Are you a novice stock trader looking for a new investment strategy that can benefit both your wallet and your conscience?
Look no further than ethical investing, one of the hottest trends in the financial markets. Not only does ethical investing offer the potential for financial gain, but it also provides a sense of fulfillment by aligning your investments with your values.
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Our research has centred on companies with strong ESG criteria and aims to cut through the ‘greenwashing’ that some firms are using to project an ethical stance. It covers a variety of sectors and geographical regions so that investors can benefit from the risk-management benefits of having a diversified portfolio and stay in their positions for a longer period of time.
By investing in the below firms, it’s possible to support the shift towards more equitable business practices and make your money work harder for you than it would in a bank savings account.
While it is impossible to compile a list of companies that will suit every investor, when it comes to ethical trading, we have put together a list of some of the best ethical and socially responsible companies you may want to consider investing in.
Remember, you can also trade in socially responsible ETFs, and another tip for socially responsible investors is to look at the FTSE4Good Index Series. This is a series of benchmark and tradable indexes, measuring companies’ performance with strong ESG practices across various geographical areas.
If you are still interested in trading individual stocks and focusing on ethical companies with strong ESG criteria, you are in the right place. Here at AskTraders, we will look at the top five ethical and socially responsible companies to invest in.
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Gilead Sciences Inc (GILD)
This company is a medical research and development organisation with a difference. It has been operating for more than three decades with the aim of advancing global health and providing medication access to those who might not otherwise have it.
The firm now has 11 commercially available HIV medications and is continuing to develop its pipeline as part of its global campaign against the disease. Of greater significance from an ethical point of view is its long-established aim to make its HIV treatments available to patients in low and middle income countries.
In 2021, Gilead HIV medicines were made available to an estimated 16.5 million people living in resource-limited countries around the world. 99% of them receive generic formats of the medicine as the company forsakes profits to tackle the disease.
The impressive Gilead CSR policy illustrates how the ethical approach runs through the entire company, not just in the area of HIV research and treatment. It states the firm’s intention to “strive for positive social and environmental change within our company and our supply chain”. However, the financial elements of Gilead’s business model also point towards the firm being a good investment, most probably for a buy-and-hold investor.
The share price has surged at times and reached as high as $121.91 in June 2015. The subsequent slide in stock price has brought it down to levels where it offers an attractive 4.4% dividend yield and a P/E ratio of 13.4, which compares well to that of its peer group. AstraZeneca, for example, has a P/E ratio of 49.4.
It created the world’s two top-selling HIV medications, commanded over 50% of the worldwide treatment market and over 75% of the US market.
Gilead Sciences’ stock is currently showing a dividend yield of 3.99%, with a 52-week high of 72.90 and a 52-week low of 60.32. Gilead stock is traded on the NASDAQ under the ticker GILD, and therefore you can buy stocks via brokers that have access to the NASDAQ and allow trading in individual stocks, such as IG or Hargreaves Lansdown.
Gilead does well on a number of ESG criteria. It offers ‘Patient Assistance Programs’, which provided free medication to over 40,000 individuals in 2017, and also provides grant funding aimed at improving lives through science.
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Salesforce Inc (CRM)
Headquartered in San Francisco, Salesforce is a customer relationship management solution with the aim of bringing companies and customers together through a range of technology and cloud-based applications. One area where it tries to gain a competitive edge is its ESG policies, with the company stating: “Our commitment to equality and sustainability helps us be a better company – and foster more inclusive, equitable, and resilient communities.”
Salesforce stock is currently showing a 52-week high of 167.56 and a 52-week low of 113.60, with a price-to-earnings ratio of 129.85. Salesforce stock is traded on the New York Stock Exchange under the ticker CRM, and you can buy its stock via brokers such as eToro or Hargreaves Lansdown.
Salesforce does well on CSR criteria. It has net-zero residual emissions and achieved sourcing 100% renewable energy for its operations. As a flagbearer for the ecopreneur movement, it aims to sequester 200 gigatons of carbon through conserving, restoring and growing 1 trillion trees, while also running projects to protect the world’s oceans.
The Salesforce approach to net zero is the real deal rather than token gestures. The firm ensures that all aspects of its operations are factored in. The program extends to company travel, investments in ecopreneur projects, and innovative outreach projects with communities.
The Salesforce stock price has retreated from the $311 price highs of November 2021. Like other growth stocks, its price slumped due to the risk of inflation and interest rate rises cutting into the spending patterns of its clients.
As bad as the economic outlook might be, Salesforce is a firm with a long-term plan and the capability to ride out temporary blips. Its CFO, Amy Weaver, has predicted that revenues will hit $50bn by 2026, which makes moments when the stock is trading below $150 a chance to step in and buy CRM.
It has maintained net-zero greenhouse gas emissions since 2018 and is over halfway towards reaching a target of 100% renewable energy by 2022. The company also provides grants to various non-profits and educational programs.
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First Solar Inc (FSLR)
First Solar not only has impressive CSR and ESG credentials but is also playing a leading role in converting the world to using sustainable energy. First Solar describes itself as leading the world’s sustainable energy future. The Arizona-based alternative energy company is dedicated to investing in research and development, as well as the financing and construction of grid-connected PV power plants (also known as solar parks).
Its stock has shown strong growth this year, with a 52-week high of 69.24 and a 52-week low of 36.64. Traded on the NASDAQ under the ticker FSLR, First Solar stock can be bought via brokers such as eToro and Fidelity.
First Solar is dedicated to social responsibility and protecting the environment. Not only does its core business activity involve providing clean, renewable energy from solar power, but it also states that it’s committed to sustainable PV manufacturing, responsible construction practices, and minimising the environmental impacts of all its products across their lifecycle.
