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.
8. Enphase Energy Inc. (NASDAQ:ENPH)
Market Cap: $5.4 Billion
Number of Hedge Fund Holders: 40
Enphase Energy Inc. (NASDAQ:ENPH) is one of the 10 best sustainability stocks to buy now. The company designs microinverters and energy storage systems that form the backbone of many decentralized solar installations. By allowing each solar panel to operate independently, its microinverters improve uptime and energy generation.
Enphase is helping accelerate the global shift toward renewable energy and energy independence. As of December 2024, the company had shipped approximately 28.10 GW DC power of Enphase microinverters, helping avoid 72 million metric tons of carbon dioxide emissions that would have come from conventional sources. To put that in perspective, it’s roughly the same as powering 14.9 million homes for one year.
In an update on July 1, a Wells Fargo analyst commented on the revised Senate tax bill recently released, highlighting important implications for Enphase Energy. The latest version removes the proposed one-time 30%–50% excise tax on foreign content, a move seen as favourable for the broader solar sector. While this may reduce First Solar’s (NASDAQ:FSLR) relative advantage, Enphase stands to benefit from extended project timelines. Specifically, solar projects beginning construction within a year of the bill’s enactment will enjoy a four-year safe harbor, allowing tax credit eligibility through mid-2030. This update strengthens the outlook for Enphase and other providers of residential and commercial solar components.
Enphase Energy Inc. (NASDAQ:ENPH) is a global energy technology company specializing in microinverter-based solar and battery systems.
7. Rivian Automotive Inc. (NASDAQ:RIVN)
Market Cap: $15.4 Billion
Number of Hedge Fund Holders: 41
Rivian Automotive Inc. (NASDAQ:RIVN) is one of the 10 best sustainability stocks to buy now. The company is an American automotive manufacturer that develops and builds electric vehicles (EVs) and related accessories.
The company’s Normal, Illinois factory is powered in part by renewable energy, and Rivian aims for net-zero carbon emissions across its operations by 2040. Its Rivian Adventure Network of fast-charging stations is designed to be powered entirely by renewable energy, reinforcing its commitment to a sustainable transportation ecosystem.
Rivian Automotive reached a key financial milestone on June 30, 2025, with a $1 billion equity investment from Volkswagen Group, marking the first step in their planned $5.8 billion technology joint venture. As part of the JV announced on June 25, they are looking to create next-generation software-defined vehicle (SDV) platforms to be used in their future EV models. The funding provides Rivian with additional capital to support long-term growth and product development.
On July 2, Rivian also reported second-quarter 2025 production and delivery numbers. The company produced 5,979 vehicles and delivered 10,661 units (-23% year-over-year), which were broadly in line with expectations. Despite ongoing industry challenges, the management also reaffirmed its full-year delivery guidance of 40,000 to 46,000 vehicles.
6. NEXTracker Inc. (NASDAQ:NXT)
Market Cap: $8.5 Billion
Number of Hedge Fund Holders: 41
NEXTracker Inc. (NASDAQ:NXT) is one of the 10 best sustainability stocks to buy now. The company produces solar tracking systems that enhance the performance of utility-scale photovoltaic installations by allowing panels to track the sun throughout the day. Its NX Horizon platform has been deployed globally on over 100 GW of solar capacity (as of mid-2024), significantly increasing solar output without requiring additional land use. This contributes directly to lowering the levelized cost of solar energy.
On June 25, Nextracker reported that it has been selected to supply its NX Horizon solar trackers for one of Europe’s largest solar initiatives, the 550 MW Oricheio PPC Ptolemaida project in Western Macedonia, Greece. Developed on repurposed coal mine land and owned by PPC Renewables, the plant is now in its final construction phase and is expected to deliver nearly 1.8% of Greece’s electricity annually once operational.
This project is a key component of Greece’s revised energy plan, which aims to achieve 82% renewable electricity generation by 2030. It will also support European efforts towards energy independence and emissions reduction. For Nextracker, the project will strengthen its growing presence in the European solar market, where it now holds the top market share, according to Wood Mackenzie.
5. Digital Realty Trust Inc. (NYSE:DLR)
Market Cap: $57.7 Billion
Number of Hedge Fund Holders: 44
Digital Realty Trust Inc. (NYSE:DLR) is one of the 10 best sustainability stocks to buy now. The company operates one of the largest global portfolios of data centers, an industry that is under scrutiny for its high energy consumption. In response, the company has implemented aggressive decarbonization measures.
More than 75% of its global electricity now comes from renewable sources, including 100% for its North America colocation and European portfolios. It has also committed to carbon neutrality across its scope 1 and 2 emissions by 2030.
DBS analyst Andy Yu reiterated a Buy rating on Digital Realty on June 17, keeping the price target steady at $213. The analyst liked the company’s robust year-over-year growth in adjusted EBITDA. This strong operational performance prompted the company to raise its guidance, which supported the analyst’s optimistic view.
The analyst also highlighted Digital Realty’s strong position in the data center space, which entails an expansive international footprint and a significant market share. The company’s available buildable capacity and recent acquisitions provide a foundation for future expansion.
Digital Realty Trust Inc. (NYSE:DLR) is a real estate investment trust that owns, operates, and invests in data centers worldwide. The company offers data center, colocation, and interconnection services.
4. Darling Ingredients Inc. (NYSE:DAR)
Market Cap: $6.0 Billion
Number of Hedge Fund Holders: 47
Darling Ingredients Inc. (NYSE:DAR) is one of the 10 best sustainability stocks to buy now. The company transforms discarded materials, such as animal by-products, used cooking oil, and food scraps, into valuable commodities, including fertilizer, feed additives, and renewable diesel. The company also operates a joint venture, Diamond Green Diesel, through which it has become one of North America’s leading producers of renewable diesel, with plans to scale output beyond 1.2 billion gallons annually. This alternative fuel delivers significantly lower carbon emissions compared to traditional diesel, making it a vital part of decarbonizing heavy transport and helping meet environmental targets.
