Environmental, Social and Governance (ESG) investing is one of the most important trends in the market. The strategy, also known as sustainable investing, involves choosing green companies with the purpose of influencing things like global climate change and social inequality.
Investing in ESG appears to be another trend that has been accelerated by the coronavirus pandemic – and is expected to have a lot of steam. According to Bloomberg Intelligence, ESG assets could account for a third of global assets under management (AUM) by 2025.
One of the early pioneers in the field of ESG was MSCI Index Investment and Analytical Instruments Specialist. The ESG rating system is widely used as a measure of a company’s ability to manage ESG risk over the long term. Similar to Moody’s or S&P’s bond rating, it applies letter grades that identify a company (or fund) as a leader or a laggard when it comes to ESG issues.
With impact investing expected to gain momentum in 2022, many investors are looking to build their portfolios with ESG leaders who also have a good upside. Here are three green and corporate governance stocks that could make a portfolio greener in more ways than one.
What is a good solar energy stock?
Solar Technology Center First Solar (NASDAQ: FSLR) is an industry leader based on MSCI’s ESG analysis. The positive rating stems from the company’s top quartile performance in the environment category. This is linked to its “strong commitment to clean technology” and relatively low exposure to water scarcity risks. First Solar is also above average in terms of corporate governance having a predominantly independent board of directors, strong management oversight, whistleblower protection, and audit compliance processes.
A major boost in First Solar’s ESG score came in April 2020 when it sold nearly all of its 10 GW solar farm assets to focus on solar modules. The latest version of the models is said to be thinner and more efficient than competing offerings. This is better for the environment and First Solar is in a more competitive position to take advantage of the increased demand for clean energy.
Shares of First Solar are down 27% since Nov.St Due to the loss of third-quarter earnings and ongoing industry-wide challenges such as the global shortage of semiconductors. However, with underlying demand strong and at 21 times earnings (versus 34 times the industry average), the long-term outlook is bright for this ESG leader.
Is Carrier Global an ESG-friendly stock?
With indoor air quality, all the rage since the start of the pandemic, Carrier Global (NYSE: CARR) It was one of the most popular sustainable investing games. The HVAC and Refrigeration Leader is also considered a leader as assessed by MSCI’s ESG because it outperforms its peers on environmental and social issues.
In the environmental category, Carrier Global’s investments to develop clean technology that make homes and workplaces healthier puts it ahead. It aims to lead the green building movement by allocating more resources to research into energy efficiency and environmentally friendly building technologies. Carrier helped found the US Green Building Council, a nonprofit organization committed to building design, construction, and operating sustainability.
Carrier Global also rates positive when it comes to sales side research companies. On Monday, the Barclays analyst reiterated the stock’s buy rating and raised its price target to $65. After a steady rise from March 2021 to August 2021, Carrier has been in a sideways pattern. Looking at the peer group’s 21x P/E ratio below, recent dividend hike, and stock buyback program, look for stocks (sustainably) to build consolidation in 2022.
Is Weyerhaeuser an eco-friendly stock?
Weyerhaeuser (NYSE: WY) It is one of the largest real estate investment trusts (REIT) stocks in MSCI’s ESG world. The paper and forestry specialist aptly prefers tree huggers because it does well in raw material sources, toxic emissions and water stress.
MSCI recently upgraded the Weyerhaeuser ESG’s classification due to improved water practices. The company plants up to 150 million trees and harvests just 2% of its forests each year. It has many environmentally friendly practices in place such as leaving tree stocks along the waterways to protect aquatic life.
The country’s largest non-state landowner also outperforms its industry in social and governance matters. The Board of Directors has an independent majority, the roles of the Chairman and CEO are separate, both of which are considered less risky corporate structures.
Last year Weyerhaeuser was a huge financial success thanks to the high prices of sawn timber. After falling sharply during the summer, timber futures are back on the rise with homebuilders’ demand strong and global supplies still constrained. This led to Wall Street revising its earnings estimates upward in anticipation of another strong year. Weyerhaeuser’s ESG properties, dividend recovery and rally from volatile sawn timber prices could produce some of the important green environment for investors this year.
Should you invest $1,000 in Weyerhaeuser now?
Before you think of Weyerhaeuser, you’ll want to hear this.
MarketBeat tracks the top-rated and best performing research analysts on Wall Street and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market hunts… Weyerhaeuser wasn’t on the list.
While Weyerhaeuser currently has a “buy” rating among analysts, top-rated analysts believe these five stocks are a better buy.
View stock 5 here
The companies mentioned in this article
Compare these stocks Add this stock to my Wishlist