First Solar has a track record of not only meeting but also beating benchmarks, whether they relate to recycling, supply chain transparency, water footprints, or the health and safety of employees and community stakeholders.
Renewables currently rely heavily on subsidy and tax support from governments, and while those taps will at some point be turned off, 2022 has been a year when US government support for green energy has scaled up, rather than retreated.
This has helped FSLR stock to break though price resistance levels and post 10-year highs. Momentum is pointing to the upside, which makes First Solar one of the best socially responsible stocks to buy now.
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Kimberly-Clark Corp (KMB)
This may not be a company you immediately associate with being socially responsible. Kimberly-Clark started life as a paper company more than 150 years ago. Today, it is known for producing disposable products used by one quarter of the world’s population on a daily basis. Its brands are sold across more than 175 countries, and it reported a healthy $18.5bn in sales for 2018. For a long time now, however, it has been striving to meet a broad range of ESG criteria.
Kimberly-Clark stock is currently showing a dividend yield of 3.08%, with a 52-week high of 143.50 and a 52-week low of 103.01. Traded on the New York Stock Exchange under the ticker KMB, Kimberly-Clark stocks can be traded via most brokers, including Hargreaves Lansdown and eToro.
Kimberly-Clark company does well on a number of ESG criteria, reporting that 95% of its manufacturing waste is diverted from landfills, and it develops programs to increase energy efficiency and seek lower-carbon solutions. It runs global social programs aimed at empowering women and girls, helping children thrive, and providing access to sanitation for people in need around the globe.
The sector that Kimberly-Clark operates in might not be an eco-trailblazer, but the firm is leading the initiative to make operations more ethical. The commitment resulted in the Ethisphere Institute confirming in 2022 that it is one of the world’s most ethical companies.
Not all the stocks in an ethical portfolio need to be involved in the introduction of ground-breaking new technology. Investing in Kimberly-Clark is much more a case of buying into a firm doing the best it can in a tough environment.
The relatively subdued share price also opens the door to financial returns. The current dividend yield is an attractive 4.09%, which puts KMB firmly into the group of high-yield stocks. It is also matched by a P/E ratio of only 18.3, which is lower than the 19.9 average for the S&P 500 index, pointing to KMB being an undervalued blue-chip stock with solid credentials and a commitment to more ethical business practices.
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Hewlett Packard Enterprise (HPE)
This is another company that may well surprise you when you look at its CSR reports. Hewlett Packard Enterprise is doing a great deal to meet ESG criteria and is doing well as a publicly traded company. (Note that with the ticker symbol HPE, Hewlett Packard Enterprise is not to be confused with HPQ, a separate publicly traded company that split off from Hewlett Packard Enterprise in 2015.)
Traded on the New York Stock Exchange, Hewlett Packard Enterprise (HPE) has a current dividend yield of 2.95%, a 52-week high of 16.97 and a 52-week low of 12.09. You can trade in HPE stocks via most online brokers that offer individual stocks, including eToro and IG.
HP is doing surprisingly well on a range of ESG criteria. It has achieved a place on the CDP Climate Change A List as a global leader on corporate climate action. The company was also named as one of the World’s Most Ethical Companies by the Ethisphere Institute in 2019. It has also been included in the 2019 Corporate Equality Index, the 2019 Disability Equality Index and the 2019 Diversity Best Practices Inclusion Index.
An impressive list of industry awards dates back more than a decade, proving that its commitment to ethical practices is a long-term commitment rather than cosmetic. Also, there are no signs that the company is easing up on its ESG programs.
In 2022, HPE was recognised as number five on the Great Place to Work – Best Workplaces in Technology list. It also topped the Best Place to Work for Disability Inclusion list for 2022 and has an AAA rating in the 2022 MSCI ESG rankings.
The decision by Warren Buffett to buy $4bn of HPE stock in early 2022 resulted in his investment vehicle, Berkshire Hathaway, becoming the largest shareholder in the firm. Buffett’s rubberstamp of Hewlett Packard Enterprise is an encouraging sign for investors thanks to his impressive track record. It isn’t, however, too surprising considering his preference to invest in companies that have solid balance sheets, quality earnings and strong pricing power.
HPE stock surged in price after Buffett’s investment was announced, but has since fallen back to levels where investors can buy an ethically minded firm offering a dividend yield of 3.8% and a P/E ratio of only 7.9.
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Investing in ethical stocks is no longer a case of sacrificing returns in an effort to feel good. Thanks to fundamental changes in behaviour, it’s possible to buy into firms that tick both boxes.
As our list proves, the revolution taking place is throwing up some surprise candidates for investment. Some firms just got with the program earlier than others and are now benefitting from prioritising ESG and CSR issues.
As any investment in ethical stocks might potentially be long term in nature, making sure that your broker is credible is also important. This list of trusted brokers offers a short-list of firms that have established track records of being able to support buy-and-hold investors. They offer pricing schedules to ensure that your returns are optimised, and research and trade management tools to make the process as convenient as possible.
Best Brokers for Trading Ethical Stocks
eToro: 68% of retail CFD accounts lose moneyTake a look
Tickmill: FCA RegulatedTake a look
IG: Over 16k stocks to tradeTake a look
From 0% commission to low trading fees and top-tier regulation, these brokers are best in class when it comes to buying and selling ethical stocks.
As already mentioned, AskTraders does not offer investment advice, and only you can decide which, if any, of these companies represent an attractive investment for you. Remember, if you’re interested in ethical trading but don’t want to trade individual stocks, you can also check out our favourite socially responsible ETFs.