The Impact Investor | ESG Investing Blog

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Investors today are choosing stocks and investments that align with their values – not just with their wallets. 

Instead of selling their soul to make a profit, investors find ways to consciously invest in something they strongly believe in. This way, individuals can feel better about their investment topic while simultaneously making a profit.

So, what socially responsible stocks should you look for? The type of stock you may invest in could differ from your friend’s or neighbor’s investments, so don’t depend too much on those around you. 

Instead, do some research to find morally-responsible stocks that align with your values. This process can take some time, but the end product is more than worth it. 

Trader analyzing Castor Maritime socially responsible stock

Top 13 Stocks For Conscious Investing

To understand the best socially responsible stocks available for conscious individuals, we have looked at various categories, such as environmentally-focused companies, social warriors, and governmental organizations that can embrace common personal values. 

We analyzed various websites to look at the best ETFs for specific social and environmental causes, such as women’s rights, reducing fossil fuel intake, and clean energy.

By reading reports and analyses on the top ESG funds for people who want to align their investments with their governmental, social, and environmental beliefs, we narrowed the extensive list to our top choices. 

Let’s go over a list of the top twelve socially responsible exchange-traded funds to consider for your next big investment. 

iShares Global Clean Energy ETF: Best Investment for Clean Energy 

iShares Global Clean Energy ETF, also known as ICLN, is a climate and environmentally-focused business that reduces carbon emissions harming the air quality and environment.

This fund directs all of its ‘energy’ into – well, clean energy. 

The socially responsible fund is the top choice for eco-conscious individuals determined to invest in clean energy, such as solar power, wind turbines, and other energy-producing endeavors that exclude harvesting crude oils and gasses that pollute the environment.

As we have seen in recent years, the focus on environmentally-friendly products and services has skyrocketed. Businesses are now using paper cups, finding new power sources, and investing in clean energy. 

Consider jumping on the bandwagon to do something good for the environment and the planet by investing in the iShares Global Clean Energy ETF to feel better about where you are putting your money. 

ICLN is an intelligent voice for eco-conscious people for people who want to help the world with their investments. This business protects and invests in other businesses with like-minded thoughts – such as smaller companies producing solar energy, wind energy, and renewable resources.

Furthermore, the firm earns approximately half of its incoming revenue from products or services that directly meet the UN’s Sustainable Development plan needs. 

According to the YTD Lipper Ranking, this fund is in the 70th percentile, earning the highest ranking possible in the ‘Expense’ category and a favorable 3 out of 5 ranking in the ‘Total Returns,’ ‘Consistent Return,’ and ‘Tax Efficiency’ categories.

Therefore, this high-ranking stock is a good investment for long-term financial gain – and a feel-good conscience. 

Look into the S&P Global Clean Energy Index to find 30 clean energy companies worldwide. Comparing companies utilizing the S&P Global Clean Energy Index and others solely focusing on the stock exchange can help investors make financial decisions. 

Pros:

Cons:

Parnassus Core Equity Fund Investor: Best Investment for Risk Management 

The second option for investing is Parnassus Core Equity Fund Investor. This firm strongly believes that teaching people how to manage risks, understand probable outcomes, and handle controversies is essential to making smart financial decisions for their future.

By partnering with data analysis, they help provide businesses with hyper-focused long-term goals and qualified higher-level staff. 

Not to mention, this investor has had tremendous success in the past couple of years. Their specific fund, the Parnassus Core Equity Fund Investor, has churned out an impressive 20.3% annual return in the past three years – making it a top contender regarding the best ETFs for socially conscious investors. 

If you are an established business looking for competitive advantages among similar companies in your industry, consider using the Parnassus Mid Cap Fund Investor from the same company. 

Pros:

Cons:

  • According to the Morningstar Snapshot, the risk of investments in this category is high 

See Related: Best EV Charging Station Stocks

iShares ESG MSCI USA ETF: Best Investment for Businesses Who Need a Short-Term Boost 

The iShares ESG MSCI USA ETF fund is a great investment for companies dealing with the fallout of severe business controversies that may have tarnished their reputation in the industry.

This ESG fund can help corporations increase their intangible value assessment by determining the present risks to the company with its market. 

