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.
8. Sprouts Farmers Market, Inc. (NASDAQ:SFM)
Number of Hedge Fund Investors: 37
Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a leading specialty retailer of fresh, natural, and organic products, dedicated to helping people live and eat better. The company is admired for its emphasis on sustainable sourcing, reduced food waste, and eco-friendly packaging. Sprouts Farmers Market, Inc. (NASDAQ:SFM) has over 440 stores across 23 states in the United States.
Sprouts Farmers Market, Inc. (NASDAQ:SFM) is focused on expanding its differentiated assortment of products that cater to the demands of its health enthusiast customers. The company is consistently increasing its range of organic produce, protein programs, and meal solutions, making it a one-stop shop for customers seeking healthy and convenient options. Sprouts Farmers Market, Inc. (NASDAQ:SFM) has also introduced new products such as grass-fed beef, stuffed peppers, and organic grass-fed meatballs, which have contributed to the company’s category growth. Additionally, the company’s Innovation Center has transitioned over 170 new items to its inline shelves, and its foraging team continues to explore new tastes and trends from around the globe.
Sprouts Farmers Market, Inc. (NASDAQ:SFM) is investing in customer engagement and experience, recognizing that a strong connection with its customers is crucial to driving loyalty and retention. The company has partnered with influencers and celebrities to attract new customers to its stores. Furthermore, the company is investing in technology to build a customer data foundation, which will enable personalized communications and tailored marketing strategies. A new loyalty program is also being tested, with promising early results, and plans are underway to extend the test to additional markets in 2025.
7. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Investors: 38
Enphase Energy, Inc. (NASDAQ:ENPH) is a global leader in energy technology, renowned for its solar microinverter systems that convert solar power into usable electricity. The company also offers energy storage solutions and monitoring software tailored for both residential and commercial solar installations. Enphase Energy, Inc. (NASDAQ:ENPH) generates revenue through a combination of product sales and subscription-based services.
The company is actively expanding its product portfolio to meet a wider array of market demands. Enphase has introduced the IQ9 microinverter, utilizing Gallium Nitride (GaN) technology, which supports higher DC input currents and elevated AC grid voltages, making it ideal for small commercial applications. Scheduled for launch in the second half of 2025, this product line aims to address evolving market needs and strengthen the company’s foothold in the commercial sector. Additionally, the company is rolling out its fourth-generation battery system, designed to minimize installation costs and wall space, enhancing its competitiveness in both grid-tied and backup energy solutions. Enphase Energy, Inc. (NASDAQ:ENPH) is also broadening its presence in key international markets, including Japan, India, and Brazil, with product offerings tailored to local regulations and market requirements.
In the United States, Enphase Energy, Inc. (NASDAQ:ENPH) is capitalizing on the opportunities provided by the Inflation Reduction Act (IRA) to solidify its market position. The company is launching higher domestic content SKUs for its IQ8HC microinverters and IQ8P three-phase microinverters, enabling commercial asset owners to qualify for a 10% domestic content Investment Tax Credit (ITC). This strategic initiative is expected to boost demand and enhance the competitiveness of the company’s products in the US market.
6. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Investors: 43
Sunrun Inc. (NASDAQ:RUN) is one of the largest residential solar energy companies in the United States, providing solar panels, battery storage, and energy management services. The company plays a vital role in reducing dependence on fossil fuels by offering homeowners affordable and sustainable solar energy solutions. Sunrun Inc.’s (NASDAQ:RUN) client base consists primarily of residential homeowners seeking renewable energy solutions and grid independence.
Sunrun Inc. (NASDAQ:RUN) is prioritizing the expansion of its strategic partnerships to better integrate residential solar energy systems with the broader electric grid, transforming homes into smart, responsive energy resources. The company has launched 16 grid service programs nationwide, with over 20,000 customers actively participating. Among its most significant partnerships is a collaboration with Orange and Rockland Utilities (O&R), a subsidiary of Consolidated Edison, Inc. This partnership resulted in the successful activation of New York’s largest residential power plant, a distributed energy system powered by over 300 solar-plus-storage units. Additionally, Sunrun Inc. (NASDAQ:RUN) is extending its reach by offering free or heavily subsidized home batteries to customers enrolled in the 10-year program.
