World Environment Day: 3 ESG Stocks to Discover

World Environment Day, celebrated annually on 5 June, brings together people across the world to help protect and restore the Earth’s ecosystems. In 2023, we mark the event’s 50th anniversary. Companies are also actively contributing to the sustainability and well-being of our planet.

This commitment is evident in their policies, initiatives, and business practices aligned with Environmental, Social, and Governance (ESG) principles. Here are three stocks to watch from companies that are leading the way in ESG standards.

3 ESG Stocks to Discover

The 3 stocks selected in the below table are based on their MSCI ESG Rating of triple AAA.

Table 1: Companies and their MSCI ESG Rating ^[1,2]

1. Nvidia (NASDAQ:NVDA)

Nvidia, an American tech giant, is renowned for making top-tier graphics processing units (GPUs) for gaming and multimedia, alongside launching successful DirectX drivers for Microsoft. By 2011, they had already shipped 1 billion graphics processors, a testament to their market dominance ^[3]. Today, NVIDIA’s reach goes well beyond just gaming. They’re making waves in everything from visual effects to mobile and super-computing, and even artificial intelligence. 

Since 2014, Nvidia has reduced its per-employee emissions by 15% and aims to derive 65% of its global electricity from renewable sources by the end of 2025 ^[4]. The company has consistently pursued its mission to enhance the energy efficiency of their products with an emphasis on reducing carbon emissions. In May 2023, Nvidia announced the development of a supercomputer powered by the NVIDIA Grace CPU Superchip. This supercomputer, capable of delivering performance and energy efficiency six times that of standard systems, ranks among Europe’s most energy-efficient systems ^[5].

Nvidia is also actively working to minimise its waste production through several waste reduction initiatives, ensuring that over 94% of its consumer packaging is recyclable, with its latest GPU retail packaging being 100% biodegradable ^[6]. 

Here’s a look at Nvidia’s market movement over the past year, which has been on an uptrend since December 2022.

Figure 1: Nvidia price chart for a duration of one year. Image obtained from Trading View

2. Microsoft (NASDAQ:MSFT)

Microsoft Corporation is a company that needs no introduction, having developed software solutions like Microsoft Windows operating system (OS) and Office suite. Despite the popularity of iOS developed by Apple, as of January 2023, the Windows OS maintained a 74% share of the total desktop operating system usage according to Statista ^[7]. Apart from developing software solutions, Microsoft has recently set its sights on artificial intelligence (AI) through a strategic partnership with OpenAI in chatbot development. For more insights on the rise of AI Chatbots, you can read more here.

Microsoft is committed to being carbon negative by 2030, and by 2050 will remove all their historical emissions since the company was founded in 1975 ^[8]. Microsoft has also been resolute in its mission to increase the energy efficiency of its data centres, with a particular focus on reducing their environmental footprint. For example, in California, the data centres are cooled with an indirect evaporative cooling system that uses reclaimed water throughout the year, eliminating the need for freshwater ^[9].

Microsoft is also dedicated to minimising its waste output through several waste management initiatives, such as recycling electronic waste and reducing single-use plastics in its packaging. Its goals for sustainable packaging include ^[10]:

• Elimination of single-use plastic packaging by 2025.
• Achieving 100% certified sustainable forested fibre by 2025.
• Implementing 100% recyclable packaging by 2030.
• Incorporating 100% recycled, renewable, or responsibly sourced content by 2030.

Here’s Microsoft’s stock performance over the past year, which has shown an upward trend since January 2023.

Figure 2: Microsoft price chart for a duration of one year. Image obtained from Trading View

3. Xylem Inc (NYSE:XYL)

Xylem Inc. is an American company specialising in water technology solutions, to help clients overcome water-related challenges. Xylem’s contributions extend beyond water technology and also encompass other areas such as water conservation, clean water initiatives, and smart infrastructure.

Image 1: Sourced from Xylem official website. https://www.xylem.com/en-us/about-xylem/newsroom/press-releases/manchester-city-announces-new-global-partnership-with-xylem/

In March 2023, Xylem announced a partnership with Manchester City Football Club aimed at raising awareness about untreated wastewater and inspiring fans to take action ^[11]. 

In 2021, Xylem successfully recycled all the processed water at 12 of its main facilities. By 2022, it expanded this achievement to include 17 facilities ^[12]. Xylem has also been unwavering in its mission to optimise the efficiency of its products, placing a significant emphasis on water conservation. Moreover, in 2022, 88% of the electricity consumed at Xylem’s manufacturing, office, and service facilities came from renewable sources, reflecting a 13% improvement from 2021 ^[13].

Xylem is committed to reducing waste by using different waste management programs like recycling, composting, and minimising the use of single-use plastics in its packaging. Since 2020, the company has been actively working to ensure that 75% of its packaging materials can be reused, recycled, or composted. In 2022, they achieved an impressive 37% increase, bringing their packaging to an 85% compliance with these standards ^[14]. 

Here is a look at the Xylem chart over the last year, which has shown to the trending sideways since January 2023.

Figure 3: Xylem price chart for a duration of one year. Image obtained from Trading View

Trading Opportunities With ESG Companies

Investing interests in ESG companies continue to grow with increasing importance placed on combating climate change and raising social awareness. Companies with strong ESG performance could be the ones to watch for those who are interested in ESG investing.
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