities.”  

Water: First Trust Water ETF (FIW) 

The $1.5 billion FIW fund is has found the fountain of positive returns this year, bucking the rest of its climate peers. This 16-year-old ETF is up 8.4% year to date. FIW focuses on companies in the potable water and wastewater industries, and invests across the market capitalization spectrum, from large caps to micro caps. 

Nuclear Energy: Van Eck Uranium+Nuclear Energy ETF (NLR) 

2023 has been a good year to “nuke it” when it comes to investment allocation. This under the radar, $101 million ETF is up 29% this year, thanks in large part to a surge in uranium stocks. That and industrial conglomerate companies make up the bulk of this portfolio. Contrary to what some investors might assume, there is very little energy weighting here, but Utilities are currently a robust 38% allocation.

This Generation's Issue 

Climate Week rallies around one of the vital issues of this generation. It is certainly a topic that clients of investment advisors have differing opinions on. That provides an opportunity for advisors to introduce a variety of ways to potentially profit in portfolios from the movement that has become the business of climate preservation.