In this article, we will take a look at 12 best ESG stocks to buy now. If you want to see more best ESG stocks to buy now, go directly to 5 Best ESG Stocks To Buy Now.
ESG investing is one of the biggest trends in all of Wall Street.
ESG stands for environmental, social and governance and ESG investing is also known as socially responsible investing.
Today, the world faces a number of issues that are rapidly eroding the sustainability of our way of life. The world is getting warmer due to greenhouse emissions. We are rapidly exhausting our supply of fresh water in many areas. Our social and governance systems can also be improved.
With ESG investing, investors invest in companies that do well in terms of trying to make their operations more environmentally friendly, trying to help their communities, and trying to have good corporate governance.
As a result of more awareness over the issues facing our world, many investors and institutions have dedicated more resources to ESG investing.
According to PwC, asset managements are expected to increase their ESG-related AUM to $33.9 trillion globally by 2026, up from $18.4 trillion in 2021. If successful, ESG assets could constitute over one fifth of the total global assets under management by 2026.
In terms of PwC's base case growth scenario, ESG AUM in the United States could rise to $10.5 trillion in 2026 from $4.5 trillion in 2021. In Europe, ESG AUM could increase to $19.6 trillion in 2026. Finally, ESG AUM in the Asia Pacific region could rise to $3.3 trillion.
PwC Global Asset & Wealth Management Leader, PwC Ireland Olwyn Alexander said, “ESG has become perhaps the most powerful driver of growth in asset and wealth management. The surge in demand for ESG investments highlighted in our survey exceeds almost all previous expectations."
2022 has been a challenging year given the Federal Reserve has increased interest rates six times this year alone. As a result of the interest rate increases, many economists think there could be a recession next year. According to St. Louis Fed President James Bullard, the U.S. central bank will likely need interest rates above 5% for most of next year and into 2024 to win the battle against inflation. Currently the upper bound for the Federal funds rate is 4%.
As a result, it could be a good idea for long term investors to own a well diversified portfolio of stocks across many different sectors.
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Methodology
For the best 12 Best ESG Stocks To Buy Now list, we took the top 12 unique stocks by weight from the Vanguard ESG U.S. Stock ETF (ESGV) and we ranked them based on percent of funds as of 11/28/2022. We excluded Alphabet Inc Class A (GOOGL) shares because Alphabet is already included once.
We also included the number of hedge funds in our database that also owned shares of the same stock at the end of Q3 2022.
Eli Lilly and Company (NYSE:LLY) is one of the leaders when it comes to ESG initiatives given it helps develop innovative medicines that make life better for people around the world. According to the company over 47 million people use Eli Lilly and Company (NYSE:LLY) and the company is working hard to develop new medicines that could potentially reach even more people in the future. As of 11/28, Eli Lilly and Company (NYSE:LLY) accounted for 0.97% of the Vanguard ESG U.S. Stock ETF (ESGV).
Alongside Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL), Eli Lilly and Company (NYSE:LLY) is an ESG stock that many hedge funds in our database owned at the end of Q3 2022.
Home improvement giant The Home Depot, Inc. (NYSE:HD)'s ESG initiatives center around focusing on its people, operating sustainably and strengthening its communities. In terms of its people, The Home Depot, Inc. (NYSE:HD)'s workforce is more ethnically diverse than the U.S. working population. In terms of the environment, The Home Depot, Inc. (NYSE:HD) has reduced electricity consumption in its U.S. stores by around 11% year over year in 2021 and in terms of community, around 14,000 of the company's employees volunteered across 150 cities nationwide in 2021. Out of the 920 hedge funds in our database at the end of Q3, 89 owned shares of The Home Depot, Inc. (NYSE:HD).
Consumer staple giant The Procter & Gamble Company (NYSE:PG) has a goal to purchase 100% renewable electricity in its global operations by 2030. Given the company's progress, it is already at 97%. Longer term, The Procter & Gamble Company (NYSE:PG) has an ambition to reach net zero green house gas emissions across its supply chain and operations by 2040. The Procter & Gamble Company (NYSE:PG) ranks #10 on our list of 12 Best ESG Stocks To Buy Now given its 1.1% weight in the Vanguard ESG U.S. Stock ETF (ESGV).
As a leading financial payments company, Visa Inc. (NYSE:V) has a commitment to digitally enable 50 million small and micro businesses by the end of 2023 that could potentially help them grow and create jobs for their communities. Visa Inc. (NYSE:V) is also committed to achieving net zero emissions by 2040. 165 hedge funds in our database owned shares of Visa Inc. (NYSE:V) at the end of the third quarter, making it one of the most widely held stocks among elite institutions.
In terms of its ESG efforts, semiconductor maker NVIDIA Corporation (NASDAQ:NVDA), which also accounts for 1.23% of the Vanguard ESG U.S. Stock ETF (ESGV), plans to purchase or generate enough renewable energy to match 100% of its global electricity usage. NVIDIA Corporation (NASDAQ:NVDA) and its employees also contributed over $22.3 million to communities in FY22. NVIDIA Corporation (NASDAQ:NVDA) is also working on making its semiconductor chips more energy efficient.
As one of the biggest banks in the United States, JPMorgan Chase & Co. (NYSE:JPM) realizes its business plays an important role in helping address challenging environmental and social issues. As a result, JPMorgan Chase & Co. (NYSE:JPM) has a sustainable development target "to finance and facilitate more than $2.5 trillion over 10 years to help address climate change and contribute to sustainable development". JPMorgan Chase & Co. (NYSE:JPM) accounted for 1.25% of the Vanguard ESG U.S. Stock ETF (ESGV) as of November 28.
Tesla, Inc. (NASDAQ:TSLA) is one of the leading ESG companies in the world given that it makes electric vehicles which can help reduce carbon emissions in the future. Tesla, Inc. (NASDAQ:TSLA) also sells solar panels that can reduce the need for coal consumption. In terms of the 12 Best ESG Stocks To Buy Now list, Tesla, Inc. (NASDAQ:TSLA) ranks #6 given it accounts for 1.46% of the Vanguard ESG U.S. Stock ETF (ESGV).
Like Tesla, Inc. (NASDAQ:TSLA), Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL) rank among the best ESG stocks that many hedge funds in our database owned at the end of Q3 2022.
