With the meme-trade phenomenon helping shape the market ecosystem over the trailing year, it’s easy to assume that younger investors only care about raking in profitability from highly speculative names. But no one knows for sure how long this dynamic will last. Given this uncertainty, it’s better to consider investments in environmental, social and governance stocks to buy.
Covering a broad range of industries, ESG stocks are associated with companies that, in addition to pursuing rational capitalist ambitions, also take time and resources to cultivate change in society. Most prominently, corporate executives have come out in support of initiatives to heal wounds stemming from wealth inequity and historical community-based tensions.
As you know, the pandemic only served to accelerate the inequities within our communities. Clearly, the public health crisis did not impact everyone in America equally. Indeed, some white-collar workers may have enjoyed the crisis because it allowed them to work from home. But for others, the lockdowns have been devastating — and not just here, but globally. Thus, ESG stocks have stronger pull on a narrative basis.
Further, you don’t want to dismiss ESG stocks as tree-hugging fairy tales. In fact, the Pew Research Center notes that Generation Z and Millennials share many of the same opinions on key social and political issues. Therefore, anachronistic views about a whole host of issues simply will not go well with this crowd. In other words, it pays to play the ESG game.
Also, it’s an obvious statement but one worth repeating: Gen Z and Millennials are young and will eventually rear children based on their distinct cultural mores. Really, it will be difficult for big business to survive without considering responsibility, boding well for these ESG stocks.
As with any investment endeavor, you don’t want to jump aboard a company without assessing its complete profile. Though the topic here will be ESG stocks, make sure that the underlying businesses ultimately make sense for your portfolio. So let’s jump into the world of ESG stocks:
- Unilever (NYSE:UL)
- Campbell Soup Company (NYSE:CPB)
- Home Depot (NYSE:HD)
- Clean Harbors (NYSE:CLH)
- Orsted (OTCMKTS:DOGEF)
- Gilead Sciences (NASDAQ:GILD)
- Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)
Stocks to Buy: Unilever (UL)
A British multinational consumer goods firm renowned for a variety of popular household brands, including Ben & Jerry’s ice cream and Axe deodorant, Unilever represents one of the best long-term investments you can make. Whether we encounter a deflationary shock or ride a bullish wave, we’ve got to stay clean, hydrated and sated.
But beyond this always-relevant catalyst, Unilever wins big for its stance on social equity and responsibility. According to Unilever CEO Alan Jope, “The two biggest threats that the world currently faces are climate change and social inequality.” While the company encourages public discussions on how to resolve these challenges, it’s also putting its money where its mouth is.
Last year, Unilever pledged $7 million “to organizations and activists working for social justice and racial equality.” Further, management committed to “Increasing our spend with diverse suppliers” and “Ensuring the diversity of our workforce fully reflects the communities we serve.”
If you’re seeking ESG stocks with long-term stability that can foster meaningful change in society, look no further than UL stock.
Campbell Soup Company (CPB)
Many of us have grown up with Campbell Soup Company, so the brand is permanently etched into our memory. That’s a positive that you shouldn’t ignore, particularly as the pandemic gave grocery-related brands roughly a year of free organic marketing.
In addition, Campbell Soup offers revenue predictability and consistent profitability. In fact, in its fiscal year ended July 31, 2020, CPB stock benefitted from sales growth of over 7% against the prior year, while net income jumped nearly eight-fold to $1.6 billion.
As impressive as that is, that’s not the focus of our discussion today. Instead, it probably comes as no surprise that Campbell Soup is one of the best ESG stocks to buy. Indeed, the company has long been an advocate for sustainability and citizenship across all echelons of society, well before it was cool to do so.
For instance, the company introduced goals “to reduce childhood obesity and water consumption.” Since management defined these and other objectives more than a decade ago, you can see how forward thinking the company is.
Stocks to Buy: Home Depot (HD)
At first glance, Home Depot may not sound like a company that would belong on a list of ESG stocks to buy. Back in 2019, billionaire co-founder Bernie Marcus publicly supported then-President Donald Trump’s 2020 reelection efforts. Because of the prior administration’s many controversies, it didn’t take long for social media to demand a boycott of Home Depot.
In turn, the company distanced itself from Marcus, noting that he retired more than a decade ago and that as a policy, Home Depot doesn’t endorse any presidential candidate.
