The ongoing boom in ESG investing is proof that corporations can grow without compromising their environmental, social, and governance, or ESG values.
In the last two years, investments in sustainable stocks have surpassed entire S&P indices. And the boom is expected to continue in 2022. Which companies will top the charts? Companies that create value for stakeholders, not just shareholders. Companies that create safe working conditions, promote diversity and inclusion (D&I), hire and pay fairly, and support local communities. In other words, companies that have high standards for corporate behaviour.
So, which companies are those?
Here are the 15 top-rated ESG stocks to consider in 2022.
- American Water Works Company
- Cisco Systems
- Schneider Electric
- McCormick & Company
- Metso Outotec
- Banco do Brasil
- VF Corporation
15 Top-Rated ESG Stocks to Consider in 2022
1. American Water Works Company
American Water Works Company is a top-rated sustainable corporation because of its first-rate leadership and transparency. The US-based company, founded in 1886, employs over 6,800 employees, and is the world’s largest publicly traded water and wastewater utility company.
Despite serving 15 million people in 46 states, the corporation saves 12.5 billion litres of water every year thanks to its efficient systems. It has also committed to a 40% reduction in greenhouse gas emissions by 2025.
According to its president and CEO, Walter Lynch, providing a consistent supply of safe, clean, and affordable water to their customers, as well as treating their wastewater, is just one part of their commitment. There are many other initiatives to improve the company’s sustainability and have a greater impact on society.
Microsoft is one of history’s most valuable companies. It is the maker of Windows—the world’s most popular operating system. However, Microsoft also designs software for servers and manufactures its own machines. It has also heavily invested in cloud computing technology, machine learning, and artificial intelligence. Microsoft understands that its footprint is large, and has therefore already managed to achieve carbon neutrality, operationally.
Next, it has committed to achieving carbon neutrality across its entire value chain within the next decade. Then, by 2050, Microsoft will offset the emissions it generated since its inception in 1975. Besides doing good for the environment, Microsoft is also operationally transparent. A big player in AI, it also happens to heavily invest in AI research, especially the ethics of using it.
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Kering maintained its strong position when evaluated against 24 quantitative KPIs, including resource management, people management, financial management, clean revenue, investment, and supplier performance. Transparency and sustainability are advocated at every operational level, from the Board of Directors to low-level managers.
According to Conservation International CEO, Dr. M Sanjayan, Kering’s commitment to protect and conserve the environment on which it relies is a huge leap for the fashion industry. It offers a gateway for the industry to influence its customers and help reimagine what fashion and luxury represent.
Nvidia is one of the world’s largest manufacturers of semiconductor chips. It is one of the world’s leading designers of graphics processing units (GPUs) and system on chip units (SOCs) for the gaming, mobile, automotive, and many other industries.
As a manufacturer and distributor of semiconductor chips at a world-spanning scale, Nvidia is accountable for a lot. It mines materials. Its factories and workstations are power- and water-intensive. However, Nvidia has not shied away from the responsibility. It is, in fact, renowned for its sustainability practices.
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Nvidia operates at power efficiencies as high as 35%. By 2025, it has committed to increasing its renewable energy consumption to 65%. The manufacturer is also 100% Responsible Minerals Assurance Process-compliant.
Neste is a global leader in sustainability, renowned for its renewable diesel, sustainable aviation fuel, chemical recycling, plastic waste management, and innovation in refining raw materials into renewable fuels. The company has climbed ranks in recent years, and is on the Corporate Knights Global 100 Index for the 15th year in a row—far longer than any other global energy firm.
According to Peter Vanacker, Neste President and CEO, the company’s goal of “making the world a better place for the coming generations motivates them to strive for greater heights every day. The CEO also acknowledged that several businesses are now constantly upgrading their sustainability initiatives, which is making it increasingly challenging to make the list each year. “It is encouraging to see more businesses actively incorporating sustainability into their operations,” he remarked.
6. Cisco Systems
Cisco is one of the world’s leading developers and manufacturers of networking hardware, software, and telecommunication equipment. It also happens to be one of the world’s most sustainable organizations.
