Investors seeking companies committed to the low-carbon transition may find Moderna MRNA, Etsy ETSY, Illumina ILMN, Healthpeak Properties DOC, and PayPal Holdings PYPL worth exploring. In this article, we look at companies that have displayed a commitment to reducing their carbon intensity while also reporting their carbon transmissions and overall contributing positively to the environment.
Morningstar US Low Carbon Transition Leaders Index
We found these companies by scouring the holdings in the Morningstar US Low Carbon Transition Leaders Index. The index comprises 181 equity holdings, with 47% in the 10 largest stocks. Nvidia NVDA commands the highest portfolio weight at nearly 13%, followed by industry giants like Microsoft MSFT, Alphabet GOOG, Eli Lilly LLY, and JPMorgan JPM.
The index, launched on Feb. 28, 2024, is designed to offer diversified exposure to companies leading the charge in carbon reduction. The companies are ranked according to their carbon intensity and Low-Carbon Transition Ratings from Morningstar Sustainalytics. The index also seeks to emphasize companies that report carbon emissions and are reducing their carbon intensity, as well as those whose business activities contribute positively to the environment.
Morningstar tracks performance from June 19, 2020. So far in 2024, the Morningstar US Low Carbon Transition Leaders Index has returned 11.24% versus SPDR S&P 500 ETF Trust’s SPY 9.45% return. In 2023, the index returned 27.5% versus SPY’s 24.0% gain.
We looked for companies within this index with the lowest price/fair value estimates.
