In this article, we will take a look at the 10 Best Sustainability Stocks to Invest In.
Sustainability investing, also called ESG investing, is an investment method that seeks to control risks associated with social issues, corporate governance, and environmental aspects. Initially called the market’s future, ESG investing has been dubbed a catalyst for corporate change and branded as little more than a publicity stunt.
Even so, despite the political pushback and continual debate, the concept of connecting capital with principles has persevered and continues to affect how investors perceive risk and return, as seen in Morningstar’s Q2 2025 Global Sustainable Fund Flow Report. The report states that net inflows of $4.9 billion were seen in the second quarter of 2025, a significant reversal compared to the first quarter’s record-high restated redemptions of $11.8 billion, indicating a comeback in the global sustainable fund market. European investors powered the comeback, injecting $8.6 billion of net new capital into ESG funds in the past three months after withdrawing $7.3 billion in the previous quarter.
Moreover, a Deloitte report revealed that four out of five businesses increased their investments in sustainability over the previous year. Executives say they have already seen significant, observable benefits from their sustainability initiatives, such as cost savings and revenue growth.
Larger companies were the most likely to report considerable increases, with 22% of those with over $10 billion in revenue boosting investments by more than 20% from the previous year.
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Our Methodology
For this list, 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. We then refined the list by selecting the top 11 stocks with the highest hedge fund ownership by leveraging data from Insider Monkey’s Q2 2025 hedge fund database.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. West Fraser Timber Co. Ltd. (NYSE:WFG)
Number of Hedge Fund Holders: 13
West Fraser Timber Co. Ltd. (NYSE:WFG) ranks among the best sustainability stocks to invest in. On October 24, RBC Capital reaffirmed its Outperform rating on West Fraser Timber Co. Ltd. (NYSE:WFG) but reduced its price target from $92 to $91.
This follows the company’s October 23 earnings results for the third-quarter of 2025, which showed significant losses amid difficult market conditions. In almost every indicator, West Fraser’s Q3 2025 financial results showed a significant decline from the previous quarter. The company’s adjusted EBITDA margin changed from 6% to -11%, while sales dropped to $1.307 billion from $1.532 billion in the second quarter.
According to the firm, West Fraser’s low-cost strategy, favorable softwood lumber duty rate, geographic diversification, and robust financial sheet, put the company in a position to weather a variety of wood products market conditions for the rest of 2025 and 2026.
Moreover, RBC believes West Fraser Timber Co. Ltd. (NYSE:WFG) is in a strong position to potentially acquire premium assets that could become available if the market continues to experience a downturn.
West Fraser Timber Co. Ltd. (NYSE:WFG) is a diversified wood products company that produces lumber, engineered wood products, pulp, newsprint, wood chips, and other residuals.
9. Piedmont Office Realty Trust, Inc. (NYSE:PDM)
Number of Hedge Fund Holders: 16
Piedmont Office Realty Trust, Inc. (NYSE:PDM) ranks among the best sustainability stocks to invest in. On October 28, Truist Securities reaffirmed its $9 price target and Buy rating for Piedmont Office Realty Trust, Inc. (NYSE:PDM) following the company’s third-quarter earnings report.
Piedmont Office Realty Trust, Inc. (NYSE:PDM) announced third-quarter funds from operations (FFO) of $0.35 per share, which exceeded both Truist’s estimate and the consensus projection of $0.34. The company also adjusted its full-year 2025 guidance to an unaltered midpoint of $1.41 per share, while its projected fourth-quarter guidance midpoint of $0.35 per share remains in line with market expectations.
Piedmont’s core FFO projection for 2025 has been reduced to $1.40–$1.42 per diluted share. Given increased leasing activity and ongoing renovations, the company projects mid-single-digit FFO growth in 2026–2027. Piedmont Office Realty Trust, Inc. (NYSE:PDM) also expects about $75 million in future annual cash rent from executed leases, with a goal of an 89–90% lease rate by the end of the year.
Piedmont Office Realty Trust, Inc. (NYSE:PDM) is a real estate investment trust that owns, manages, develops, redevelops, and operates Class A office properties in major Eastern U.S. office markets.
8. Ormat Technologies, Inc. (NYSE:ORA)
Number of Hedge Fund Holders: 27
Ormat Technologies, Inc. (NYSE:ORA) ranks among the best sustainability stocks to invest in. Oppenheimer reaffirmed its Outperform rating on Ormat Technologies, Inc. (NYSE:ORA) and increased its price target to $125 from $120 on November 5. The increase follows Ormat’s better-than-expected third-quarter 2025 earnings results, which surpassed consensus estimates.
Ormat Technologies, Inc. (NYSE:ORA) outperformed expectations with an EPS of $0.41, compared to the projection of $0.38, for a 6.25% earnings surprise. Revenue was also above expectations, reaching $249.7 million versus $234.3 million.
