eToro is an accessible trading platform that prides itself on using social elements in investing. This is why it is only natural that it has ESG stocks available on its platform.
If you are interested in learning about ESG stocks and which ones are in the top 5 on eToro, then you are on the right page because these topics will be covered in this article.
What are ESG Stocks?
ESG is an acronym that stands for environmental, social, and governance.
The environmental factors taken into consideration in ESG are the initiatives that a company creates to reduce greenhouse emissions and improve climate change. These also include how they deal with energy efficiency and waste management. The more initiative they have to improve the environment, the higher their score will be.
On the other hand, a company’s social factor score increases when they positively impact their local community. The social factors also involve labor standards, workplace health, and human rights practices within the company.
Lastly, the governance factor refers to the principles that define the company’s administrators and stakeholders’ expectations, responsibilities, and rights. A company with a high governance factor score indicates an alignment of interest and balance among the stakeholders to help achieve its long-term goals.
ESG ratings are between 0-100. A lower ESG rating usually means lower unmanaged ESG risks.
Top 5 ESG Stocks on eToro
Now that you have a clearer understanding of what are ESG stocks, here are the top 5 ESG stocks that can be traded on eToro:
Nvidia Corp. is a multinational technology company based in Santa Clara, California. They dabble in the semiconductors, artificial intelligence, video games, consumer electronics, and computer hardware industries. It is popularly known for its GPU product line, which is a direct competition of Advanced Micro Devices’ Radeon products.
According to Yahoo, their ESG risk rating is in the 4th percentile, which is generally low. Their environment risk score is 2.3; the social risk score is 4.2, and the governance risk score is 6.5.
Nvidia has a fundamentally strong position, which is reflected in its 33% return on equity and 35% annual pretax margin. The semiconductor industry might have some weaknesses, but Nvidia also taps high growth markets such as AI and gaming, allowing it to have the potential to be a good investment.
Pool Corporation is a wholesale distributor of swimming supplies and equipment. They also sell other related irrigation and outdoor living products.
Pool became a publicly-traded company in 1995 under the NASDAQ stock exchange. Today, it has sales centers around the world with hundreds of employees.
Pool Corp. stocks have the potential to be profitable investments not only because they check all the list that qualifies them as ESG stock but also because they have a momentum score of B.
Third on this list is Salesforce.com. It has an ESG rating of 11, which means it has unmanaged ESG risk. They also have a very low environmental risk factor meaning that their practices do not harm the environment. This is a clear reflection of the company’s goal to put the environment first.
Salesforce.com Inc. is a cloud-based software company based in San Francisco, California. They sell enterprise applications that focus on application developments, analytics, automation, marketing, and customer service. They also provide CRM related services.
With the increasing demands for CRM services, Salesforce.com’s revenue also has a high potential to increase. This is already happening given their recent second-quarter earning data.
Adobe Inc. is an American computer software company based in San Jose, California. It is known for its creativity and multimedia software products. However, they have recently entered the niche of digital marketing software.
This company is given an ESG score rating of 13 by Yahoo. Their environmental risk score is 0.4. This is no surprise given that they have pledged their commitment to ensure that their products help customers reduce environmental impacts.
Based on several Wall Street analysts, Abode stocks are considered as “StrongBuy.” It has the potential to rise by 24.1% more than its previous value. This means that if you are looking for an ESG stock with a lot of potential, this might just be it.
West Pharmaceutical Services (WST)
West Pharmaceutical Services is a manufacturer and designer of pharmaceutical delivery and packaging systems. Its main industries are medical devices and pharmaceuticals. It has been a constant name in many top ESG stock lists in the past few years.
West Pharmaceutical stocks can be an excellent investment given their recent track record. They hit a closing high of 301.66 last October 12, and their stocks are boosted despite the Covid-19 wave.
Orsted is a multinational company from Fredericia, Denmark. Their company is one of the largest in the industry of energy, with a particular interest in the adoption and production of “green” energy.
They are considered the largest energy company in all of Denmark and they dabble in the development, construction, and operation of both offshore and onshore renewable energy sources. Some examples of these sources are solar farms, wind farms, and bioenergy plants.
They are global leaders in the development of offshore wind power, accounting for almost 29% of all installed wind power sources in the world. Aside from this, they also account for 88% of the world’s production of renewable energy.
According to Yahoo!’s data, Orsted’s ESG risk rating is in the 22nd percentile which is considered medium-risk. They have a general environment risk score of 7.4 while their social risk score and governance risk score are 8.4 and 4.7, respectively.
With their low controversy level and medium risk score, investing in Orsted is generally a good idea, especially when it comes to long-term profitability and sustainability.
Bynd, or Beyond Meat Inc, is one of the largest producers of plant-based meat alternatives and is based in the city of Los Angeles, California. They strive to produce plant-based meats that are designed to mimic the feel and taste of real meat without using animal meat and by-products.
In terms of its ESG risk rating, Sustainalytics place their score at 42.6 which is considered high and offers severe risk in terms of investment.
Weyerhaeuser Co. is a company based in Seattle, Washington, and owns many of the country’s timberlands, owning around 12,400,000 acres in the US, as well as 14,000,000 acres in Canada with long-term licenses. Aside from this, they also produce wood products that are integrated into various companies and operations, not just in the US but worldwide as well.
Yahoo! Finance places their total ESG risk score of 19 at the 18th percentile which is generally low for a company their size. Breaking down this total, they have an environment risk score is 10.8 while their social risk score is 3.9 and their governance risk score is 4.5.
They generally have sustainable practices that make them a good company to invest in. However, take note that they have a significant controversy level, garnering a score of 3 out of 5.
UPM-Kymmene is a Finland-based forest industry company, with its headquarters located in the country’s southern capital, Helsinki. As a company, they strive to replace fossil-based materials with sustainable and innovative forest-based solutions. They dabble in the production of recyclable, biodegradable, and renewable everyday items that ordinary citizens can use.
They operate on a global scale, offering their innovations to countries worldwide. By offering their services to others, they want to maximize the potential of bioeconomy while promoting sustainability and long-term global solutions.
They have a total ESG risk score of 15, placing them at the 7th percentile, and is considered low-risk. Breaking that down, they have an environment risk score of 7.7, a social risk score of 2.7, and a governance risk score of 4.5.
As a company, they offer long-term sustainability and profitability to investors which can be a good investment for those looking for such qualities.
First Solar is an American company based in Arizona that provides large-scale PV power plants and similar services like construction, finance, maintenance, and recycling of end-of-life panels. They also dabble in the production of solar panels, becoming one of the largest producers of solar energy in the country.
They are committed to generating eco-friendly and eco-efficient energy solutions using sustainable practices. This allows them to provide their services at competitive prices with the least harmful impact on the environment.
They are considered a medium risk in terms of sustainability, with an ESG risk rating of 20.3. They joined the RE100 which is a global initiative that aims to bring most of the world’s most influential and largest businesses together to invest in the complete transition to renewable energy.
They are invested in the entire process of their innovative energy solutions – from the manufacturing to the recycling of their solar panels. Because of this, as well as their relatively low-risk factor, First Solar can be a good company to invest in if you value sustainability and long-term practices.
When you combine the ESG and traditional investment strategies, you might be looking into very profitable investments. This can be the case with the top 10 ESG stocks mentioned above that you can trade on eToro.