In this article we highlight six stocks which we believe are well placed to help meet Europe’s climate change challenge. As always, these are not recommendations and investors are urged to do their own research.
Counting the economic cost
According to insurance giant Allianz, this year’s extreme weather has reduced European economic output by around €113 billion (£96 billion). Italy is the worst-affected country, with estimated economic losses of €28 billion. Next are Germany at €25 billion and France at €20 billion.
The insurer says average annual European losses between 2020 and 2026 are twice as high as between 2000 and 2019. Natural catastrophe losses have only risen by half, however, meaning climate change is responsible for most of the increase.
Europe has warmed more than other continents, with Norway the most affected country. The average temperature in Norway in 2025 was 3.7 degrees above the 1950-1970 average. Meanwhile, average 2025 temperatures in Germany and France were around 2% above the 1950-1970 average.
The reason Europe has been the most-affected region is due partly to demographics and partly due to economics. The continent is densely-populated with a strong economy, so losses are higher than in sparsely-populated continents with less valuable infrastructure.
Meeting the climate change challenge
Another report, published by Bloomberg Intelligence, estimates Europe may need to spend around €500 billion (£425 million) between now and 2035 to meet the climate change challenge. Annual EU and UK government outlays are seen rising to €80 billion in 2035, with the balance coming from the private sector.
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So-called ‘prepare and repair’ infrastructure outlays of €29 billion this year are already more than double the 2022 level. Spending is moving beyond emergency relief into rail, waterway and power grid upgrades to rebuild assets with greater resilience.
The ‘super El Niño’ effect
None of the forecasts in the Allianz or BI reports include provisions for the developing ‘super El Niño’, which could affect Europe in 2027. The natural phenomenon of El Niño occurs every few years as the eastern Pacific Ocean warms, affecting global weather patterns.
The UN World Meteoroligical Organisation already expects above-average temperatures and lower rainfall in large parts of the world. If 2027 brings yet more extreme heat it could reduce global economic growth by nearly €400 billion, according to the Allianz study.
Six stocks to help meet the challenge
Volution (LON:FAN)
Market Cap: £1.27 billion
Price: 644p
As European and UK programmes move from emergency relief to resilience, one of the key areas of spending is cooling. With air conditioning in just 23% of European homes, there is a huge and prolonged retrofit and installation cycle ahead.
Volution (LON:FAN) is one of the leading suppliers of ventilation products to customers in the UK, Europe and Australasia. It owns more than 20 brands including Manrose, Ventair and Vent-Axia.
Europe’s cooling penetration lags far behind that of the US and China. At the same time, its ageing building stock faces rising costs from heat, flooding, subsidence and water stress. England alone needs roughly £84 billion of energy-efficiency renovation, according to Bloomberg Intelligence.
The UK accounts for around 40% of Volution’s sales and 45% of its operating profit. Europe accounts for 33% of sales and a similar proportion of profit, with Australasia making up the rest.
The business split is 70% residential/30% commercial, with products ranging from single extractors for bathrooms and kitchens to large-scale industrial systems. Within housing, 60% of sales are for retrofits and upgrades to existing buildings and 40% go to the new-build market.
A key feature of Volution’s ventilation products is their energy-efficient technology, with over 70% of sales classified as low-carbon. Sustainability is also important, with the firm recycling over 80% of the plastic it uses at its own facilities.
For commercial property owners, inadequate cooling can be a red flag for potential buyers or tenants, especially in the office market. Meanwhile, data centres face higher cooling requirements as temperatures rise creating risk of outages and other service delivery issues.
Renew Holdings (LON:RNWH)
Market cap: £770 million
Price: 984p
As noted, UK and European government spending is shifting from emergency relief to upgrading crucial rail, water and grid networks. AIM-listed Renew Holdings (LON:RNWH) provides specialist engineering services to all three sectors in the UK and currently enjoys a record order book.
Based on government operating budgets, Renew’s subsidiaries enjoy a total addressable market of around £30 billion per year. In rail, the firm is currently working on 70 frameworks including £5 billion of projects under National Rail’s CP7.
CP7 or control period 7 runs from 2024 to 2029 and has a total budget of £45.4 billion. Renew is Network Rail’s largest supplier of infrastructure services and is strengthening its position with a broader range of rail clients.
In water and environmental services, the firm is part of 71 frameworks including £9 billion of works under AMP8. Asset magament period 8 runs from 2025 to 2030 and has a total budget of £45 billion. In addition, between 2025 and 2036 the government is spending £10.5 billion on flood defences.
In energy, Renew is active across 40 frameworks including £3.8 billion of UK electricity transmission and distribution upgrades. It is also part of a £1.9 billion nuclear energy programme and £3.5 billion of UK and European offshore wind projects. In total, government spending on upgrading the energy network between 2026 and 2031 is expected to reach £90 billion.
On top of its impressive organic revenue growth, Renew makes occasional bolt-on acquisitions supported by its high cash flow generation and strong balance sheet. The firm says it currently has a ‘good’ pipeline of M&A opportunities to boost its performance and returns.
Foresight Environmental Infrastructure (LON:FGEN)
Market Cap: £547 million
Price: 88p
Investment trust Foresight Environmental Infrastructure (LON:FGEN) offers a high-yield play on an energy transition which continues to gather pace. Its portfolio of private infrastructure assets delivers stable returns, long-term predictable income and opportunities for growth whilst supporting the drive towards decarbonisation and sustainable resource management.
