12 Best ESG Stocks To Buy Now

Published November 29, 2022 at 11:33 am EST Updated August 31, 2026 at 11:58 am EDT

In this article, we will take a look at 12 best ESG stocks to buy now.

ESG investing is one of the biggest trends in all of Wall Street.

ESG stands for environmental, social and governance and ESG investing is also known as socially responsible investing.

Today, the world faces a number of issues that are rapidly eroding the sustainability of our way of life. The world is getting warmer due to greenhouse emissions. We are rapidly exhausting our supply of fresh water in many areas. Our social and governance systems can also be improved.

With ESG investing, investors invest in companies that do well in terms of trying to make their operations more environmentally friendly, trying to help their communities, and trying to have good corporate governance.

As a result of more awareness over the issues facing our world, many investors and institutions have dedicated more resources to ESG investing.

According to PwC, asset managements are expected to increase their ESG-related AUM to $33.9 trillion globally by 2026, up from $18.4 trillion in 2021. If successful, ESG assets could constitute over one fifth of the total global assets under management by 2026.

In terms of PwC’s base case growth scenario, ESG AUM in the United States could rise to $10.5 trillion in 2026 from $4.5 trillion in 2021. In Europe, ESG AUM could increase to $19.6 trillion in 2026. Finally, ESG AUM in the Asia Pacific region could rise to $3.3 trillion.

PwC Global Asset & Wealth Management Leader, PwC Ireland Olwyn Alexander said, “ESG has become perhaps the most powerful driver of growth in asset and wealth management. The surge in demand for ESG investments highlighted in our survey exceeds almost all previous expectations.”

2022 has been a challenging year given the Federal Reserve has increased interest rates six times this year alone. As a result of the interest rate increases, many economists think there could be a recession next year. According to St. Louis Fed President James Bullard, the U.S. central bank will likely need interest rates above 5% for most of next year and into 2024 to win the battle against inflation. Currently the upper bound for the Federal funds rate is 4%.

As a result, it could be a good idea for long term investors to own a well diversified portfolio of stocks across many different sectors.

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Methodology

For the best 12 Best ESG Stocks To Buy Now list, we took the top 12 unique stocks by weight from the Vanguard ESG U.S. Stock ETF (ESGV) and we ranked them based on percent of funds as of 11/28/2022. We excluded Alphabet Inc Class A (GOOGL) shares because Alphabet is already included once.

We also included the number of hedge funds in our database that also owned shares of the same stock at the end of Q3 2022.

If you are interested, also check out the top ESG stocks in the second quarter of 2022.

12 Best ESG Stocks To Buy Now

12. Eli Lilly and Company (NYSE:LLY)

% of Funds as of 11/28/2022: 0.97%

Number of Hedge Fund Holders: 75

Eli Lilly and Company (NYSE:LLY) is one of the leaders when it comes to ESG initiatives given it helps develop innovative medicines that make life better for people around the world. According to the company over 47 million people use Eli Lilly and Company and the company is working hard to develop new medicines that could potentially reach even more people in the future. As of 11/28, Eli Lilly and Company accounted for 0.97% of the Vanguard ESG U.S. Stock ETF (ESGV).

Alongside Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL), Eli Lilly and Company is an ESG stock that many hedge funds in our database owned at the end of Q3 2022.

11. The Home Depot, Inc. (NYSE:HD)

% of Funds as of 11/28/2022: 1.06%

Number of Hedge Fund Holders: 89

Home improvement giant The Home Depot, Inc. (NYSE:HD)’s ESG initiatives center around focusing on its people, operating sustainably and strengthening its communities. In terms of its people, The Home Depot, Inc.’s workforce is more ethnically diverse than the U.S. working population. In terms of the environment, The Home Depot, Inc. has reduced electricity consumption in its U.S. stores by around 11% year over year in 2021 and in terms of community, around 14,000 of the company’s employees volunteered across 150 cities nationwide in 2021. Out of the 920 hedge funds in our database at the end of Q3, 89 owned shares of The Home Depot, Inc..

