By Ann Monroe, MSN MoneySo you want to do something about global warming. Guess what? So do a lot of companies.
It's easy to be skeptical about that, with just about every company talking green in their ads. That includes some you just know aren't green -- such as ExxonMobil (XOM, news, msgs), which touted its climate-change partnership with Stanford University while paying anti-environmentalist groups to attack the whole concept.
But a lot of companies are serious. And by investing in them, you're putting your money to a double use: You're helping those companies grow, and you've got at least a fighting chance of helping your nest egg grow, too. 
How corporate thinking has changed
Investing in individual companies gives you a sense of connection you can't get from investing in mutual funds. As a shareholder, you're an owner -- that's your company out there changing the world.
But be warned: Investing in individual stocks is not for the faint of heart or the slender of wallet. The price of a single stock, or even of a small group of stocks, is much more volatile than the price of a broad market index or a well-diversified mutual fund. Chart: Is 'green' good for business?
You shouldn't even think of putting your savings into individual stocks unless you have enough money -- roughly $100,000, divided among at least 20 companies -- to build a diversified portfolio, says Matthew Patsky, a partner and portfolio manager at Winslow Management, the sponsor of the Winslow Green Growth Fund (WGGFX).
Many green stocks carry an additional risk because the U.S. has been such a laggard in fighting global warming. As a result, many of the most successful green companies are outside the U.S. That makes them both harder to research and harder to buy, although most major brokers can get them for you. (A few are traded over the counter in the lightly traded U.S. pink sheets, but that's a riskier bet. You're better off buying on the companies' home exchanges.)
For those willing and able to take the gamble, here's a list of companies that are making a difference in the fight against global warming. To come up with the list, I talked to half a dozen well-known money managers who specialize in socially responsible investing. Each of these stocks is owned by at least one of them.
All of these companies have good underlying fundamentals, though because many are in very new businesses, their results tend to be volatile. But they are all interesting.
Would you make money on every one of them? Probably not. But you could make a difference.
1. General Electric (GE, news, msgs) has had its environmental troubles; it's just beginning to clean up the PCBs it started dumping into the Hudson River 60 years ago. But in 2005 the company launched a green initiative, emphasizing products such as clean engines,
wind turbines and water purification systems, and judging managers' performance, in part, on what they do to cut greenhouse gas emissions. The company is cleaning up financially, too: According to brand specialists, GE's brand value is up almost 17%, largely as a result of the initiative, and CEO Jeffrey Immelt estimates that green initiatives have added 5 to 10 cents to the value of each share. What's in it for GE?
2. If your favorite restaurant serves ethically grown coffee, there's a good chance it's from Green Mountain Coffee Roasters (GMCR, news, msgs). How does that help with global warming? Well, as much as 33% of climate change is caused by poor land use. Green Mountain has also come up with a cup that that has an environmentally friendly corn-based liner instead of the plastic one found in most paper hot-drink cups. Both revenue and operating income have been growing steadily for the company and, in fact, operating income for the quarter ending March 29 was almost double the quarter before. 3 ways this coffee is greener
3. Koninklijke Philips Electronics (PHG, news, msgs) is traded on the New York Stock Exchange, but it's a Dutch company that's a world leader in the production of compact fluorescent bulbs and organic LEDs. Its Green Flagship product line's a lot bigger than that. The company's flat-screen eco-TV won best of show at the 2008 Consumer Electronics Show. Altogether, Green Flagship products accounted for 20% of its revenue in 2007, up from 15% the year before.
4. Johnson Controls (JCI, news, msgs) has been helping companies operate their buildings more efficiently since 1885. Now, with corporate America struggling to cut energy use, the company's also jumping into a sector that's likely to yield the biggest improvement yet in hybrid autos: lithium-ion batteries. It opened the world's first factory for those batteries this year and expects $3 billion in sales from the business within five years. The company's annual profit and revenue have been growing steadily for the past several years despite a recent decline in the stock price this year.