Oppenheimer believes Ormat Technologies, Inc. (NYSE:ORA) will overcome short-term difficulties in its electricity division, which are largely related to grid limitations, costing the company approximately $20 million in fiscal year 2025. For fiscal year 2026, the firm anticipates mid-single-digit growth in generation, with additional growth in 2027–2028 as developments continue to increase.
According to the firm, Ormat’s enhanced geothermal system (EGS) also provides expansion flexibility, while power purchase deal announcements with large data center clients offer a favorable near-term driver for the company.
Ormat Technologies, Inc. (NYSE:ORA) is a leading geothermal company that develops, produces, and offers sustainable energy solutions.
7. Lucid Group Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: 27
Lucid Group Inc. (NASDAQ:LCID) ranks among the best sustainability stocks to invest in. On November 5, Lucid Group Inc. (NASDAQ:LCID) released its third-quarter 2025 earnings results, which showed a record quarterly revenue and delivery increases. The EV maker revealed record quarterly revenue of $336.6 million, a 68% year-over-year growth over Q3 2024. The rise was fueled by the company’s eighth consecutive quarter of record deliveries, with 4,078 vehicles shipped in Q3, a 47% increase over the same period a year earlier.
With 3,891 vehicles manufactured throughout the quarter, the company’s production figures also showed a notable improvement, representing a 116% increase over the previous year.
Additionally, Lucid Group Inc. (NASDAQ:LCID) emphasized a number of strategic alliances meant to put the company at the center of autonomous driving technologies. Notably, the company delivered the first Lucid Gravity engineering vehicles to Nuro for the deployment of Uber robotaxis in Q3 after closing a $300 million strategic investment from Uber.
Lucid Group Inc. (NASDAQ:LCID) is an electric vehicle manufacturer specializing in luxury electric cars. The company is famous for its high-performance vehicles with advanced battery technology.
6. Enphase Energy Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 39
Enphase Energy Inc. (NASDAQ:ENPH) ranks among the best sustainability stocks to invest in. Enphase Energy Inc. (NASDAQ:ENPH) reported third-quarter results on October 28 that came in higher than analysts predicted, while its fourth-quarter revenue guidance turned out lower than expected.
The company’s third-quarter adjusted earnings per share of $0.90 greatly exceeded the $0.64 analyst expectation. Meanwhile, its revenue hit $410.4 million, the highest figure in two years, and exceeded the average forecast of $365.43 million.
Although Enphase’s quarterly performance was solid, the market reacted negatively when its fourth-quarter revenue projection of $310–350 million fell short of the $385.8 million analysts had anticipated. Management cited weakening demand in Europe, which has historically been a growth engine for solar and battery manufacturers. The guidance also implies that operational expenses would remain high, at $77 million to $81 million.
That said, the company also announced a number of upcoming product launches in the fourth quarter, including the IQ9N-3P Commercial Microinverter, IQ EV Charger 2, and IQ Battery 5P with FlexPhase.
Enphase Energy Inc. (NASDAQ:ENPH) designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry in the US and internationally.
5. Digital Realty Trust, Inc. (NYSE:DLR)
Number of Hedge Fund Holders: 47
Digital Realty Trust, Inc. (NYSE:DLR) ranks among the best sustainability stocks to invest in. Freedom Capital Markets maintained its Buy rating on Digital Realty Trust, Inc. (NYSE:DLR) and increased its price objective from $198 to $205 on October 27 following the company’s third-quarter 2025 results. For the third consecutive quarter, the data center REIT upped its full-year projection after outperforming consensus estimates.
In the reported quarter, Digital Realty Trust’s signed total bookings were expected to generate $201 million in annual GAAP rental revenues at its share, with a $65 million contribution from the 0-1 megawatt category and a $20 million gain from interconnection.
The company upgraded its projection in response to this performance, now projecting between $6.03 billion and $6.08 billion in revenue and between $3.57 and $3.62 in net income per diluted share in 2025.
Digital Realty Trust, Inc. (NYSE:DLR) also recorded a record 19.9% cash re-leasing gap in the more than 1 megawatt segment, underscoring tight dynamics in the company’s key markets. According to Freedom Capital, the company’s near-record backlog of $852 million gives immense insight into 2026 revenue potential.
Digital Realty Trust, Inc. (NYSE:DLR) is a real estate investment trust that invests in carrier-neutral data centers and offers colocation and peering services. It specializes in the ownership, acquisition, development, and administration of technology-related real estate.
4. Nextracker Inc. (NASDAQ:NXT)
Number of Hedge Fund Holders: 50
Nextracker Inc. (NASDAQ:NXT) ranks among the best sustainability stocks to invest in. On November 13, RBC Capital raised its price target for Nextracker Inc. (NASDAQ:NXT) to $96 from $93 while maintaining an Outperform rating on the company’s shares. RBC Capital stated that Nextracker’s software and robotics advances are strengthening its role as a long-term partner in solar power plant management, resulting in new steady revenue prospects.
The firm believes that these extra capabilities are creating “more sticky relationships” with clients and establishing Nextracker Inc. (NASDAQ:NXT) as a platform solutions vendor rather than merely a hardware maker.
