Morningstar Sustainalytics identifies 21 climate transition leaders across various sectors, including Johnson & Johnson, Air Liquide, Enel SpA, and Pernod Richard. Companies are urged to set actionable targets to mitigate climate risks and capitalize on decarbonization efforts. Investors are encouraged to consider key questions to identify leaders in the low-carbon transition.

Sustainalytics uses specific criteria to identify climate transition leaders, such as Low Carbon Transition Rating scores, Carbon Intensity Trend indicators, and Controversy event ratings. The list comprises companies that set ambitious targets, reduce greenhouse gas emissions, and avoid significant controversies. Investors can use these metrics to find undervalued 4- and 5-star companies like Clorox, Air Liquide, Sanofi, Henkel AG & Co, and Pernod Ricard.

Clorox, known for its cleaning supplies and consumer products, generates over 80% of sales in the US. Air Liquide, a leading industrial gas company, serves millions of customers in various industries worldwide. Sanofi specializes in immunology, vaccines, and rare diseases, with its top-selling drug accounting for 30% of revenue. Henkel offers laundry and home care products as well as adhesives technologies, with sales across Europe, Asia-Pacific, and North America. Pernod Ricard, formed through a merger, distributes over 240 spirits brands globally.

Read more at Morningstar: 5 Undervalued Stocks That Are Climate Transition Leaders