Companies who want to get ahead of the curve- and avoid any long-term controversies or unsafe investments – should use this ESG Fund to analyze the presence of risk exposure within the industry.

By realizing the most common risks that can occur, such as data security, client satisfaction, or company scandals, businesses can reduce the prevalence of any business-threatened issues. 

This USA ETF fund is a short-term investment that can help businesses get out of an immediate rut.

Although this option is not ideal for long-term investments to secure finances over multiple months or years, the ESG fund can help companies increase their standing in their respective industry.

Pros:

Cons: 

See related: Important Socially Responsible Investing Pros and Cons

Vanguard ESG U.S. Stock ETF: Best Investment for Meeting Corporate Criteria

Another beneficial choice for those interested in investing in socially-conscious stocks is the Vanguard ESG U.S. Stock ETF, also known as the ESGV.

This impressive stock has a moral obligation to meet specific social, environmental, and governmental standards and provides a high-performance outcome and low expense ratio. 

The ESGV fund holds over 1,400 stocks in various companies across the globe, including some big-name corporations to increase its standing in the industry, such as Apple and Amazon.

However, the company doesn’t just choose any stock to include in their portfolio – they are highly choosy about only selecting businesses that meet the standards set forth by the UN global principles. 

This large-blend ETF scored #33 in the ‘Large Blend’ category on Money US News compared to similar stocks. Earning an ‘Excellent’ in the Costs category, ‘Excellent’ in the Tracking Error category, and ‘Good’ in the Holdings Diversity category, this large blend ETF is one of the top-ranked passively managed funds for socially conscious investors. 

If you love Vanguard but want to try your luck in a different investment portfolio, consider using the Vanguard FTSE Social Index Fund Admiral.

This fund is very inexpensive, top-rated, and reduces any risk of investing in controversial or risky industries.

With a $10k initial investment, this social index fund can be a good choice for individuals who want to invest in a fund that makes SRI exclusions (socially responsible stocks investments). 

Pros:

Cons: 

  • A client may not want to risk investing in an ESG ETF. 
  • Higher risk potential 
  • Features a low 12-month yield of 0.95%

See Related: What Are Conscious Capitalists? Definition & Key Principles

PowerShares Global X CleanTech ETF Portfolio: Best Investment for Environmentally-Friendly Nutrition

PowerShares Global X CleanTech ETF Portfolio is a fund focused on providing environmentally-friendly agriculture and nutrition to help alleviate the effects of harmful farming practices and inadequate nutrition.

After its inception in 2006 and over 15 years of experience, this portfolio is suitable for those wary about making investments in risky companies.  This mid-growth fund focuses on energy – specifically cleantech energy – in various regions worldwide.

PowerShares invests most of its money in the industrials, technology, and basic materials sectors, focusing on helping the environment by utilizing alternative farming and energy practices. 

Pros:

  • The projected 5-year growth of the business is very high
  • Features a lower carbon risk score of 23 out of 100
  • High growth potential 
  • Global exposure in many industries
  • Uses ESG guidelines

Cons: 

  • The fund has a high expense ratio of 0.65% 
  • High volatility and liquidity during the 5-year projection 
  • 84.8% fossil fuel involvement 
  • High risk for the corporate sustainability score

See Related: Worst ESG Companies | Stocks to Avoid

SPDR S&P 500 Fossil Fuel Reserves Free ETF: Best Investment For Fossil Fuel Exclusion

By now, it is likely common knowledge that fossil fuels are ‘bad.’ Individuals strive to use clean and green practices to power their cars, heat their houses, and run their businesses. So why are we talking about fossil fuels? 

By using the SPDR S&P 500 Fossil Fuel Reserves Free ETF, individuals can invest in energy-clean companies by specifically excluding fossil fuel reserve-based businesses.

If other stocks have you investing in crude oil and thermal coal businesses, back out of these investments and put your money into this Reserves Free ETF. 

This ETF fund specifically addresses businesses that use thermal coal reserves, non-metallurgical reserves, chemical byproducts, conventional oil, natural gas reserves, shale gas reserves, and oil and gas reserves – and removes them from any investment portfolio. 

