Putting together a stock portfolio can be challenging. In addition to determining your risk and investment goals, you may also want to believe in the companies that you’re investing in. One way to do this is with environmental, social, and corporate governance (ESG) investing, which focuses on companies that emphasize support for green energy, fair-labor practices, or diverse board membership.
Here are a few stocks you may want to consider if you’re interested in creating a portfolio of companies that are environmentally and socially conscious.
The tech giant announced an initiative to be carbon negative by 2030 with an aim to remove the carbon the company has created by 2050 — all of it since its founding in 1975. In the first year of the new initiative, the company said it reduced its emissions by 6% and hopes to build on those gains.
It’s also encouraged its employees to find new and innovative ways to help it meet its goals, such as the Xbox team developing a feature that reduces power when the gaming device is in standby mode.
Microsoft also works with the LGBTQI+ community not only within their company but also supports customer products, including Xbox clothing with Pride themes and a Pride Skin for Microsoft Surface customers.
Google may be a huge company, but they are working to be more socially and environmentally conscious. Last year, Google CEO Sundar Pichai said a free and open internet is a tremendous force and urged countries to uphold freedom of communication on the internet.
Google is also pushing to be a more sustainable company. In 2007, they became the first major company to be carbon neutral with a goal to be carbon-free by 2030. They also are developing better ways to recycle electronics (such as the company’s phones) for consumers.
Beyond Meat (BYND)
Beyond Meat is the creator of plant-based products that mimic meat, including burgers, sausages, and jerky chicken. The company says its plant-based versions of meat use significantly less land, water, and energy to create than their meat counterparts.
For example, a quarter-pound plant burger uses up to 99% less water and 93% less land to produce than a typical beef burger. Beyond Meat has expanded beyond the grocery store and partnered with several fast-food chains to offer plant-based meat options, including Burger King, White Castle, and Denny’s.
Salesforce is another company that has aimed to reduce emissions, announcing that it achieved net-zero admissions in 2021. They’ve also pushed to plant more trees that can remove carbon from the air and are working with environmental programs to increase urban reforestation in low-income communities.
On the governance front, Paula Goldman became the company’s Chief Ethical and Humane Use Officer in 2019. In January 2022, the company named Lori Castillo Martinez as the company's Chief Equality Officer to develop a more inclusive culture within the company.
Insurer Aflac was recently named one of Ethisphere’s most ethical companies and is the only Fortune 500 insurer that has made the list every year since the start of the recognition program in 2007. Aflac’s charitable contributions as a company include $158 million in donations to children with cancer and sickle cell disease. The company also started a nationwide initiative to study disparities in health and wealth in the U.S. and address medical debt.
Consumer products company Colgate-Palmolive has put forward sustainability policies focused on sourcing minerals from conflict-free suppliers and responsibly managed forests and renewing its commitment to animal welfare. The company has also laid out an environmental, governance, safety, and health policy to protect its workers around the world and set up an ethics hotline where they can ask questions and report ethical concerns.
Nvidia has been working in recent years to create a good environment for its employees. The tech company has been working to ensure equal pay regardless of gender and supports a Women in Technology group for its employees. The California-based company also supports policies and benefits for the LGBTQ community and is committed to disability inclusion within the workplace.
Best Buy (BBY)
In 2021, Best Buy was recognized for achieving zero waste at their supply chain facility in Chino, California. The facility diverted more than 99.67% of its waste to places other than a landfill, earning it a Total Resource Use and Efficiency (TRUE) certification for its work. The retailer has set a goal of reducing its carbon emissions by 75% by 2030 and hopes to be carbon neutral by 2040.
Adobe has been working to achieve fair pay across a variety of workers for the company by analyzing and adjusting pay over time and continues to put in place measures to maintain pay parity. The company has also been pushing sustainability initiatives, including building LEED-certified offices and setting a 100% renewable energy goal by 2035.
ESG funds: An alternative to individual stocks
If you would rather invest in a basket of stocks instead of just one, there are several ESG funds that may be a good fit if you want to get involved in values-based investing. Some funds may purposely exclude non-renewable energy, firearms-related companies, or so-called “vice” companies like gambling, alcohol, or tobacco businesses. Others may focus on specific issues like investing in renewable energy stocks or companies that emphasize equal pay and women in leadership roles.
Pro tip: Investors can choose from several different types of funds on the market, so consider researching how to invest money in these funds and determining which are best for your particular portfolio before jumping in.
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