Personally, I felt that the social media crowd was wrong on this one. Boycotting an entire organization based on one person’s political inclinations is not an appropriate course of action, particularly because anybody has the right to choose whom to vote for in free American elections.
Also lost in that discussion is that actually, HD is one of the best ESG stocks to buy — and the novel coronavirus pandemic proved it. Remember when suddenly, it seemed that every store was closing super early? You know which company stayed up (relatively) late to serve the community? Home Depot.
Also, Home Depot features excellent diversity in hiring, particularly age diversity. When it comes to ESG-ness, I only have good things to say about the retailer.
Clean Harbors (CLH)
Despite the contentiousness we have in society, you’ll find very few who are against implementing sustainable living standards, such as building out cleaner energy infrastructures. For the longest time, climate change seemed like an esoteric concept — it exists but how does that affect me? Well, we’re seeing that question answered firsthand through serious crises like water shortages.
But before we can transition to a clean, green future, we’ve got to manage the aftereffects of the current energy and chemical infrastructures. That’s where Clean Harbors comes into the picture. The largest hazardous waste disposal company in North America, Clean Harbors is vital to our economy, whether you believe in the viability of ESG stocks or not. Some of its services include “used oil collection, recycling, rerefining, and parts washing for small-quantity users.”
As well, business has been good, with the company consistently delivering positive net income. To be fair, Clean Harbors did lose some momentum in top-line sales for 2020, down nearly 8% against the prior year. However, as the economy recharges again from the pandemic, you can expect CLH to continue on its steady growth trek.
Stocks to Buy: Orsted (DOGEF)
Some companies are considered as ESG stocks merely because of the sake of their PR teams. On the other hand, you have organizations like Orsted, which holistically operate as a sustainable business. Orsted, a Danish multinational power company, is the largest energy firm in Denmark. Over the years ahead, DOGEF stock can make a huge impact among the international investment community.
Significantly, Orsted knows exactly how to transition to clean renewable energy — and do so profitably. By its own admission, the company was one of the most carbon-intensive firms. However, over a 10-year period, Orsted changed its operational ethos, eventually becoming ranked as the world’s most sustainable energy company according to the Corporate Knights Global 100 Index.
According to Orsted CEO Mads Nipper, “We aspire to be one of the true catalysts of systemic change to a greener society by continuing to prove that there is no long-term trade-off between sustainability and financial value creation.” Nipper isn’t kidding, with the company generating strong positive earnings since 2016.
Gilead Sciences (GILD)
One of the most distinguished biopharmaceutical companies, Gilead Sciences added more to its reputation when it was an early frontrunner in providing a treatment solution for the SARS-CoV-2 virus. Though other companies specializing in vaccines, such as Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) eventually overshadowed Gilead, it nevertheless played a pivotal role in saving lives early in the crisis.
Aside from that element, the company is also one of the most respected ESG stocks. According to DigitalInformationWorld.com, Gilead Sciences “donated $388 million, a total of 2.9% of their pre-tax profit,” presumably for fiscal year 2019 since the data was published in August 2020. That makes Gilead the most generous company as a percentage of pre-tax profits.
Interestingly, the biopharma firm beat out Goldman Sachs (NYSE:GS) at 2.5%, Pfizer at 1.7% and Johnson & Johnson (NYSE:JNJ) — another Covid vaccine developer — at 1.3%.
Still, you should be aware that Gilead took a revenue hit in 2020, suffering a year-over-year decline of 31%. However, the company is on the rebound, with first quarter of 2021 sales of $2.5 billion representing year-over-year growth of 48%.
Stocks to Buy: Alphabet (GOOG, GOOGL)
With Alphabet, I’ve spared the most controversial name on this list of ESG stocks for last. Yes, Alphabet gets stuck in the conversation about big tech’s overarching influence on society. But for this purpose, I specifically would like to address the company’s YouTube brand. More than just a video-sharing platform, YouTube has become one of the activist institutions in implementing an ESG-centric ethos on the global community.
Back in 2017 — and well before various social and community-related issues exploded onto the mainstream — YouTube CEO Susan Wojcicki stated that the underlying platform is more than just a place to distribute video content but that it has a “real responsibility” to promote the “greater good of the nation or humanity.”
And don’t forget that until last year, Google was recently the largest corporate purchaser of green energy until Amazon took the title, and has pledged to “run on carbon-free energy everywhere, at all times” by 2030.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.