In this article, we will examine the 12 Best ESG stocks to Buy Now According to Hedge Funds.
Does ESG deliver real value, or is it just a marketing ploy? That question has haunted Environmental, Social, and Governance (ESG) investing since the acronym first entered Wall Street’s vocabulary. Once promoted as the future of capital markets, ESG investing has been praised as a driver of corporate change and criticized as a public relations exercise.
Despite the political backlash and constant debate, the concept of aligning capital with broader values has endured and continues to shape how investors think about risk and return.
Capital flows tell their own story. Reviewing Morningstar’s Q2 2025 Global Sustainable Fund Flow Report, it appears that investor appetite for sustainability remains intact despite political headwinds and regulatory scrutiny.
According to the report, global sustainable funds posted $4.9 billion in net inflows, reversing the heavy outflows of the previous quarter. Total assets in Global sustainable funds reached $3.5 trillion, with rising equity markets providing additional support.
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Regionally, Europe led the recovery in Q2 with $8.6 billion of net new money, while the U.S. recorded its 11th consecutive quarter of outflows at $5.7 billion, reflecting a more cautious investor base.
As per the Morningstar report, a key reason why U.S. investors are showing less interest in sustainable funds is the growing political pushback against ESG. The Trump administration has amplified this trend, rolling out measures since January that scale back or challenge climate and ESG-related policies.
Even so, the stock market remains on the upswing, offering investors a broad set of opportunities. Reinforcing this view, on September 11, Rich Saperstein, CIO and founding principal of Treasury Partners, told CNBC that the current backdrop continues to support the equity market. He pointed to moderating inflation, accommodative Fed policy, solid GDP growth, and healthy earnings as reasons why stocks remain appealing at record levels.
He believes deregulation, tax policy, and permitting reforms further strengthen the investment climate, which justifies keeping clients fully invested. Saperstein acknowledged that valuations are somewhat stretched, with market gains slightly outpacing earnings growth over the past five years, but said equities remain the best asset class to own.
With ESG investing now more established, the focus has moved away from broad themes toward companies that can show measurable benefits from incorporating ESG into their business models. The 12 stocks highlighted below fit that description, offering exposure to sustainability without losing focus on financial performance.
Given this backdrop, let’s turn to our selection of the 12 best ESG stocks to buy now, according to hedge funds.
Photo by Christian Lue on Unsplash
Our Methodology
To identify the best ESG stocks according to hedge funds, we first reviewed holdings of prominent ESG-focused ETFs managed by BlackRock and Vanguard. From these funds, we shortlisted 20 stocks with the highest weightings. We then used Q2 2025 data from Insider Monkey’s database to determine hedge fund ownership and narrowed the list to the 12 most widely held names. Finally, the stocks are ranked in ascending order based on the number of hedge funds holding a position.
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 data is as of market close on September 11, 2025.
12 Best ESG Stocks to Buy Now According to Hedge Funds
12. Tesla Inc. (NASDAQ:TSLA)
Market Cap: $1.2 Trillion
Number of Hedge Fund Holders: 115
Tesla Inc. (NASDAQ:TSLA) is one of the best ESG stocks to buy now according to hedge funds. On September 9, Adam Jonas, an analyst at Morgan Stanley, reaffirmed a Buy rating on Tesla with an unchanged price target of $410. The analyst believes that Tesla Inc. (NASDAQ:TSLA) has pioneered innovations in the electric vehicle industry, spurring the global shift to sustainable energy. These innovations have enabled the company to maintain its leadership in this transition and the industry.
Jonas emphasized Tesla Inc.’s (NASDAQ:TSLA) progress in battery technology and autonomous driving, noting these capabilities as competitive advantages that could support long-term growth. He also highlighted the company’s global expansion and its efficiency in scaling production, which together strengthen the case for greater market share.
Tesla Inc.’s (NASDAQ:TSLA) strong brand identity and loyal customer base add further weight to the positive outlook. In Jonas’s view, the combination of innovation, operational execution, and favorable market conditions for EV adoption continues to justify a bullish stance on the stock.
Tesla Inc. (NASDAQ:TSLA) is an EV manufacturer and clean energy company known for its innovative solutions to sustainable transportation and energy solutions.
11. Eli Lilly and Co. (NYSE:LLY)
Market Cap: $680 Billion
Number of Hedge Fund Holders: 119
Eli Lilly and Co. (NYSE:LLY) is one of the best ESG stocks to buy now according to hedge funds. On September 9, Bank of America’s Tim Anderson reiterated a Buy rating on Eli Lilly & Co. (NYSE:LLY) and a $900 price target. The analyst highlighted the company’s strong market position in the obesity drug market as a key driver of future growth.
Anderson made a case for Eli Lilly and Co.’s (NYSE:LLY) portfolio after the recent update from the Institute for Clinical and Economic Review. The institute now believes that GLP-1 therapies, including those developed by Eli Lilly, are cost-effective for treating obesity. This marks a notable change from earlier views and strengthens the case that these therapies deliver meaningful clinical and economic benefits.
By broadening its assessment to include obesity-related outcomes and quality-of-life improvements, the ICER report further supports the value proposition of Eli Lilly and Co.’s (NYSE:LLY) drugs.
Although reimbursement challenges persist, the ICER findings may help expand coverage and payer acceptance over time. Anderson added that Eli Lilly’s strong pipeline, above-peer revenue growth forecasts, and leadership in obesity treatments underpin his positive outlook and continue to justify the Buy rating.
Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company focused on the development, manufacture, and marketing of medicines for diabetes, oncology, immunology, and neuroscience.
