Tim Nash's Top Picks: July 20, 2018

Tim Nash, founder of The Sustainable Economist
Focus: Green investing (renewable energy stocks and green REITs)

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MARKET OUTLOOK

Green investors need to be cautious since conservative governments are targeting environmental initiatives as scapegoats for rising energy prices and sluggish economic growth. These short-sighted policy changes may slow down the shift towards a greener economy, but the long-term trend persists. While America tries to revive the coal industry and Canadians debate carbon pricing, the rest of the world is leapfrogging ahead with China accounting for nearly one third of the $298 billion in 2017 global renewable energy investments.

Corporations are also plowing ahead with major investments in green research and development. Most notable is the auto sector, with every major car company introducing hybrid and electric models in the next few years. Bloomberg New Energy Finance forecasts the electric vehicle market to grow from 1.1 million cars in 2017 to 10 million cars in 2025 and 30 millioncars in 2030. This rapid growth will create an economy of scale in battery production, bringing down the cost of energy storage.

TOP PICKS

ISHARES JANTZI SOCIAL INDEX ETF (XEN.TO)

The flagship socially responsible ETF in Canada. It’s designed to track the S&P/TSX 60 while omitting companies that are lagging their sector peers with their environmental, social and governance (ESG) score. It also omits so-called “sin stocks” like tobacco, alcohol, military, and gambling. It has outperformed the S&P/TSX considerably over the last five years, showing that socially responsible investing is not only the right thing to do, but it’s also the smart thing to do.

INVESCO CLEANTECH ETF (PZD.N)

The most diversified green ETF currently available. It includes companies across green sectors like renewable energy, energy storage, LED lighting, water infrastructure, and environmental services. I expect this ETF to perform well as the global economy shifts toward high-efficiency, low-carbon technologies.

CASCADES (CAS.TO)

A Canadian paper company that doesn’t cut down any trees. In addition to using 100 percent recycled materials, they consider the entire life cycle of the product in their design. They have developed ambitious sustainable development goals and are on track to meet them. I expect their sales to increase as facilities embrace their own green targets (like LEED certification for buildings) and look for sustainable paper options.

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