President Donald Trump has signed an executive order directing the United States to withdraw from the Paris climate agreement, which is a significant blow to worldwide efforts to combat global warming. The order, signed on Trump’s first day in office after being sworn in for a second term, marks the second time the US has withdrawn from the agreement, having previously done so in 2017. The Biden administration had previously submitted a plan to cut US greenhouse gas emissions by more than 60% by 2035, but Trump’s withdrawal from the Paris Agreement has threatened to undermine these efforts.
On 20 January, The Guardian reported that the global financial sector is witnessing a significant shift away from its commitment to net zero emissions, as banks, asset managers, and industry groups move to accommodate the Trump administration’s anti-net zero stance. At the center of this shift are two key initiatives: The Glasgow Financial Alliance for Net Zero (GFANZ) and The Net Zero Asset Managers (NZAM) initiative.
GFANZ, a global coalition of financial institutions, was launched in 2021 at the COP26 climate conference in Glasgow, Scotland, with the goal of mobilizing the trillions of dollars needed to deliver the goals of the Paris Agreement. The alliance had set a goal of achieving net-zero emissions by 2050, and its members had committed to aligning their financing activities with the goals of the Paris Agreement. However, in a significant reversal, GFANZ has abandoned its requirement that members be aligned with the Paris Agreement, following a series of withdrawals by major US banks.
Read Also: 12 Cheapest Stocks with Biggest Upside Potential and Top 10 Undervalued Tech Stocks to Buy According to Hedge Funds.
The Net Zero Asset Managers (NZAM) initiative, which includes some of the world’s largest asset managers, has also been impacted by the shift in the global financial sector. NZAM was launched in 2020 with the goal of promoting net-zero investing and supporting the transition to a low-carbon economy. The initiative had gained significant momentum, with over 200 asset managers signing up to its principles and committing to align their investment portfolios with the goals of the Paris Agreement.
However, in recent weeks, NZAM has also suspended its monitoring of members’ progress towards their net-zero commitments, and has announced a review “to ensure NZAM remains fit for purpose in the new global context.” BlackRock, the world’s largest asset manager, has also quit the NZAM initiative, citing “confusion” over its membership. The departure of BlackRock, which manages over $11 trillion in assets, is seen as a significant blow to the initiative and has raised concerns about the ability of NZAM to achieve its goals.
The recent policy shifts and the wavering commitment of major financial institutions to net-zero goals represent significant setbacks in the global fight against climate change. However, sectors such as renewable energy and electric vehicles are expected to continue demonstrating resilience due to their cost-effectiveness, technology advancements, and economies of scale. With that in context, let’s take a look at the 12 most promising green stocks according to hedge funds.
Our Methodology
To compile our list of the 12 most promising green stocks according to hedge funds, we used environmental ETFs plus online rankings to compile an initial list of 25 green stocks. We then used Insider Monkey’s Hedge Fund database to rank 12 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).
12 Most Promising Green Stocks According to Hedge Funds
12. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Investors: 31
Rivian Automotive, Inc. (NASDAQ:RIVN) is an electric vehicle (EV) manufacturer specializing in adventure-focused trucks and SUVs. The company designs and produces vehicles such as the R1T (pickup truck) and R1S (SUV) and also offers fleet delivery vans for Amazon. Rivian Automotive, Inc. (NASDAQ:RIVN) generates revenue through vehicle sales and related services, including its proprietary charging network.
Rivian Automotive, Inc. (NASDAQ:RIVN) has launched its second-generation R1 platform chassis, which is equipped with three motors to provide increased power and range. The new Tri-Motor variant offers outstanding performance and efficiency and is expected to be a major contributor to the company’s sales growth. Additionally, Rivian Automotive, Inc. (NASDAQ:RIVN) is working on the development of its R2 model, set for launch in the first half of 2026. The R2 model will be produced at the company’s new Illinois plant and will include several cutting-edge technologies, such as a structural battery pack and a unique electrical architecture.
Rivian Automotive, Inc. (NASDAQ:RIVN) has made substantial progress in ramping up the production of its second-generation R2 platform chassis, with completion expected in 2025. This platform will be used in the R2 model as well as other upcoming models like the R3, and will also include a quad-motor variant. Rivian Automotive, Inc. (NASDAQ:RIVN) is focused on optimizing the cost of this platform, and as a result, the R2 chassis program is anticipated to benefit from significant cost reductions, driven by improvements in material costs, strengthening supply chain relationships, and more efficient manufacturing processes.
11. Array Technologies, Inc. (NASDAQ:ARRY)
Number of Hedge Fund Investors: 36
Array Technologies, Inc. (NASDAQ:ARRY) specializes in solar tracking systems designed to improve the efficiency of solar energy projects. The company’s flagship products, including the DuraTrack and OmniTrack series, are designed to optimize energy production and reduce operational risks, making them suitable for a wide range of terrains and climates. Array Technologies, Inc. (NASDAQ:ARRY) generates revenue through hardware sales and post-installation services, catering to utility-scale solar developers and independent power producers.
Array Technologies, Inc. (NASDAQ:ARRY) is dedicated to continuous innovation, as demonstrated by the recent introduction of the 77-degree tracker, which features the industry’s steepest stow angle to protect against hail damage. This product, along with the SkyLink architecture and automated snow response solutions, addresses the specific challenges faced by solar sites, such as extreme weather conditions. The company is also working on a strong pipeline of upcoming products, including the automated snow response system.
While the U.S. market remains a core focus, Array Technologies, Inc. (NASDAQ:ARRY) is actively expanding its global presence. The company has increased its investments in sales and marketing to strengthen its position and drive additional business in international regions. In Brazil, the company has achieved a leading market share in distributed generation, showcasing its ability to adapt to diverse market conditions. In Europe, despite modest demand, Array Technologies, Inc. (NASDAQ:ARRY) is confident in its targeted customer initiatives and is well-positioned for market share growth in the coming quarters.
