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2 ASX shares to mitigate climate change risk in your portfolio

Matthew Donald
Ideas to save the planet

Climate change may make investments in the fossil fuel industry like BHP Group Ltd (ASX: BHP) and Beach Energy Ltd (ASX: BPT) risky in the long term for investors.

With this in mind, I think companies like Bingo Industries (ASX: BIN) and Telstra Corporation Ltd (ASX: TLS) could be solid long-term choices.

Bingo Industries (ASX: BIN)

Bingo is a waste management company and according to its website is “pushing for a waste free Australia”.

In the company’s Climate Change Position Statement, it “recognises its responsibility … to assist governments, business partners and communities in reducing greenhouse gas emissions through the diversion of waste from landfill.”

To give an idea of the waste problem Australia currently faces, ABC reports that “the most up-to-date stats show Australians generated 67 million tonnes of waste in 2016–2017.” I believe waste is a massive problem and Bingo stands to benefit from this crisis by working with relevant stakeholders to address waste.

In the company’s 2019 annual report released last October, Bingo’s chairman Michael Coleman stated, “our long-term opportunity as a Company and for waste management industry is tremendous.”

I believe that this sentiment is backed up by Bingo’s strong FY19 revenue growth of 32.4%, despite the short-term challenges in terms of slowing construction activity. Pleasingly, the Bingo share price has increased by 32% in the past 12 months.

The ability for Australia to deal with waste is an important part in preserving our environment. Population growth is going to make management of waste crucial, and in my opinion Bingo can play a significant role in this.

Telstra Corporation Ltd (ASX: TLS)

In Telstra’s 2019 sustainability report, the telco highlighted that it is “focused on embracing innovation and technology to help address environmental challenges.” The report focuses on 5 pillars: managing carbon emissions, climate change resilience, low-carbon economic growth, resource efficiency, and environmental management.

Telstra appears to be taking the threat of climate change seriously in its operations and consideration for future investments. In the company’s climate change information factsheet, it states that it is reducing carbon emission intensity against a target by using energy efficient equipment, along with reducing emissions by investing in renewable energy.

Telstra also stands to benefit from the rapid growth in technology. With the rise of mobile devices, internet of things and cloud computing, Telstra’s future growth potential appears to be bright. This is despite the National Broadband Network cutting into Telstra’s fixed-line revenue. Telstra’s 5G network may be a big winner over the long term.

The market seems to have high hopes for the future and has pushed the Telstra share price up 18% in the past 12 months.

Foolish takeaway

There’s no doubt that climate change is having a real impact on the economy, as the recent bushfires have demonstrated. It’s important for businesses to take this risk seriously to ensure their businesses are as sustainable as possible.

I believe its prudent for investors to assess the long-term implications climate change may have on their investments.

The post 2 ASX shares to mitigate climate change risk in your portfolio appeared first on Motley Fool Australia.

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Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020