26 climate-smart stocks shine in new BMO screen

BMO's Doug Morrow identifies 26 stocks leading the charge against climate change

26 climate-smart stocks shine in new BMO screen

BMO Nesbitt Burns analyst Doug Morrow has launched a new “climate opportunities screen” targeting stocks positioned to thrive in the fight against climate change, as reported by The Globe and Mail.

This innovative screening process seeks to identify companies that are actively contributing to mitigating climate change impacts, with Morrow suggesting that climate-friendly companies will soon be valued more highly than those detrimental to the environment.

He bases his approach on the visible negative effects of climate change, noting an increase in extreme weather events by a factor of six since 1970 and a fourfold jump in insurance-related losses from climate change since 1990, referencing a Swiss Re study.

The selection process started with 432 stocks rated as outperform at BMO, evaluating them against criteria such as net-zero emissions policies, transparency in carbon emissions, and board oversight of climate targets.

Ninety-nine companies that demonstrated a successful reduction in greenhouse gas emissions over the past three years and had a robust policy for further reductions by 2030 were then scrutinized. The stocks that progressed had carbon emissions in the lowest quartile compared to their peers.

This list was refined to 47 stocks before entering the third stage, which used Bloomberg’s physical climate risk rating scale. This scale considers not just emissions but also the impact of operations on soil, energy use, supplier emissions compliance, and waste and water management.

The fourth and final stage assessed the remaining 35 companies for their potential earnings growth from global decarbonization efforts, leading to a final selection of 26 companies.

These include leaders in critical materials for renewable power, smart grid expertise, energy transition finance, and sustainable packaging development.

The 26 companies that made it through Morrow's comprehensive screening process, listed alphabetically, are:

  • Adobe Systems
  • AstraZeneca
  • Avery Dennison
  • Baker Hughes Co.
  • BHP
  • Brookfield Renewable Partners
  • BXP
  • Canadian Imperial Bank of Commerce (CIBC)
  • Equinix
  • Federal Realty Investment (FRI)
  • Freeport-McMoRan
  • Magna International
  • Microsoft
  • Moody’s Corp.
  • National Bank of Canada
  • Pfizer
  • Prologis
  • Regency Centers
  • Salesforce.com
  • ServiceNow
  • SLB
  • Stantec
  • TransAlta
  • Vale S.A.
  • Wheaton Precious Metals
  • WSP Global

CIBC's inclusion is particularly noteworthy for its commitment to reducing emissions, which is supported by third-party verification and climate expertise on its board.