While the energy and transportation sectors may be the hot spots for green investment opportunities, environmentally aware investors shouldn't overlook consumer discretionary stocks. Fidelity portfolio manager Katherine Shaw says that when it comes to monitoring carbon emissions, minimizing packaging materials, and using water wisely, a trio of brands and retailers stand out.
“Lululemon Athletica (LULU), Nike (NKE), and TJX (parent company of TJ Maxx, Marshalls, and HomeGoods, among others) are getting it right in this regard and, partly as a result, they’re earning a higher stock premium for their attention to the environment,” says Shaw, who manages Fidelity® Select Consumer Discretionary Portfolio (FSCPX).
Apparel company Lululemon, Shaw says, seeks to power all company-owned operations with 100% recycled electricity this year, and by 2025, plans to make its products with 75% sustainable materials. They are also testing nylon-dying techniques that use at least 75% less water.
Taking care of the environment is also part of the TJX ethos, says Shaw. She explains that the company lags Lululemon and Nike in its efforts to reduce carbon emissions, but that TJX is a standout in minimizing packaging materials and waste. In 2019, the company diverted more than 75,000 metric tons of waste out of landfills, according to Shaw, and is seeking ways to recycle more than just cardboard—including scrap metal, paper, glass, and the hangers and fixtures used in its stores.
“It’s clear to me that environmental, social, and other important stakeholder concerns are integrated into all 3 of these companies’ business models,” Shaw says.
Fidelity® Select Consumer Discretionary Portfolio held securities mentioned in this article as of its most recent holdings disclosure. For specific fund information, including holdings, please click on the fund trading symbol above.