5. Even with a hefty 20% profit margin, ProLogis (PLD, news, msgs) doesn't look exciting -- what could be more boring than a real-estate investment trust -- especially one that builds distribution centers. But most of those distribution centers are built on brownfields -- old, polluted industrial sites -- rather than unused land, so ProLogis avoids having to cut down trees and tear down buildings. And its distribution technology is extraordinarily efficient, which means fewer idling trucks and lower greenhouse emissions.
6. SunPower (SPWR, news, msgs) "is getting a real look-see from everybody," says Thomas Moser, a money manager who specializes in sustainable investing. Why? Because the company -- a big chunk of which is owned by Cypress Semiconductor (CY, news, msgs) -- has come up with extraordinarily efficient solar cells that produce as much as 50% more power than traditional panels in the same amount of space. The company, which went public in 2005, turned profitable in 2006.
7. Ray Anderson, the founder of Interface (IFSIA, news, msgs), has been preaching sustainability since 1994, and his company practices what he preaches. Interface makes carpet -- recyclable, renewable, compostable carpet. It's aiming to emit zero waste by 2020 and already runs four of its plants off 100% solar power. The company, which went through some rocky times a few years ago, is now back in growth mode. Profits were up more than 20% last year.
8. Like the rest of the stocks below, Gamesa Corporación Tecnológica's (GCTAF, news, msgs) shares can't be easily bought in the U.S., though any major broker can get them for you. Why would you want them? This rapidly growing company is one of Europe's biggest wind-turbine manufacturers and a leading wind-farm operator. And it's tripling the size of its U.S. headquarters in Pennsylvania.
9. WaterFurnace International, owned by WaterFurnace Renewable Energy (WFIFF, news, msgs), taps a steady source of heating and cooling that's right under your house: the steady temperature of the ground 6 feet down. Its geothermal heat pumps can cut heating and cooling energy demands by up to 60%. Small wonder the parent company's $103 million in sales last year was an all-time high.
10. If you're looking for a company that's making serious money from solar panels, you need to look to Europe, to a company such as SolarWorld (SRWRF, news, msgs), one of the biggest players in the business. One thing money manager Moser likes about the company: It recycles a lot of its silicon, a key ingredient in solar panels and one that has been in short supply.
11. Suzlon Energy, traded in Mumbai, India, under ticker 532667, is another wind-turbine manufacturer -- one of the top five in the world. What makes it a key player in cutting down global warming, says Jeffrey MacDonagh, a portfolio manager at Domini Social Investments, is that it's in India. "We all know that the Indian and Chinese energy markets need to expand rapidly," he points out. "So having a company on the ground doing that work is huge."
12. Along with Suzlon, MacDonagh ranks Nine Dragons Paper Holdings -- traded in Hong Kong under ticker 2689 -- as one of the world's 10 most important publicly traded companies in terms of potential global-warming mitigation. The company takes waste paper from the U.S. and recycles it in China, a business model that's made Nine Dragons the top exporter of U.S. scrap paper and the biggest packaging manufacturer in China. It also made its founder, businesswoman Cheung Yan, the richest person in China in 2006, with a fortune estimated at more than $4 billion.
13. If you drink beer, wash clothes or take medicine, there's a good chance you're using an enzyme or micro-organism produced by Novozymes -- traded in Copenhagen, Denmark, under ticker NZYM-B -- one of the world's biggest biotech companies. The company's a leader in sustainability, topping the biotech sector of the Dow Jones Sustainability indexes for six years running. Many of its enzymes can take the place of
toxic chemicals, notes Rona Fried, the president of SustainableBusiness.com, a green-investing Web site. President Bush visited Novozymes' North Carolina facility last year to discuss one of its newest projects: enzymes to help produce cellulosic ethanol. And sales are booming -- up 14% last year. Novozymes' sales rose by 11% in local currencies in the first quarter of 2008.
Published July 11, 2008
