Be sustainable and profitable at the same time this year
- Here are the most highly rated ESG companies in the capital markets.
- Schnitzer Steel (SCHN): Schnitzer surprisingly ranks atop the ESG list.
- Vestas Wind (VWDRY): Vestas promotes sustainability via its core business.
- Brambles (BXBLY): Brambles invests heavily in sustainable solutions.
- Brookfield Renewable (BEP): BEP’s business is all about green energy.
- Autodesk (ADSK): Autodesk takes a holistic approach to ESG.
- Evoqua Water (AQUA): Newly bought out, Evoqua commands ESG cred.
- Stantec (STN): Stantec was much improved from last year’s rankings.
One of the secondary consequences of Russia’s invasion of Ukraine was the impact of environmental, social, and governance (ESG) initiatives, negatively affecting even the most highly rated ESG companies. Essentially, the war sparked immediate demand for weaponry, resulting in poor outcomes for the environment. However, unprecedented support for Ukraine may also undergird international policymakers’ hopes for a quicker end to the crisis.
If so, the global community can then focus on what matters for all of us: care and sustainability of the Earth. To that end, the most highly rated ESG companies have stepped up to the plate, forwarding various initiatives to promote green practices and behaviors. As well, many organizations foster equality programs, stemming from social justice causes in recent years.
For this list of the most highly rated ESG companies, I’m taking the names directly from Corporate Knights’ Global 100 ranking of the world’s most sustainable businesses. Below are the top seven names, ranked from best to slightly less than best.
Schnitzer Steel (SCHN)
At first glance, Schnitzer Steel (NASDAQ:SCHN) doesn’t sound like a name that belongs on a list of the most highly rated ESG companies. However, not only does it belong but it’s also atop the entire list. Featuring a final grade by Corporate Knights of A+, 100% of Schnitzer Steel’s revenue is sustainably derived.
Moreover, the company’s sustainable investments also rate as 100%. On the social and governance front, 50% of Schnitzer’s board directors identify as non-males. In 2022, the company ranked number 15 on the Global 100 list, representing a significant improvement.
According to Reuters, the steel manufacturing and scrap metal recycling firm “reported improvements in energy, carbon, water and waste productivity in 2021 to lead 2023 Global 100.” Notably, Corporate Knights stated that Schnitzer is the first steel company to top the list.
Just to disprove the idea that going green doesn’t pay, TipRanks revealed that Schnitzer features positive sentiment among hedge funds. That’s yet another reason why it tops other highly-rated ESG companies.
Vestas Wind (VWDRY)
Although Vestas Wind (OTCMKTS:VWDRY) got knocked off the top perch, it doesn’t make it any less of an organization. Indeed, Vestas continues to raise the bar among highly rated ESG companies. For the 2022 Global 100 list, it came in first place. This year, the stats rank almost identically to Schnitzer, featuring 100% sustainable revenue and sustainable investments.
However, the one difference may have come down to the social component of ESG. Currently, 42% of Vestas’ board of directors identify themselves as non-male. While the wind turbine manufacturer is no slouch in the gender equity department, 50% is simply a larger allocation.
Based in Denmark, Vestas may not be the most visible enterprise among American investors. As well, it features a disadvantage of trading in the over-the-counter market. Still, VWDRY gained over 10% in the trailing year, reflecting solid viability. Certainly, if you care about sustainability, it’s one of the highly-rated ESG companies to consider.
Based in Sydney, Australia, Brambles (OTCMKTS:BXBLY) specializes in the pooling of unit-load equipment, pallets, crates, and containers. Significantly, Brambles incorporates a circular business model, facilitating the share and reuse of the world’s largest pool of reusable pallets and containers. Per its website, the company represents the most sustainable logistics enterprise.
Sure enough, Corporate Knights took notice, ranking it third among the most highly rated ESG companies. Brambles features an overall grade of A and commands the same metrics of 100% sustainable revenue and 100% sustainable investments. In terms of its board of directors, 40% of members identify as non-male. Last year, Brambles ranked in tenth place.
Better yet, BXBLY demonstrates perfectly that having a heart and being good stewards of the environment doesn’t necessarily imply lower financial performances. For instance, in the trailing year, Brambles shares gained 23.5% of equity value. That’s well above several major global equity indices, making it one of the most highly-rated ESG companies to invest in.