It is energy-efficient and sustainable across its entire value chain, from mining and sourcing materials, designing and manufacturing products, and consuming electricity to promoting fair hiring and securing data. Cisco claims that 80% of its electricity, operationally, is clean, and has committed to going carbon neutral, entirely across its value chain, by 2030.
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7. Schneider Electric
Schneider Electric has often been recognized as the world’s most sustainable company. The European energy and automation giant is renowned for its relentless commitment to solving ESG challenges.
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Schneider Electric Chair and CEO, Jean-Pascal Tricoire, stated that the foundation of their strategy has always been to establish a business and organization that is sustainable—an organization that has always been committed to elevating ESG. In the last decade, the company has continued to set higher standards for itself as well as its customers and partners.
8. McCormick & Company
McCormick & Company is a world leader in manufacturing, marketing, and distributing seasonings. Since McCormick is a thriving food company, its value chain virtually spans the globe. The company sources over 2500 products from over 85 countries. But despite having a value chain so long and complex, its sustainability initiatives remain top-notch.
McCormick has partnered with organizations like the World Wildlife Fund (WWF), the Rainforest Alliance, and the Sustainable Trade to support poor communities, empower women, and curb labour exploitation.
Stantec is one of the world’s most environmentally conscious firms. Half of the company’s overall ESG score can be attributed to its clean earnings and its clean investments, which mainly lie in commodities and services with a proven environmental and social impact.
Stantec President and CEO, Gord Johnston, has stated that their outstanding track record on sustainability is the product of the organization’s deep commitment and excellent leadership across their worldwide operation. The CEO has added that Stantec’s teams are striving to improve sustainability in their own operations, but also to assist clients in setting and achieving their own sustainability goals.
Hewlett-Packard is one of the world’s most prominent IT hardware and services manufacturers. The company is most recognized for its computers and laptops. In fact, between 2007 and 2013, it was reportedly the world’s leading manufacturer of PCs. But the IT pioneer also manufactures printers, scanners, and cameras.
Throughout its value chain involving materials sourced from around the world, Hewlett-Packard has managed to keep over 1.5 million pounds of plastic out of the world’s oceans and recycle over 875 million ink cartridges. In fact, the company is the world’s number one recycler of printer supply.
By 2025, HP has committed to reducing single-use plastic in packaging by nearly 80%. It also collaborates with non-profit organizations worldwide, supporting education, technology, healthcare, sanitation, and water and waste management projects.
11. Metso Outotec
Metso Outotec, a global leader in sustainable technology and services, caters to recycling and aggregates and mineral processing industries. In 2021, it ranked 8th on the Global 100 Index.
Metso Outotec’s Senior Vice President of Business Development, Piia Karhu, has stated that for its aggregates and metals and minerals industry customers, their focus is on producing products that are sustainable across their entire value chains. They expect to achieve this by driving sustainable innovation, together, by collaborating with their stakeholders, which include their employees, partners, customers, and communities across the globe.
Verizon is a leading provider of communication, entertainment, and information products and services. Like Cisco and other technology giants on the list, Verizon is making strides in its sustainability projects. By 2025, it has committed to generating 50% of its electricity from renewable sources. By 2035, it has committed to becoming carbon-neutral in Scope 1 and Scope 2 emissions.
Autodesk creates software for the engineering, construction, architecture, education, manufacturing, and entertainment industries. The leader in 3D design uses highly efficient data centres and creates cloud computing software that enables companies to share data and collaborate seamlessly. Let us not forget that half of its directors are women.
14. Banco do Brasil
Banco do Brasil, the largest bank in Brazil and Latin America by assets, is also one of the world’s most sustainable businesses. The bank, founded more than two centuries ago, has committed to be inclusive and improve society digitally by offering free internet access to underserved and underprivileged communities, and bettering Brazil’s educational and financial prospects by supporting free education and funding local entrepreneurs.
15. VF Corporation
VF Corporation is one of the world’s leading apparel, footwear, and accessories companies. VF has committed to shifting entirely to renewables by 2025, operationally.
Further, it has committed to decarbonizing across its entire value chain by 2030. The company has also committed to using only regenerative, recycled, and responsibly-sourced materials within the next ten years.
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