BMO Nesbitt Burns analyst Doug Morrow has released a new ‘climate opportunities screen’ for stocks that contribute to addressing climate change. The intended benefit for investors lies in Mr. Morrow’s contention that climate change will soon become a central determinant of stock valuations – climate friendly companies will be valued at a premium over those more harmful to the environment.
The stock screen begins with the 432 stocks ranked outperform at BMO and then assesses management for factors like policies for net-zero emissions, full disclosure of existing carbon emissions, and board oversite of climate-related targets. The list was cut to 47 stocks ahead of stage three, which incorporates Bloomberg’s rating scale of physical climate risk. Bloomberg’s scoring methodology includes not only emissions but also effects of operations on soil, energy use, supplier compliance with emissions guidelines and waste and water management.