The rating comes after RBC’s previous coverage on October 24, where the firm stated that it expects Nextracker’s accelerating growth in non-tracker orders to continue up to the fiscal third quarter of 2026. RBC also emphasized that Nextracker’s joint venture for the Middle East and North Africa (MENA) area might boost sales growth and improve its competitive position in that region.
Nextracker Inc. (NASDAQ:NXT) is a California-based company that provides solar tracker technologies and solutions. The core offerings of the company include NX Horizon, NX Horizon-XTR, NX Horizon Hail Pro, NX Horizon Low Carbon, and TrueCapture.
3. Darling Ingredients Inc. (NYSE:DAR)
Number of Hedge Fund Holders: 50
Darling Ingredients Inc. (NYSE:DAR) ranks among the best sustainability stocks to invest in. UBS reaffirmed its Buy rating on Darling Ingredients Inc. (NYSE:DAR) on October 24 with a $58 price target. According to the firm, Darling’s main ingredients business, apart from the Diamond Green Diesel (DGD) joint venture, should produce about $875–900 million in EBITDA in fiscal year 2025.
The coverage followed Darling’s third-quarter report, which revealed a net income of $19.4 million, falling short of analyst forecasts of $0.25 per share despite reporting higher-than-expected revenue of $1.6 billion compared to the average estimate of $1.51 billion.
UBS pointed out that the U.S. biofuel market has suffered due to uncertainty and delays in receiving a definitive Renewable Volume Obligation (RVO) verdict, though export protein demand is beginning to rebound with somewhat more stable pricing trends.
That said, the firm pointed out that Darling’s poultry protein products have been affected by tariff implications that influence the China and Asia-Pacific markets, posing challenges for that business area.
Darling Ingredients Inc. (NYSE:DAR) is a global company operating in the bio-nutrient solutions and the renewable energy sector. Its operations span across three segments: Feed Ingredients, Food Ingredients, and Fuel Ingredients.
2. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 68
First Solar, Inc. (NASDAQ:FSLR) ranks among the best sustainability stocks to invest in. Despite announcing record quarterly volume and a solid third-quarter performance, First Solar, Inc. (NASDAQ:FSLR) released dismal full-year guidance on October 30. The company announced revenue of $1.59 billion, which narrowly exceeded the average estimate of $1.58 billion. However, owing to one-time underutilization charges, adjusted earnings per share came in at $4.24, slightly less than the expected $4.27.
First Solar’s revenue prediction for the full year 2025 was reduced from $4.90 to $5.70 billion to $4.95 to $5.20 billion, a figure lower than the $5.3 billion analysts had forecast. The company also lowered its earnings expectation to $14.00-$15.00 per share, down from its previous projection of $13.50-$16.50.
That said, the company’s net cash position increased from $0.6 billion at the end of the previous quarter to $1.5 billion at the end of the third quarter, mostly as a result of favorable working capital improvements and increased cash receipts from module sales.
Following the results, KeyBanc analyst Sophie Karp boosted the price target for First Solar, Inc. (NASDAQ:FSLR) to $150 from $100 on October 31 while maintaining an Overweight rating on the stock. The firm said that the company delivered results that were roughly in line with expectations and lowered its FY25 outlook owing to operational problems such as supply chain disruptions.
First Solar, Inc. (NASDAQ:FSLR) is an American solar technology company and a global supplier of sustainably produced eco-efficient solar modules.
1. Tesla Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 115
Tesla Inc. (NASDAQ:TSLA) ranks among the best sustainability stocks to invest in. On October 27, Cantor Fitzgerald maintained its Overweight rating on Tesla Inc. (NASDAQ:TSLA) and increased its price target from $355 to $510. The firm referenced Tesla’s announcement that Cybercab, Semi, and Megapack 3 volume production is scheduled for fiscal year 2026, with Optimus production lines also expected for that year.
Early Optimus V3 prototypes are currently being manufactured at Tesla’s Fremont facility in California. By late 2026, Tesla Inc. (NASDAQ:TSLA) plans to increase Fremont’s output to roughly one million cars per year, ahead of a far larger production push in Texas. The Gigafactory Texas line, which has an annual capacity of 10 million units, is scheduled to begin production in 2027.
Cantor Fitzgerald anticipates a “significant increase” in capital expenditures for the upcoming year and sees these production schedules as significant milestones for the company.
The firm projects capital expenditures of about $9.2 billion for fiscal year 2025 and $12 billion for the year after.
That said, some firms advise caution around such lofty outlooks for the EV giant. On November 11, Truist Securities reiterated its Hold rating on Tesla Inc. (NASDAQ:TSLA) with a price target of $406, while expressing concern about the company’s future growth drivers, noting that the company’s physical AI technologies, including the Optimus robot, remain essentially unproven, with “close to zero revenue” at the moment.
Tesla Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells EVs, and energy generation & storage systems in the US, China, and internationally.
While we acknowledge the potential of TSLA to grow, 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 TSLA and that has 100x upside potential, check out our report about this cheapest AI stock.
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