10. The Procter & Gamble Company (NYSE:PG)

% of Funds as of 11/28/2022: 1.10%

Number of Hedge Fund Holders: 69

Consumer staple giant The Procter & Gamble Company has a goal to purchase 100% renewable electricity in its global operations by 2030. Given the company’s progress, it is already at 97%. Longer term, The Procter & Gamble Company has an ambition to reach net zero green house gas emissions across its supply chain and operations by 2040. The Procter & Gamble Company ranks #10 on our list of 12 Best ESG Stocks To Buy Now given its 1.1% weight in the Vanguard ESG U.S. Stock ETF (ESGV).

9. Visa Inc. (NYSE:V)

% of Funds as of 11/28/2022: 1.11%

Number of Hedge Fund Holders: 165

As a leading financial payments company, Visa Inc. (NYSE:V) has a commitment to digitally enable 50 million small and micro businesses by the end of 2023 that could potentially help them grow and create jobs for their communities. Visa Inc. is also committed to achieving net zero emissions by 2040. 165 hedge funds in our database owned shares of Visa Inc. at the end of the third quarter, making it one of the most widely held stocks among elite institutions.

8. NVIDIA Corporation (NASDAQ:NVDA)

% of Funds as of 11/28/2022: 1.23%

Number of Hedge Fund Holders: 89

In terms of its ESG efforts, semiconductor maker NVIDIA Corporation (NASDAQ:NVDA), which also accounts for 1.23% of the Vanguard ESG U.S. Stock ETF (ESGV), plans to purchase or generate enough renewable energy to match 100% of its global electricity usage. NVIDIA Corporation and its employees also contributed over $22.3 million to communities in FY22. NVIDIA Corporation is also working on making its semiconductor chips more energy efficient.

7. JPMorgan Chase & Co. (NYSE:JPM)

% of Funds as of 11/28/2022: 1.25%

Number of Hedge Fund Holders: 110

As one of the biggest banks in the United States, JPMorgan Chase & Co. realizes its business plays an important role in helping address challenging environmental and social issues. As a result, JPMorgan Chase & Co. has a sustainable development target “to finance and facilitate more than $2.5 trillion over 10 years to help address climate change and contribute to sustainable development”. JPMorgan Chase & Co. accounted for 1.25% of the Vanguard ESG U.S. Stock ETF (ESGV) as of November 28.

6. Tesla, Inc. (NASDAQ:TSLA)

% of Funds as of 11/28/2022: 1.46%

Number of Hedge Fund Holders: 88

Tesla, Inc. (NASDAQ:TSLA) is one of the leading ESG companies in the world given that it makes electric vehicles which can help reduce carbon emissions in the future. Tesla, Inc. also sells solar panels that can reduce the need for coal consumption. In terms of the 12 Best ESG Stocks To Buy Now list, Tesla, Inc. ranks #6 given it accounts for 1.46% of the Vanguard ESG U.S. Stock ETF (ESGV).

Like Tesla, Inc., Amazon.com, Inc., Microsoft Corporation, and Apple Inc. rank among the best ESG stocks that many hedge funds in our database owned at the end of Q3 2022.

5. UnitedHealth Group Inc. (NYSE:UNH)

% of Funds as of 11/28/2022: 1.58%

Number of Hedge Fund Holders: 110

Healthcare insurance giant UnitedHealth Group Inc. (NYSE:UNH) has a dedicated approach to sustainability and inclusion. In terms of environmental health, UnitedHealth Group Inc. hopes to achieve operational net zero emissions by 2035. The company is also advancing health equity by committing $100 million to create a new health workforce diversity program. As of 11/28, UnitedHealth Group Inc. accounted for 1.58% of the Vanguard ESG U.S. Stock ETF (ESGV).