Sunrun Inc. (NASDAQ:RUN) continues to invest in cutting-edge technologies and services to maintain its leadership in innovation. The company is advancing battery storage solutions, smart grid management tools, and integrated energy management platforms. These technologies not only enhance the efficiency and reliability of its systems but also improve user experience by making energy management more seamless and intuitive. Sunrun Inc.’s (NASDAQ:RUN) virtual power plants leverage sophisticated software to optimize energy consumption and distribution, ensuring stored solar power is efficiently utilized during peak demand periods.
5. Waste Connections, Inc. (NYSE:WCN)
Number of Hedge Fund Investors: 48
Waste Connections, Inc. (NYSE:WCN) is a leading provider of waste management, recycling, and environmental services across North America. The company focuses on sustainable waste disposal practices, recycling initiatives, and landfill gas-to-energy projects to reduce environmental impact. Waste Connections, Inc. (NYSE:WCN) partners with municipalities, commercial businesses, and industrial clients to provide tailored waste management solutions.
Waste Connections, Inc. (NYSE:WCN) is focusing on expanding its presence in key markets. In 2024, the company is on track for a record year of private company acquisitions, with over $700 million in annualized private company revenue signed or closed by October 30. These acquisitions include solid waste franchises, new markets, oil and natural gas waste facilities, and tuck-in operations within or adjacent to its existing footprint. Notably, the acquisition of Royal Waste Services, a leading waste management company in New York City, has positioned Waste Connections, Inc. (NYSE:WCN) as the largest and only fully integrated player in the city. This strategic move is expected to provide significant opportunities for growth and operating efficiencies, particularly with the city’s transition to a franchise model, in which the company has signed exclusive contracts with municipalities and businesses to obtain rights to be the primary waste collection provider.
Waste Connections, Inc. (NYSE:WCN) is committed to sustainable practices and has made significant progress toward achieving its long-term aspirational ESG (Environmental, Social, and Governance) targets. The company has reduced emissions intensity by 40% and absolute emissions by 13% over multiple years.
4. Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Investors: 52
Aptiv PLC (NYSE:APTV) is a global technology company specializing in advanced safety, electrification, and connected car solutions for the automotive industry. The company plays a leading role in the transition to a sustainable and electrified transportation system by providing software and hardware solutions. Aptiv PLC (NYSE:APTV) is also known for its emphasis on sustainable manufacturing processes and energy-efficient technologies.
Aptiv PLC (NYSE:APTV) is investing heavily in the development of advanced technologies, including high-voltage electrical architecture solutions, battery management systems, and electric motor control systems for the EV market. The company is focused on developing cost-effective solutions for EVs, such as its modular electrical distribution systems, which can help reduce the overall cost of EV production. Additionally, Aptiv PLC (NYSE:APTV) is working closely with its OEM customers to support the development of new EV platforms and models, including the integration of advanced safety and user experience features. Additionally, the company is investing in productized solutions, such as its Gen 6 ADAS platform, which provides a high-performing, scalable solution at a competitive cost.
Aptiv PLC (NYSE:APTV) is also prioritizing investments in emerging EV technologies, such as battery management and electric motor control. The company has made strategic investments in several EV-related startups and has established partnerships with leading EV manufacturers to develop and produce advanced EV components.
3. Waste Management, Inc. (NYSE:WM)
Number of Hedge Fund Investors: 54
Waste Management, Inc. (NYSE:WM) is one of the largest providers of waste collection, disposal, and recycling services, serving over 20 million customers across the United States and Canada. The company is a leader in sustainable waste practices, including waste-to-energy initiatives, methane gas recovery, and advanced recycling technologies. Waste Management, Inc. (NYSE:WM) actively reduces greenhouse gas emissions and minimizes landfill dependency.
Waste Management, Inc. (NYSE:WM) is actively investing in sustainability initiatives and renewable energy projects to drive growth and reduce its environmental footprint. The company has committed to spend approximately $3 billion on sustainability-related investments, including the development of renewable natural gas (RNG) projects, recycling facilities, and other initiatives. These investments are expected to generate significant earnings growth and free cash flow, with the company anticipating $800 million in EBITDA from these initiatives by 2027.
