As we all push and pull together toward a net-zero world, efforts to make it happen are coming in from all sides. For example, investments totaling $2 trillion are slated for clean energy technologies and infrastructure in 2024 alone, according to the International Energy Agency (IEA). However, clean energy isn't the only area in which climate-improvement efforts are ongoing.
Climate week is slated for Sept. 22-29, making this a great time to look at some small-cap stocks that are making an impact in supporting climate improvements. Here are five small caps offering up potential solutions for climate change — and you might never have heard of these companies.
1. ASP Isotopes
ASP Isotopes Inc (NASDAQ:ASPI) is working on "the next generation" of green nuclear fuel. Citing data from the IEA, the firm noted that global electricity generation will have to rise 250% to reach net-zero emissions by 2050. Nuclear energy will play a critical role in that, as nuclear output will have to double to achieve those milestones.
ASPI's Quantum Leap Energy division aims to enable the commercialization of small modular reactors (SMRs) and molten salt reactors (MSRs). SMRs are widely considered the next big thing in nuclear energy production, given that their smaller, modular design enables the manufacturing of them to occur on a production line. It's generally accepted that SMRs will deliver affordable, clean energy with a greater efficiency timeline in deployment and better operational flexibility versus traditional nuclear power plants.
ASP Isotopes' Quantum Leap Energy division aims to become a commercial supplier of high assay low enriched uranium (HALEU) for the Western world, as currently the West has no commercial suppliers of this material. To enrich U-235 and produce HALEU, Quantum Leap will be able to use either of ASPI's proprietary technologies for isotope enrichment: Quantum Enrichment or Aerodynamic Separation Process.
2. Aspen Aerogels
Products from Aspen Aerogels Inc (NYSE:ASPN) serve multiple purposes, including optimizing the performance and safety of electric vehicles and energy infrastructure. The company provides thermal insulation and applies its expertise in aerogel science to engineer, manufacture and commercialize aerogel-based solutions for energy conservation and asset protection.
For example, Aspen's PyroThin helps boost battery-packing density while reducing weight and making thermal management more efficient — while meeting required goals for safety. Additionally, the company's carbon aerogel solution helps optimize lithium-ion batteries' energy density, enabling them to meet safety requirements while helping boost drive range.
Aside from EVs, Aspen Aerogels also serves the energy and industrial sectors, providing thermal performance to help optimize process yields and minimize corrosion under insulation. The company also provides insulation solutions for acoustic attenuation and passive fire protection.
3. Bridger Aerospace
Speaking of fire protection, Bridger Aerospace Group Holdings Inc (NASDAQ:BAER) is an aerial firefighting and aerospace services company. The company specializes in global wildfire suppression, offering a number of advanced platforms to battle wildfires from the skies.
Wildfire suppression might not immediately seem like a climate play, but when fires burn out of control, they release carbon dioxide into the atmosphere, contributing to climate change. Thus, putting these fires out as fast as possible is critical to combating climate change.
Bridger's aerial firefighting aircraft include a number of Super Scoopers, which scoop over 1,400 gallons of water from rivers or lakes and then drop it on a fire from low altitudes. These scoopers have a four-hour fuel cycle that enables them to repeatedly scoop and drop water in support of firefighters on the ground.
Bridger's Air Attack aircraft serve as a command center while battling a wildfire. A pilot and air tactical group supervisor crew this aircraft and communicate with firefighters on the ground while coordinating aerial firefighting resources. The company also offers a fire intelligence platform for situational awareness.
4. Hudson Technologies
Hudson Technologies Inc (NASDAQ:HDSN) provides products and services that reduce greenhouse gas emissions, boost energy efficiency and promote sustainability. The company's environmentally sustainable solutions for heating, ventilation, air conditioning and refrigeration (HVACR) help support the climate transition.
Hudson provides initial refrigerant sale via recovery, reclamation and reuse and provides services to promote energy efficiency. The company's net zero Global Warming Potential (GWP) solution replaces virgin production. Hudson also offers solutions to optimize chiller performance so that energy consumption is reduced, and service life is extended.
Where possible, the company reuses refrigerants. For example, Hudson recently announced an agreement to provide reclaimed refrigerant to LG Air Conditioning Technologies USA. That collaboration will help promote sustainable refrigerant management practices by using lower GWP refrigerants.
In cases when it's not possible to reuse refrigerant, Hudson chooses environmentally friendly destruction.
5. Matthews International
Matthews International Corporation (NASDAQ:MATW) provides industrial energy and warehouse automation solutions in support of the energy transition. Matthews Engineering designs and builds a variety of equipment, like for tooling of dry and wet electrodes for lithium-ion batteries used in electric vehicles.
By working with Terrella Energy Systems, which supplies stack-ready bipolar plates, Matthews is working to accelerate the mass production of hydrogen fuel cells. The company's Saueressig provides fuel-cell solutions that include design and engineering services for components and stacks, starting with the development process.
Matthews' Saueressig also offers battery-manufacturing solutions in the form of specialty equipment for electrode production for lithium-ion batteries.
Investing in climate-related stocks
When picking stocks, diversification is always critical to help smooth out some of the market's volatility. In some cases, it can be easy to miss out on diversification in a climate portfolio because so many of the most well-known companies fall into the same small areas of climate improvement.
However, delving into the small-cap universe opens up a whole new world of stocks and companies that provide a much wider array of climate-oriented solutions. Additionally, investors may discover some climate-friendly stocks in places where they might not expect to.
“I have been watching the updates where the SEC is pushing for greater climate-related disclosures in securities filings,” said Seth Farbman, chairman of Vstock Transfer. “Companies must now embed sustainability into their reporting to meet investor and regulatory expectations. Seems that climate-conscious investing is no longer just a trend; it's a fundamental shift in how capital flows, driving both corporate responsibility and long-term value for public companies in the eyes of investors.”
Of course, investors are always advised to do their own due diligence before investing in any stock, theme or idea.