Darling Ingredients also continued to make strides in product innovation. In mid-May, it signed a non-binding agreement with the Belgian industrial company, Tessenderlo Group, to combine the collagen and gelatin segments of their companies into a new company called Nextida.
Nextida will be formed as a joint venture (JV), with Darling Ingredients holding a majority stake of 85% and Tessenderlo Group owning the remaining 15%. The JV is expected to generate annual revenue of $1.5 billion and will capitalize on global collagen growth by focusing on collagen-based health, wellness, and nutrition products. The transaction is expected to close in 2026, after necessary approvals.
Darling Ingredients Inc. collects and recycles animal processing by-products and used restaurant cooking oil into finished products, including feed and fuel ingredients, animal proteins & meals, edible fats, and collagen.
3. First Solar Inc. (NASDAQ:FSLR)
Market Cap: $17.5 Billion
Number of Hedge Fund Holders: 52
First Solar Inc. (NASDAQ:FSLR) is one of the 10 best sustainability stocks to buy now. The company specializes in cadmium telluride thin-film solar modules, which require less energy, semiconductor material, and water to produce than traditional crystalline silicon (c-Si) panels. The Series 7 product line boasts one of the industry’s lowest environmental footprints, and the company operates its own end-of-life recycling facilities, recovering over 90% of materials for reuse.
RBC Capital’s Christopher Dendrinos raised his price target on First Solar to $200 from $188 on June 30, maintaining an Outperform rating. In his note to investors, Dendrinos pointed to policy developments under the current draft of the One Big Beautiful Bill (OBBB), which he believes could boost short- and medium-term demand for U.S.-based solar manufacturers like First Solar.
He highlighted that solar developers are likely to fast-track projects to lock in benefits before the Investment Tax Credit (ITC) phases out. They might also be trying to steer clear of possible penalties related to foreign content rules under the new excise tax proposal.
Dendrinos says this could lead to a boost in short-term demand, helping strengthen First Solar’s order book. He believes the policy tailwinds outlined in the bill align well with the company’s U.S.-focused manufacturing base and reinforce its positioning for continued growth.
First Solar Inc. (NASDAQ:FSLR) is a leading American solar technology company that manufactures eco-efficient solar modules.
2. Tesla Inc. (NASDAQ:TSLA)
Market Cap: $942.3 Billion
Number of Hedge Fund Holders: 104
Tesla Inc. (NASDAQ:TSLA) is one of the 10 best sustainability stocks to buy now. Tesla’s impact spans electric vehicles, battery storage, and distributed solar power. Its EVs, from the Model 3 to the Cybertruck, support broad EV adoption across price points and use cases. To put things in perspective, Tesla helped its customers avoid 32 million metric tons of carbon dioxide equivalent emissions in 2024, which is a 60% improvement over 2023.
Beyond the automotive sector, Tesla’s energy products (such as Tesla Virtual Power Plants) enable households and enterprises to generate, store, and manage their own renewable energy, thereby enhancing grid flexibility.
The company’s global Gigafactory network incorporates sustainable manufacturing practices, including closed-loop battery recycling and on-site renewables.
On the operational front, Tesla’s Q2 2025 delivery numbers offered some relief to investors, even though overall sales declined. The company reported 384,122 vehicles delivered during the quarter, a 13% drop year-over-year, but this was better than the 20% decline some investors had feared.
According to a July 2 Bloomberg report, analysts remain divided after the delivery report. While some, like Gene Munster of Deepwater Asset Management, believe sales may have bottomed out, others, including Baird’s Ben Kallo, see continued risks from brand damage and the lack of a new, affordable vehicle offering. Concerns also linger around inventory build-up and growing competition, particularly from Chinese players like BYD and Xiaomi.
Tesla Inc. (NASDAQ:TSLA) is an EV manufacturer and clean energy company known for its innovative approach to sustainable transportation and energy solutions.
1. Nvidia Corp. (NASDAQ:NVDA)
Market Cap: $3.74 Trillion
Number of Hedge Fund Holders: 212
Nvidia Corp. (NASDAQ:NVDA) is one of the 10 best sustainability stocks to buy now. The company is an ‘enabler’ in the sustainability ecosystem as it enables sustainability through its core technology, supplying the computing power behind AI applications in climate science, energy efficiency, and low-emission transport systems (EVs, autonomous vehicles).
Nvidia has set its own targets for achieving carbon neutrality across its global operations. As part of this effort, the company recently reported that all its electricity use worldwide is either powered by or offset with renewable energy. Beyond its internal sustainability goals, Nvidia’s hardware and platforms play a crucial role in advancing analytics and automation, key tools for building more efficient, eco-friendly systems at scale. With every new product, the company is making strides in efficiency; for example, its Blackwell platform is 25 times more efficient for LLM inference compared to the Hopper generation.
Analyst opinions have been broadly positive on the company. For example, on July 1, Cantor Fitzgerald analyst C. J. Muse reaffirmed a Buy rating on Nvidia shares with an unchanged price target of $200. At around $165, the company should touch the mammoth, $4.0 trillion market capitalization. Interestingly, as the consensus 12-month median price target stands at around $175, with a high of $250, the market appears to be expecting a much higher value.
In a June 27 interview, Bloomberg Intelligence analyst Mandeep Singh was asked what should justify such a huge valuation. He said that most of the data points he tracks suggest that there is still good upside to current earnings estimates. Moreover, inferencing demand is expected to continue rising and is likely to support growth.
While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than NVDA and that has 100x upside potential, check out our report about this cheapest AI stock.
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