As sustainability investing navigates through political and regulatory turbulence, the latest insights from Rothschild & Co Wealth Management Switzerland offer a timely perspective on the evolving landscape. In their June 2025 report, “ESG Insights for 2025 and Beyond,” the firm addresses recent headwinds facing the ESG fund universe while reaffirming long-term confidence in sustainable investing.
The start of 2025 proved challenging for ESG-focused funds. After witnessing $18.1 billion in net inflows during Q4 2024, global sustainable funds saw a sharp decline in the first quarter of 2025, posting $8.6 billion in outflows, which is the steepest quarterly decline on record. The reasons for the downturn range from a mix of geopolitical tensions to shifting regulatory landscapes and to growing investor caution, particularly in the U.S. and Europe. In the US, the return of President Donald Trump and the administration’s rollback of climate and diversity policies introduced legal ambiguity that pushed some asset managers to retreat from ESG promotion. Meanwhile, Europe’s pivot toward defence and economic resilience in light of new global tensions has sidelined some climate goals.
Long-Term Investment Case Still Intact
Despite these challenges, Rothschild & Co. points out that total global ESG fund assets remained steady at $3.16 trillion as of March 2025. The firm also notes that longer-term returns from sustainable funds remain compelling. Morningstar data reveals that a $100 investment in ESG funds at the end of 2018 would be worth $136 today, outperforming the $131 value of a comparable traditional fund.
More importantly, capital continues to flow into clean energy and related technologies. In 2024, global investment in clean energy hit a record $2 trillion—double the amount directed toward fossil fuels. Solar power alone attracted $500 billion, and electric vehicle sales reached over 17 million units globally, making up 20% of all new cars sold. These figures reflect the ongoing shift toward electrification, efficiency, and renewables as dominant investment themes.
Rothschild & Co. concludes that successful ESG strategies going forward will require flexibility and a focus on core principles like transparency and data quality. While the political and regulatory environment remains complex, it also creates room for investors to reposition themselves for long-term structural change.
With those insights, let’s explore the selection of the 10 best sustainability stocks to buy now.
Our Methodology
For shortlisting the 10 best sustainability stocks to buy now, we began by analyzing the Invesco MSCI Sustainable Future ETF (ERTH), which tracks the MSCI Global Environment Select Index. This index offers targeted exposure to six key environmental impact themes, making it a relevant benchmark for screening sustainability-focused stocks. From the ETF’s portfolio of approximately 150 securities, we first selected the top 20 holdings by portfolio weight, reflecting the companies with the largest representation in the fund. We then refined the list by selecting the top 10 stocks with the highest hedge fund ownership by leveraging data from Insider Monkey’s Q1 2025 hedge fund database. Finally, we ranked these stocks in ascending order based on the number of hedge funds holding positions in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Note: All pricing and analyst rating data are as of market close on July 1, 2025.
10 Best Sustainability Stocks to Buy Now
10. Advanced Drainage Systems Inc. (NYSE:WMS)
Market Cap: $9.3 Billion
Number of Hedge Fund Holders: 33
Advanced Drainage Systems Inc. (NYSE:WMS) is one of the 10 best sustainability stocks to buy now.
Advanced Drainage Systems stands at the intersection of infrastructure development and environmental stewardship. In FY 2024, the company purchased around 540 million pounds of recycled plastic, transforming waste into durable infrastructure products. The company aims to use one billion pounds of recycled materials each year by 2032, reflecting bold sustainability goals. This industry-leading program keeps millions of used bottles out of the landfill and puts them to work again for more than a hundred years as part of our infrastructure.
Advanced Drainage products help manage stormwater, protect water quality, and reduce flood risks, problems increasingly exacerbated by climate change. Its stormwater systems are widely used in sustainable construction and green infrastructure projects.
On June 25, Barclays analyst Matthew Bouley reaffirmed his confidence in the stock with an Overweight rating and an unchanged price target of $135. The analyst had previously increased WMS’ price target in mid-May, when the company, along with its quarterly results, acknowledged near-term market softness but viewed management’s cautious guidance as prudent.
Bouley viewed management’s conservative guidance as a sensible move, noting that while pricing may remain steady, volumes are likely to outpace those of the broader industry. Despite a subdued forecast for fiscal 2026, he sees the company in a strong position, underpinned by solid operating fundamentals.
Advanced Drainage Systems Inc. (NYSE:WMS) is the leading manufacturer of innovative water management solutions in the stormwater and onsite septic wastewater industries. It designs, manufactures, and markets various products, including polypropylene and polyethylene pipes, plastic leach field chambers and systems, and septic tanks.
9. Badger Meter Inc. (NYSE:BMI)
Market Cap: $7.1 Billion
Number of Hedge Fund Holders: 39
Badger Meter Inc. (NYSE:BMI) is one of the 10 best sustainability stocks to buy now. Nearly 95% of Badger Meter’s revenue comes from technologies designed to safeguard water, a resource growing scarcer by the day. The company builds intelligent metering systems that help cities, utilities, and industries monitor consumption.
Badger Meter’s technology suite includes the ORION Cellular endpoints, BlueEdge suite, and the BEACON analytics platform, which provide utilities and businesses with real-time visibility into water usage. These tools make it easier to detect leaks, curb waste, and fine-tune system performance—helping operators respond quickly and manage water more efficiently.
Badger Meter also brings its environmental values into the factory floor: nearly 98.5% of the bronze used in its meter housings comes from recycled materials. It’s a detail that reflects the company’s broader approach, that is not just innovating in water tech, but doing so with a commitment to responsible production.
The stock has risen by around 15% year-to-date and is up over 42% since touching its one-year low of $170.72 in early April. Analyst sentiment remains mixed on it. On June 16, Stifel Nicolaus analyst Nathan Jones reaffirmed his Hold rating on it, as he believed the stock was fairly valued at those levels. He met with the company’s CEO and CFO, and the discussions with them underpinned his outlook of continued growth and margin improvement. As a result, the analyst increased his price target to $230 from $200. However, he maintained his cautious view as he expects the potential upside to be limited.
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