ESG investing denotes investment in companies that includes an analysis of their environmental, social, and governance records and initiatives. These largely non-financial factors are becoming increasingly key for investors in their analysis of the growth prospects and risk metrics of stocks. Investors now pick companies based on their potential return on investment, sustainability, and long-term impact on the environment. This is because…
companies with high ESG investing scores are believed to have lower exposure to the risk of economic loss arising from many issues in the ESG domain.
ESG, or Socially Responsible Investing (SRI), can involve the evaluation of a company on many aspects, including employee well-being, social unrest, climate control, compliance with corporate governance, among others. ESG investing has gained prominence in recent years. According to research firm Opimas, ESG Investing has tripled over eight years to account for $40.5 trillion in 2020. With increased awareness, the momentum surrounding ESG investment is likely to continue.
We believe Microsoft Corporation (MSFT – Get Rating), Intel Corporation (INTC – Get Rating), Adobe Inc. (ADBE – Get Rating), and UnitedHealth Group Incorporated (UNH – Get Rating) are among the best picks now with regard to ESG Investing. These three large-cap companies are also held by the Vanguard ESG U.S. Stock ETF (ESGV), which has returned more than 73.9% over the past year.
Microsoft Corporation (MSFT – Get Rating)
According to Sustainalytics Inc., MSFT has a low ESG risk rating of 14.7. The company has also rated INTC’s management of ESG Material Risk as Strong. MSFT has been carbon neutral worldwide since 2012 and aims to be carbon negative by 2030. The company’s cloud and artificial intelligence (AI) services help businesses reduce their energy consumption, cut their physical footprints, and develop sustainable products themselves.
The company is one of the largest purchasers of renewable energy and its Puget Sound campus has been zero-waste certified since 2016. MSFT is also investing $50 million in its AI for Earth program to boost innovation by empowering those addressing sustainability challenges by the power of AI.
MSFT ended yesterday’s trading session at $230.72, rallying 64.33% over the past year. During the past six months, the stock has gained 15%.
It’s no surprise that MSFT has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
MSFT has a Sentiment rating of A along with Stability and Quality ratings of B. In the D-rated Software – Application industry, it is ranked #14.
In addition to the POWR Ratings grades I’ve just highlighted, you can see the MSFT ratings for Growth, Momentum, and Value.
Intel Corporation (INTC – Get Rating)
In 2018, Morgan Stanley referred to INTC as one of the first mover companies that is “already capitalizing on investor interest in ESG.” According to Sustainalytics Inc., INTC has a low ESG risk rating of 16.9. The company has also rated INTC’s management of ESG Material Risk as Strong.
Last May 2020, INTC launched its 2030 strategy and goals, which demand continued progress in corporate responsibility for the next decade. This includes…
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