Waste Management, Inc. (NYSE:WM) is also leveraging technology and automation to optimize its operations, improve efficiency, and reduce costs. The company has implemented various technologies, including automated routing systems, scheduling and planning tools, and advanced mapping systems, to streamline its collection and disposal operations. Additionally, Waste Management, Inc. (NYSE:WM) has automated over 800 routes in its residential fleet to reduce labor dependence and improve performance. These investments in technology are expected to drive margin expansion and operating efficiency, with the company targeting a significant reduction in operating expenses as a percentage of revenue.
Waste Management, Inc. (NYSE:WM) is also pursuing strategic acquisitions to expand its service offerings and increase its market share. On November 4, the company completed the acquisition of Stericycle, a leading provider of medical waste management services. This acquisition is expected to add a complementary business line and drive growth through synergies and expanded service offerings.
2. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Investors: 59
First Solar, Inc. (NASDAQ:FSLR) is a leading provider of solar energy solutions, specializing in thin-film photovoltaic (PV) technology. The company designs, manufactures, and installs large-scale solar power systems worldwide. First Solar, Inc. (NASDAQ:FSLR) serves utility-scale project developers, independent power producers, and energy companies, contributing significantly to the global shift toward renewable energy.
First Solar, Inc. (NASDAQ:FSLR) has made notable progress in expanding its manufacturing capacity and advancing its technological capabilities. The company recently opened its $1.1 billion manufacturing facility in Alabama, which is expected to add 3.5 gigawatts of vertically integrated solar production capacity once fully operational. Additionally, the company plans to commence operations at its Louisiana facility in the second half of 2025, aligning with its target of surpassing 14 gigawatts of annual U.S. capacity and over 25 gigawatts of global capacity by 2026.
First Solar, Inc. (NASDAQ:FSLR) remains at the forefront of next-generation thin-film photovoltaic technology development. The company is preparing to launch CuRe production at its Ohio facility, aiming to deliver approximately 0.4 gigawatts of CuRe products by Q1 2025. Furthermore, the company is advancing perovskite technology through a dedicated development line in Perrysburg, Ohio, designed to replicate in-line manufacturing conditions and accelerate innovation in this promising technology.
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Tesla (NASDAQ:TSLA) is a global leader in electric vehicle production. The company has revolutionized the automotive industry with its cutting-edge electric cars. Additionally, Tesla (NASDAQ:TSLA) is driving innovation in robotics and autonomous driving with its advanced Full Self-Driving (FSD) software. The company’s mission is to accelerate the world’s transition to sustainable energy.
Autonomy is a key focus area for Tesla (NASDAQ:TSLA), and the company is making significant strides in developing and deploying autonomous driving technology. Tesla (NASDAQ:TSLA) recently released the Full Self-Driving version 12.5 and plans to release version 13.0 of Full Self-Driving. The new update is expected to enhance the miles between interventions by 5 to 6 folds compared to the prior version. Furthermore, the company aims to achieve full autonomy by Q3 2025 and capabilities that will surpass human driving by the end of 2025.
Tesla (NASDAQ:TSLA) plans to debut self-driving electric vehicles for ride-hailing in California and Texas by the middle of 2025, as the regulatory approval process is more streamlined in these states. The company is already testing this service by offering ride-hailing for its employees in the Bay Area.
Tesla (NASDAQ:TSLA) is also focusing on increasing its vehicle production and plans to introduce more affordable models in the first half of 2025. This strategy is designed to make electric vehicles more accessible to a wider audience. Additionally, the company is on track to start volume production of the Cybercab in 2026, with an ambitious target of producing at least 2 million units annually and potentially scaling up to 4 million units in the future. This expansion in production capacity will not only meet the growing demand for electric vehicles but also aims to contribute to the company’s long-term goal of becoming a fully autonomous and sustainable transportation provider.
While we acknowledge the potential of Tesla (NASDAQ:TSLA) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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