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Top ESG Stocks to Watch – Invest Responsibly With These 5 Companies

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Impact Investing Forum 2023

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Corporate responsibility is becoming a critical factor in finding the best investment opportunities. Rather than focusing specifically on returns, ESG investing prioritizes accountability as well as business performance. For this reason, this article will cover the top ESG Stocks to watch for responsible investing.

ESG stocks are businesses that strategically focus on sustainability through Environmental, Social, and Governance actions. As a result, investors are starting to consider this as an essential factor.

If a company has a poor press release due to these factors, the stock will often fall significantly. Limit your chances of that happening with these top ESG stocks to watch.

Top ESG Stocks to Watch List

According to new research, 77% of Americans think about a product’s environmental impact when making a purchase. What’s more, it’s even more of an issue with younger generations as 3/4th’s of millennials will pay more for sustainable products.

This research shows a clear trend – people want companies to do their part. On top of this, Wall St is beginning to catch on. With that in mind, here are the top ESG stocks to watch:

Chipotle (NYSE: CMG)Nike (NYSE: NKE)Target (NYSE: TGT)Nvidia (NASDAQ: NVDA)Microsoft (NASDAQ: MSFT)

Not only are these some of the most respected brands, but they are also making an effort to make the world a better place.

#5 Chipotle

MSCI ESG Rating: BBBESG Risk Rating: 24.2 (Medium Risk)1 Year Growth: 34%

Chipotle is one firm that was founded on ethics in mind. To support its ability to grow and expand, Chipotle is investing heavily in local farming.

In Chipotle’s latest sustainability report, CEO Brian Niccol Said “Sustainability is and always will be a strategic priority for Chipotle.”

With that in mind, Chipotles entire operation focuses on some aspect of sustainability. From the partners they work with, to the ingredients they source, and the employees serving the food. As a result of the efforts, Chipotle has a positive reputation.

For example, chipotle prevented 50% of its waste from entering landfills in 2020, and 100% of its new stores opened this past year now take part in its food donation program.

On top of this, Chipotle is a rapidly growing stock. Its strategy is benefitting shareholders as well as the environment. In its 3rd quarter, the company increased total revenue 21.9% to $2 billion. Even more, Chipotle’s tech investment is helping boost digital sales, which accounted for 42.8% of sales.

Being a millennial favorite, Chipotle is an excellent candidate to be a top ESG stock to watch for years to come.

#4 Nike

MSCI ESG Rating: AESG Risk Rating: 16.6 (Low Risk)1 Year Growth: 51%

Known as a bold leader, Nike is another ESG company aggressively moving towards sustainability. In fact, the company is aiming for zero carbon and zero waste as part of its “Move to Zero” campaign.

Nike promotes the campaign as a way of protecting the future of athletes. Because climate change can affect athletic performance, Nike is teaming up with experts and researchers to help fight it.

Also, Nike is doing its part to reduce its impact on the environment. The company is stepping up its sustainability efforts by a) using 100% renewable energy sources in the U.S & Canada b) reducing freshwater use by 30%, and c) diverting 99.9% of its waste from landfills.

On top of this, Nike stock is up over 50% on strong earnings growth. The sports fan favorite is executing on a high level, with revenues up 16% to $12.2 billion. Not to mention Nike’s connection with consumers is only strengthening with its digital channel growing 25%.

 #3 Target

MSCI ESG Rating: AAESG Risk Rating: 14.6 (Low Risk)1 Year Growth: 67%

Target is yet another consumer brand favorite focusing on bettering the world around it. As a matter of fact, Target’s new campaign, “Target Forward,” is designed just for that – to benefit the people, planet, and business.

The company’s CEO put it best:

“Success is making ourselves useful in the world, valuable to society, helping in lifting the level of humanity, so conducting ourselves that when we go, the world will be somewhat better…”

With that in mind, the company has several aggressive goals.

By 2030: 1) Be the market leader for creating inclusive, sustainable brands. 2) Aim to build a team that reflects the communities around them.By 2040: 1) 100% of owned brands to support a circular future. 2) Committed to being a net-zero company.

Another key point to consider is Target’s incredible growth over the past two years despite industry challenges.

In its second quarter, comp sales grew another 8.9% after a record-breaking 24.3% growth last year. What’s more is Target’s digital channel advanced 10%, on top of 195% growth the year before.

Keep reading to find the top ESG stocks to watch…

#2 Nvidia

MSCI ESG Rating: AAAESG Risk Rating: 12.8 (Low Risk)1 Year Growth: 76%

Nvidia is on a tear lately, returning over 350% since its lows in March 2020. With the company’s technology playing a vital role in the healthcare industry, NVDA stock came into focus. As a result, the company poured $17 million into Covid support.

In addition, Nvidia’s technology is reducing energy usage. All in all, of the top 30 greenest computers, 26 of them use Nvidia’s technology.

This year, 17 of Nvidia’s locations were fully powered by clean energy sources. And by 2025, the company is targeting 65% clean energy usage.

As a result of the increased demand for its products, the company saw record revenue of $6.51 billion, up 68% YOY. The company’s gaming segment led the way, advancing 85% YOY, followed by data, up 35%.

Top ESG Stocks to Watch – #1 Microsoft

MSCI ESG Rating: AAAESG Risk Rating: 13.3 (Low Risk)1 Year Growth: 48%

It’s hard to think of a company more committed to sustainability and improving life around us than Microsoft. In January 2020, the company committed to achieving a negative carbon footprint. Not only that, but Microsoft is pledging to remove the impact of its emissions since it was established by the year 2050.

Microsoft is involved in several different projects that relate to ESG issues.

Investing $30 million to help support a circular economy.Investing $10 million to support technology for better water quality and conservation.Eliminated 1.3 million metric tons of carbon as the result of projects.Investing $129 million to fund carbon reduction, water management, and economic support.Suppliers reduced carbon footprint by 21 million.Achieved Zero Waste Certification in two data centers.Providing safe drinking water for 1.5 million people.

As you can see, Microsoft is a company that puts its money where its mouth is. It isn’t just trying to please shareholders – it’s proving it’s committed through its actions. As a result, Microsoft is #1 on the top ESG stocks to watch list.

Top ESG Stocks to Watch – Balancing Returns & Integrity

These are some of the top ESG stocks to watch as corporate responsibility is increasingly becoming a concern among investors. In fact, a new study shows ESG stocks performed 1.4% – 2.4% better than their peers when the market was responding to the pandemic news.

The research also reveals a distinct pattern – financial performance seems to improve with ESG stocks and is more noticeable over a longer period of time.

Furthermore, the commitments also seem to drive innovation and better risk management practices. Therefore, keep an eye on these top ESG stocks as they lead towards a more sustainable future.

And finally, check out Profit Trends below to keep up with the latest ESG stocks to watch. The Profit Trends team regularly highlights renewable energy stocks and other technologies in the ESG space. Join today!

About Pete Johnson

Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.


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