Market Overview

Bank of America: Profit From Climate Change And Extreme Weather


A recent report by Bank of America focused on investment themes for a changing world. One of the areas that the report identified as a source of change is extreme weather and climate.

Regardless of whether it’s a temporary or permanent phenomenon, global temperatures have been rising. The year 2013 was the 28th consecutive year that temperatures were above the 20th century average. According to NASA, “extreme” weather can now be found on 10 percent of the globe, whereas this type of weather was only found on less than 0.2 percent of the globe from 1951-1980. The Bank of America report indicates that over 40 percent of the world’s land is at risk of extreme heat by 2040.

Extreme weather events such as Hurricane Katrina and Super-storm Sandy have become more common. According to the report, “90% of the S&P Global 100 across industry sectors identify extreme weather and climate change as [a] current or future business risk.” However, less than half of businesses have adapted their business practices to mitigate the risk posed by extreme weather.

Analysts expect a 2-4 degrees C rise in global temperatures as soon as the 2060s. By 2030, the worldwide demand for food is projected to increase by 50 percent, water demand is expected to increase by 40 percent, and energy demand is projected to increase by 50 percent. Each of these three critical necessities is closely tied to the weather.

The stocks that Bank of America recommends as a means to capitalize on the opportunities that will be created by climate change and extreme weather include the following:

  • Trina Solar Ltd (NYSE: TSL), manufacturer of solar modules in China
  • Vivint Solar Inc (NYSE: VSLR), designer and installer of solar energy systems
  • SolarCity Corp (NASDAQ: SCTY), installer and monitor of solar energy systems
  • Sunedison Inc (NYSE: SUNE), developer of solar projects
  • Abengoa Yield PLC (NASDAQ: ABY), yield co and owner of energy assets
  • SunPower Corp (NASDAQ: SPWR), designer and producer of solar panels and solar electronics
  • CPFL Energia SA (NYSE: CPL), owner of a 59 percent stake in South America’s largest wind farm operator, CPFL Renovaveis

Bank of America analysts believe that these seven companies are in a position to benefit from the coming economic pressures of climate change.

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Aug 2016MaintainsNeutral

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