4. Alphabet Inc. (NASDAQ:GOOG)

% of Funds as of 11/28/2022: 1.8%

Number of Hedge Fund Holders: 156

As one of the leading tech companies in the world, Alphabet Inc. (NASDAQ:GOOG) has dedicated substantial resources to ESG. In 2020, for example, Alphabet Inc. became the first major company to be carbon neutral for its entire operating history by compensating for its legacy carbon footprint. In recent years, Alphabet Inc. has helped lower the cost to access the internet by making cheaper operating systems for smartphones and computers to benefit communities in developing countries. 156 hedge funds we track owned shares of Alphabet Inc. at the end of Q3.

3. Amazon.com, Inc. (NASDAQ:AMZN)

% of Funds as of 11/28/2022: 2.61%

Number of Hedge Fund Holders: 269

E-commerce and cloud computing leader Amazon.com, Inc. has an ambitious plan to help communities around the world by helping build satellite internet with Project Kuiper. The company is also on the path to powering its operations with 100% renewable energy by 2025. Longer term, Amazon.com, Inc. has a commitment to be net zero carbon by 2040. Amazon.com, Inc. ranks #3 on our list of 12 Best ESG Stocks To Buy Now given its weight of 2.61% in the Vanguard ESG U.S. Stock ETF (ESGV).

2. Microsoft Corporation (NASDAQ:MSFT)

% of Funds as of 11/28/2022: 5.82%

Number of Hedge Fund Holders: 269

Leading software maker Microsoft Corporation is committed to sustainability with a goal to be carbon negative by 2030. The company also hopes to replenish more water than it uses and to be zero waste across its direct waste footprint by the same year. At the end of Q3, Microsoft Corporation was among the most popular stocks among elite institutions with 269 hedge funds in our database owning shares.

Baron Funds commented on Microsoft Corporation in a Q3 2022 investor letter,

Shares of Microsoft Corporation pulled back with the overall software industry on the back of macroeconomic issues, including inflation concerns and rising interest rates. The company reported another strong quarter, highlighted by total revenues growing 16% on a constant currency basis and Microsoft Cloud revenues, now 48% of total sales, growing 33%, with Azure (Microsoft’s infrastructure cloud) growing 46%. These results were driven by strong demand for large commercial cloud contracts, as more businesses are standardizing on Microsoft’s platform and the company is signing larger and longer deals. Initial fiscal year 2023 guidance calls for healthy double-digit revenue and operating income growth. Both foreign exchange and personal computer headwinds were contemplated in the guidance and have continued to worsen, but we have conviction in the company’s strong competitive positioning, durable growth drivers, and margin expansion opportunity over the mid- to long term.

1. Apple Inc. (NASDAQ:AAPL)

% of Funds as of 11/28/2022: 7.11%

Number of Hedge Fund Holders: 140

Smartphone maker Apple Inc. has been carbon neutral for its corporate operations since 2020 and the company has an ambitious goal to make carbon neutral products by 2030. With innovation, Apple Inc. has reduced its average product energy use by 70% since 2008 and with further advances, it could be possible to lower the average product energy use even more. Given its weight of 7.11% in the Vanguard ESG U.S. Stock ETF (ESGV), Apple Inc. ranks #1 on our list of 12 Best ESG Stocks To Buy Now.

Wedgewood Partners commented on Apple Inc. in a Q3 2022 investor letter,

Apple Inc. grew revenues +5% (foreign exchange adjusted and excluding Russia) driven by record iPhone revenues that were up about +3% on an exceptional year ago comparison of +50%. Apple’s installed base is over 1.8 billion devices which helps drive a software and services business that has generated almost $80 billion of revenue over the past 4 quarters. As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially ICs) as well as software, continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.

You can also take a look at Warren Buffett’s Top 10 Dividend Stock Picks and 15 Largest Hotel Chains in the US in 2022.

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