The United Nations Climate Change Conference (COP29), held in Baku, Azerbaijan, concluded on November 24, with a landmark agreement that sets a new collective goal for climate finance. The agreement, which aims to triple the annual finance to developing countries from the previous goal of $100 billion to $300 billion by 2035, marks a significant step forward in global efforts to combat climate change and support vulnerable nations. Furthermore, this new finance goal, known as the New Collective Quantified Goal (NCQG) also aims to scale up collaboration among all actors including governments, private sector entities, and international financial institutions to finance developing countries to reach $1.3 trillion annually by 2035.
The progress made at COP29 builds on the global climate action achieved at previous conferences. COP27 established a historic Loss and Damage Fund, while COP28 delivered a global agreement to transition away from all fossil fuels in energy systems swiftly and fairly, tripling renewable energy and boosting climate resilience. The new finance goal at COP29 is a crucial step in ensuring that these commitments are met and that the global community remains on track to limit global warming.
According to a report by McKinsey, the $300 billion annual goal for climate financing falls drastically short of the estimated $1 trillion needed annually to meet global targets. On a broader scale, McKinsey estimates that up to $9 trillion per year will be required globally by 2050 to decarbonize physical assets and transition towards a sustainable future.
The report highlights that private capital is widely seen as a key enabler in bridging this financing gap. However, many investors remain cautious, not just due to a lack of funds, but due to a shortage of credible, scalable investment opportunities, execution challenges, insufficient risk management, and delays in scaling operations. The geopolitical and macroeconomic environment further complicates the sustainability landscape. Higher interest rates, inflation, and energy supply disruptions have created an environment where cost assumptions from just a few years ago no longer hold true.
In light of these dynamics, McKinsey identifies three key strategies for businesses to navigate the complex investment landscape in sustainability. First, companies must reevaluate and refresh sustainability strategies as past assumptions may no longer be valid, and companies must take a pragmatic approach to align their strategies with current realities. Second, businesses must accelerate climate technology industrialization. While renewable energy technologies have made significant progress in cost competitiveness, other emerging technologies, such as hydrogen, long-duration energy storage, and precision fermentation, require further industrialization. Third, companies must address execution risks, streamline supply chains, and ensure they have experienced teams capable of managing large-scale sustainable projects.
The report concluded by emphasizing that companies who will act decisively, embrace innovative financing mechanisms, and prioritize operational excellence will not only contribute to global sustainability goals but also position themselves for future growth in an evolving economic landscape.
The journey towards a sustainable future requires collaboration, innovation, and accountability across all sectors. While the challenges are significant, the opportunities for growth, resilience, and value creation are even greater. With that in context, let’s take a look at the 10 best environmental stocks to invest in right now.
Photo by Markus Spiske on Unsplash
Our Methodology
To compile our list of the 10 best environmental stocks to invest in right now, we used environmental ETFs plus online rankings to compile an initial list of 20 environment-friendly companies. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Environmental Stocks To Invest In Right Now
10. Clearway Energy Inc (NYSE:CWEN)
Number of Hedge Fund Investors: 29
Clearway Energy, Inc. (NYSE:CWEN) is one of the largest owners of renewable energy projects in the United States. The company is primarily focused on wind and solar energy and is actively expanding its battery energy storage assets.
Clearway Energy, Inc. (NYSE:CWEN) is actively advancing the growth of its renewable energy portfolio. The company recently signed a binding agreement to acquire the 137 MW Tuolumne Wind Project from Turlock Irrigation District, located in Klickitat County, Washington. The acquisition, expected to close in the first quarter of 2025, will supply power under a new 15-year Power Purchase Agreement (PPA) with Turlock Irrigation District. It is projected to deliver an average incremental annual levered asset Cash Available for Distribution (CAFD) of approximately $9 million over five years, starting January 1, 2026.
In addition, Clearway Energy, Inc. (NYSE:CWEN) is investing in the Pine Forest Solar and Storage Project. Situated in the rapidly expanding ERCOT (Electric Reliability Council of Texas) power market, this project strategically strengthens the company’s renewable portfolio. The solar capacity of the Pine Forest project is fully contracted for an average duration of about 20 years, with the majority of agreements secured with leading information technology companies.
9. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Investors: 31
Rivian Automotive, Inc. (NASDAQ:RIVN) is an American electric vehicle manufacturer specializing in electric trucks, SUVs, and delivery vans. The company also develops charging infrastructure and energy management systems to support its EV ecosystem. Rivian Automotive, Inc.’s (NASDAQ:RIVN) primary clients include eco-conscious consumers and corporate partners such as Amazon, which has ordered a fleet of electric delivery vans for sustainable logistics solutions.
Rivian Automotive, Inc. (NASDAQ:RIVN) has recently introduced its second-generation R1 platform chassis, which features three motors for increased power and range. The new variant called the Tri-Motor offers exceptional performance and efficiency and is expected to be a key driver of sales growth for the company. Additionally, Rivian Automotive, Inc. (NASDAQ:RIVN) is working on the development of its R2 model, which is expected to be launched in the first half of 2026. The R2 model will be produced at the company’s new plant in Illinois and will feature a number of innovative technologies, including a structural battery pack and a unique electrical architecture.
Rivian Automotive, Inc. (NASDAQ:RIVN) has made significant strides in ramping up production of its second-generation platform chassis, R2, which is expected to be completed in 2025. The R2 platform is designed to be used in R2 along with other models, including the R3, and will also feature a quad-motor variant. Rivian Automotive, Inc. (NASDAQ:RIVN) is focusing on optimizing the cost of this platform, as a result, the R2 chassis program is expected to benefit from substantial cost reductions, driven by material cost improvements, enhanced supply chain relationships, and more efficient manufacturing processes.