Primarily focused on the UK, FGEN’s portfolio is reassuringly diversified across wind and solar assets, as well as anaerobic digestion, biomass, energy-from-waste and hydropower. Meanwhile its ‘growth’ assets, including its CNG Fuels gas filling station portfolio, are also starting to add value.
As an active owner of environmental infrastructure assets, FGEN’s investments naturally contribute to climate change mitigation. The fund has consistently grown its dividend since IPO in 2014 and offers a prospective yield of 9.2%, based on an FY27 dividend target of 8.04p.
Despite a recent re-rating, the trust’s 16% discount to net asset value (NAV) demonstrates FGEN still offers value. The quarterly dividend payer has the best five-year share price total return in the AIC’s Renewable Energy Infrastructure sector to boot.
Sharesify likes the fact FGEN targets projects and businesses with an emphasis on long-term stable cash flows, secured revenue, inflation linkage and the delivery of essential services. Among other advantages, this diversified approach means the fund is significantly de-risked from weather variability.
Origin Enterprises (LON:OGN)
Market cap: £366 million
Share price: 340p
In the small-cap arena, the climate mitigation merits of Origin Enterprises (LON:OGN) deserve wider recognition in our view. This AIM-listed company focuses on promoting sustainable agriculture and reducing greenhouse gas emissions, boasting leading market positions in the UK and Ireland, Poland, Romania and Brazil.
Dublin-headquartered Origin is uniquely positioned to respond to global land use trends and contribute to a healthier planet. Through its portfolio of specialist businesses, the company champions sustainable land management and empowers farmers to unlock the full potential of their land.
Led by CEO Sean Coyle, Origin offers solutions across all types of land, from optimising fields used for crops and farming to caring for diverse landscapes dedicated to ecology and environments, and perfecting green spaces primed for sports, culture, and wellbeing.
In sustainable agronomy, Origin is the UK’s leading player with a 35% market share and the second and third biggest player in Romania and Poland respectively. The firm is also the UK and Ireland’s market leader in soil nutrition and a top five player in the vast Brazilian market.
Given the challenging market backdrop, results for the year to July 2026 proved resilient with group operating profit nudging up 1.8% to €100.7 million on broadly flat revenue of €2.1 billion. Growth in Latin America and animal nutrition offset lower profitability in Origin’s European Agriculture operations.
A capital markets day on 17 November offers the next potential upside catalyst for the stock, which trades on a measly eight times prospective FY27 earnings and offers an attractive 4.7% dividend yield.
At the investor event, management will outline its strategy and set out medium-term financial ambitions for Origin’s next phase of growth. Sharesify believes this should cultivate greater awareness of Origin’s fruitful long-term growth story and potentially trigger a re-rating of the stock.
Regnan Sustainable Water and Waste Fund (BMYXD32)
Market cap: £230 million
Price: 130p
As this summer’s punishing global heatwaves demonstrated, water is a scarce resource. Though many of us take water for granted, there is no global economy without H2O and no sustainable economy without waste management.
One thematic fund playing its part in meeting the sustainability challenge is Regnan Sustainable Water and Waste (BMYXD32). Managed by JO Hambro Capital Management’s Bertrand Lecourt and Saurabh Sharma, the fund aims to generate long-term outperformance by investing in sustainable companies which provide solutions to global water and/or waste-related challenges.
Lecourt and Sharma believe water and waste are core to civilization and sustainable growth. Due to urbanisation, rising demand and infrastructure needs, they say there is a $2.5 trillion market of some 350 firms offering ‘resilience, long-term growth, and tech-like returns, while solving real-world challenges’.
The managers are expert in combining exposure to both water and waste value chains, including companies developing new technologies. This means the fund has extremely low overlap with global equity portfolios and boasts defensive qualities, since portfolio holdings typically enjoy stable earnings and strong balance sheets.
Among the circa 350 companies in the fund’s investable universe, around 85% are not widely covered by sell-side analysts. This gives the managers an edge as they conduct in-depth research and meet company management teams in their quest to deliver alpha.
As one might expect, the fund has lagged an MSCI All Country World Index, dominated as it is by big tech, over one and three years. But it should help investors build a defensive edge to portfolios in the event of a broader market sell-off.
As at 31 August, top 10 holdings included Watts Water Technologies (NYSE:WTS), which sells products to the water regulation and control markets, and water and waste solutions firm Veolia. The fund also owns water analytics-to-treatment technologies specialist company Veralto (VLTO:NYSE) and UK water company United Utilities (LON:UU).
Earnz (LON:EARN)
Market Cap: £10 million
Price: 4.5p
AIM-listed Earnz (LON:EARN) is by far the smallest company on our list and the newest. Therefore, although it has a 70% free float, it won’t suit investors wanting daily liquidity. Also, its limited track record means it’s only suitable for those with a high appetite for risk.
The business is headed by Bob Holt OBE, who built Mears (LON:MER) into a billion-pound company and then ran Sureserve before it was acquired by private equity. Earnz occupies a similar space to both companies, serving social housing providers but also commercial customers in their drive to decarbonise.
Earnz uses a traditional ‘buy-and-build’ model, which explains why H1 revenue increased 79% to £8.4 million. That said, growth would have been higher still had the government not delayed the Warm Homes Plan, which has since been published.
Holt believes the company’s addressable ‘primary’ market is £15 billion, and the firm can double revenue then double it again. The latest acquisition of GEM is a significant step on the road to scaling up the business in what is a highly fragmented industry.
Entering the fourth quarter, the firm has strong momentum and high revenue visibility from its long-term projects and contracts. Also, gross margins are set to improve as the business mix improves and increased scale delivers purchasing synergies.
Disclaimer: Ian Conway owns shares in Volution