With an estimated 3.5-year growth of over 18% and almost 500 holders, this fund could be an excellent investment for conscious individuals. After extensive analysis by FactSet, First Call, and Reuters, results show this fund will grow in the upcoming years. 

As an added plus, Morningstar has awarded this ETF fund with 5 out of 5 stars and three sustainability awards. 

Pros:

  • The 1-year return of the fund is an impressive 23.78
  • Features a low expense ratio of 0.20% 
  • Earned a 5/5 in the YTD Lipper Ranking 
  • The value of the stock has increased in the past year consistently 
  • Earned a 5/5 in the Morningstar Analyst Rating 
  • Low carbon risk score
  • Low fossil fuel involvement %

Cons: 

  • Currently has a YTD return of -2.50%
  • Low SEC yield of 1%
  • Low sustainability rating of ⅗
  • Average corporate sustainability score 

Pax Ellevate Global Women’s Leadership Fund: Best Investment For Women’s Rights 

Our Daughters Deserve Choices

Gender equality is among one of the most significant issues the world faces. Across the globe, women are fighting for rights such as earning equal pay, speaking out against injustices, holding jobs, divorcing a partner, and voting. 

Even though women’s rights are widely varied based on county and culture, investing in a socially conscious ETF fund that highlights gender diversity is essential to bring light to the importance of gender equality, diversity in the workplace, and including women in the conversation. 

Investing in Pax Ellevate Global Women’s Leadership Fund is one of the best opportunities for individuals who want to put their money into gender-diverse companies that provide equality, opportunity, and fair treatment to all employees. 

This Women’s Leadership Fund uses the Impax Global Women’s Leadership Index to analyze over 1,500 companies to scan for criteria, such as women in positions of power, gender pay data, and employee satisfaction levels. This workplace data provides Pax Ellevate with the necessary information to highlight and work with gender-diverse businesses.

This ETF fund works with high-ranking and high-earning companies, such as Microsoft and Estee Lauder. They also focus on providing the resources necessary to increase innovation and employee retention rates.  

Pros:

  • The fee level is below average 
  • Increased returns 
  • 100% corporate sustainability contribution
  • Very low carbon risk score and fossil fuel involvement %

Cons:

  • 3 out of 5 Morningstar rating for projected returns 

Nuveen ESG Small-Cap ETF Fund: Best Investment To Help Small Businesses

Unfortunately, small businesses were hit extremely hard during the pandemic – more so than your big-brother corporation down the street from your house. 

To help small businesses succeed, many people began ordering takeout food from their local corner restaurant, picking up coffee through a takeaway window on daily walks, and ordering products online to keep them in business.

Being socially responsible means helping people in the community succeed. Instead of giving all of your hard-earned money to massive corporations, such as Walmart, consider shopping at small businesses that need your help to stay afloat. 

You can help small businesses by investing in the Nuveen ESG Small-Cap ETF fund, helping small-cap companies withstand the tough times of economic recession and bounce back after slow periods of their business.

This ETF fund uses the Small-Cap Index to invest in small businesses, such as technology companies, industrial companies, and numerous other sectors – helping spread out the wealth of the investments. 

And don’t worry – this ETF fund avoids any fossil fuel businesses and deforestation companies that directly harm the environment. To feel good about helping those around you while simultaneously helping the environment, we recommend investing in this ETF fund.

Nuveen uses the As You Sow environmental nonprofit to avoid investing in deforestation companies. Altering the forest cover and increasing deforestation in recent years has negatively impacted the environment, changing the climate’s temperature and harming businesses. 

Pros:

  • Earns a 5/5 Morningstar Analyst Rating
  • Features a low expense ratio of 0.3%
  • Increased from 10,000 to 19,000 YTD in one year
  • Features a 3-year total return is 19.26%.
  • 100% corporate sustainability contribution
  • 5/5 sustainability rating according to Morningstar

Cons:

  • Contains a 14% unallocated risk according to the ESG pillars
  • Low SEC yield of 1%
  • High volatility and liquidity ranking

See related: Best Vanguard ESG Funds

First Trust Water ETF: Best Investment For Clean Water

A few high-ranking ETFs focus on providing clean water to people around the globe. One of the best choices is the First Trust Water ETF, which prioritizes US-based companies in the wastewater and potable water industries.

