Goldman Sachs names 6 global stocks to own as sustainability focus kicks into high gear

Published Thu, Jan 13 202211:01 PM EST

Goldman Sachs has named six stocks it says will benefit from a rising urgency to address critical environmental and social issues. Amid the looming climate emergency, companies are facing ever greater scrutiny to reduce their carbon footprint and do more to alleviate the effects of climate change. And Goldman thinks the focus will now shift from setting targets to actual execution. "The rising 'urgency to accomplish' versus the 'desire to support' will drive critical changes in sustainability investing starting this year as focus shifts from aspiration to action," Goldman's analysts, led by Brian Singer, said in a research note on Jan. 6. This creates opportunities for stocks across the supply chain to further outperform, he added. Stock picks Goldman believes Norwegian aluminum producer Norsk Hydro will benefit from increased regulatory pressure, particularly from the European Union taxonomy — which is a new classification system that establishes a list of environmentally sustainable economic activities. "Hydro is establishing itself as a green leader through growth in recycling capabilities, and further expansion into renewable and battery technologies," Singer said. The company estimates that up to 27% of its revenue and up to 35% of its capital expenditure are aligned with EU taxonomy, which Goldman said is higher relative to global peers and the broader market average of less than 10%. Among its various initiatives, the company aims to deliver the first near-zero emissions aluminum product to the market by 2022 and double the sale of green products by 2025, Singer added. Chinese glass microfiber producer Zaisheng Technology also makes Goldman's list, with the bank viewing the company as "well positioned" to benefit from various growth opportunities across the decarbonization supply chain. The bank sees the company's products as "enablers" for other industries to effect climate change mitigation. Goldman also likes U.S chipmaker Advanced Micro Devices for its continued market share gains in personal computers and server processors, as well as its gross margin expansion and significant operating leverage. The bank said that the company is a key "greenabler" (green enabler) for global data centers due to its mo