Brookfield Renewable (BEP)
Pulling no surprises here, Brookfield Renewable (NYSE:BEP) is a publicly traded limited partnership that owns and operates renewable power assets. These assets include hydroelectric plants, wind farms, solar facilities, and energy storage centers. Per its public profile, Brookfield claims to have more than a century’s worth of experience in operating and developing hydroelectric power facilities.
Ranking fourth in Corporate Knights’ Global 100 list, it earned an overall sustainability grade of A. Similar to the other highly rated ESG companies, Brookfield posted 100% sustainable investments. However, on the revenue end, it posted 99% – still a respectable figure.
To be sure, BEP stock incurred some volatility during the hectic period of 2022. In the trailing year, shares tumbled by 11%. However, since the January opener this year, shares gained 13% of equity value.
Also, keep in mind that Wall Street analysts rate BEP as a consensus strong buy. Further, their average price target implies 18% upside potential, making Brookfield one of the highly-rated ESG companies.
A multinational software firm, Autodesk (NASDAQ:ADSK) makes software products and services for the architecture, engineering, construction, manufacturing, media, education, and entertainment industries. According to its website, Autodesk takes a holistic approach to develop its core values. Along with its sustainability initiatives, it also focuses on human rights and enforces a code of conduct regarding its resellers and distributors.
This year, Autodesk comes in fifth place in Corporate Knights’ Global 100 list. Overall, the software firm earned a final grade of A. In terms of sustainable revenue, it posted a ranking of 100%. However, it dipped a little bit in the sustainable investment arena, coming in at 43%. Last year, Autodesk took third place.
Like Brookfield above, Autodesk suffered in 2022, this time for economic pressures that weighed heavily on the software industry. In the trailing year, ADSK dipped 12%. However, since the January opener, shares gained nearly 14% of equity value. On a final note, analysts peg ADSK as a consensus moderate buy. With an implied 10% upside potential, ADSK ranks among the highly rated ESG companies to invest in.
Evoqua Water (AQUA)
Headquartered in Pittsburgh, Pennsylvania, Evoqua Water (NYSE:AQUA) is a leading provider of water and wastewater treatment solutions. Per its website, it offers a broad portfolio of products, services, and expertise to support industrial, municipal and recreational customers.
To state upfront, global water technology firm Xylem (NYSE:XYL) announced that it will acquire Evoqua in a $7.5 billion all-stock transaction. Normally, I wouldn’t talk about companies that will be absorbed into another organization. However, since this topic specifically focuses on highly rated ESG companies, I’m including AQUA here for completeness’ sake.
Per Corporate Knights, Evoqua came in sixth place, earning an overall grade of A. For both the sustainable revenue and investment categories, the company posted a 100% ranking. For the social and governance component, 33% of Evoqua’s board of director members identify as non-male.
As a public entity, AQUA featured a consensus strong buy view. However, acquirer Xylem isn’t doing too bad itself, enjoying a consensus moderate buy rating. Easily, both enterprises stand among the highly rated ESG companies.
Based in Canada, Stantec (NYSE:STN) is an international professional services company in the design and consulting industry. As one of the highly rated ESG companies to invest in, Stantec finds itself on awkward footing. Per Corporate Knights, it’s actually tied with Schneider Electric (OTCMKTS:SBGSY) for seventh place. However, with Stantec representing a proper exchange-listed company, it gets the nod here.
According to the Global 100 list, Stantec earned a final grade of A-. In terms of sustainable revenue, it posted a ranking of 53%. For sustainable investment, it reached 94%. On the other end, Schneider posted 71% and 68%, respectively, giving Stantec a slight edge. Regarding the board of directors, 33% of Stantec members identify as non-male. For Schneider, this stat came out to 50%.
Last year, Stantec was at number 17 while Schneider placed fourth. Thus, the improvement for the former also helped give the services firm an advantage.
Finally, Wall Street analysts rate STN as a consensus strong buy. Their price target implies nearly 15% upside potential, making it one of the most highly rated ESG companies to invest in.
This post originally appeared at InvestorPlace.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.