If you are an avid hiker, enjoy kayaking, or love going camping with the family on the weekend, this ETF is directly responsible for helping keep the flowing rivers crystal clear. 

Not to mention, this ETF only invests in businesses that are clean-water and environmentally friendly focused, providing monetary assistance to businesses in the infrastructure, purification, and filtration industries. 

Lastly, the FEW uses the USE Clean Water Index to determine which businesses they should focus on – the index analyzes stocks in the wastewater and potable water industry and eliminates any options that do not meet the requirements of sustainable revenue. 

If you are looking for a mid-blend ETF to invest in (instead of the mid-growth fund), consider looking at the Guggenheim S&P Global Water Index ETF. This ETF gathers its data from the reputable S&P Global Water Index, analyzing 50 water companies centered in the US, Asia, and Europe to improve water conditions around the globe. 

Pros:

Cons:

  • 2 out of 5 stars for the sustainability rating, according to Morningstar

Serenity Shares Global Impact ETF: Best Investment For Social Impact

For investors who want to focus specifically on the individual needs of people in their society, whether it be social requirements, planetary needs, or governmental changes, consider investing in the Serenity Shares Global Impact ETF. This passive investment fund browses hundreds of US-based companies to help address communities’ societal and social needs. 

This ETF has successfully identified what needs to be changed throughout numerous societies to make the world a better place using the UN Sustainable Development Goals. Serenity Shares has determined the specific products and services essential to living in a healthy and happy society – and is focusing on providing these attainable services to people around the globe. 

Serenity Shares uses the calculation methodology to ensure no one business takes over the entire index. By identifying the areas around the world in which society can improve, this fund focuses on providing more of what the world needs – like clean water, environmental action, and accessible health services. 

Pros: 

  • Earned a 4 out of 5 for the Morningstar Analyst Rating
  • Increased from 12,000 to 22,000 YTD since early 2020 
  • Projected 3-year projected return of over 18.80% 

Cons:

  • High expense ratio (0.49%)
  • The total return is -7.51% for the one-year projection  

SPDR SSGA Gender Diversity Index ETF: Best Investment For Female Empowerment

The SPDR SSGA Gender Diversity Index ETF is a large-blend investment fund with one goal – female empowerment. In a male-dominated world, this ‘girl boss’ fund is just what socially conscious individuals are looking for right now.

Featuring companies that pride themselves on gender diversity and women in senior management positions, the SHE investment fund only spends its time and money on businesses with similar interests in helping women progress in the workplace. 

While this fund is a fantastic way to support female empowerment, there are a few things to be aware of. For example, it has a low score for total returns and consistent returns in the YTD Lipper Ranking and a low SEC yield of 0.91%

Pros:

  • Low dividend of $0.32
  • Consistent growth from February 2021-December 2021
  • Excellent ‘Costs’ and ‘Tracing Error’ scores
  • In the ‘Best Fit’ list of Large Blend ETFs  
  • 4 out of 5 sustainability rating
  • Low carbon risk score and fossil fuel involvement %

Cons:

See related: Why is Socially Responsible Investing Important?

Organics ETF: Best Investment for Organic Products

For our vegans and nature lovers out there, this organic-focused fund is calling your name. Organics ETF focuses on helping all-natural grocers and food production companies churn out good organic food for our bodies and the environment. 

Organics ETF prides itself on being a fund that seeks to aid specific companies that can help produce organic items for everyday use, such as organic food, cosmetics, or packaging.

With a reach of 25 companies spanning over four continents, Organics ETF has high-ranking partners, such as United Natural Foods, Wessanen, and L’Occitane International. 

Is there a benefit to investing in organic products and companies? Yes! The mixture of stable and high-risk companies has a higher chance of long-term returns vs. other fund options. 

Pros:

  • Excellent investment for helping global nutrition. 
  • Invests > 80% of its assets into Solactive Organics Index businesses
  • Holds 25 companies in 4 continents
  • YTD return of 37%
  • Cumulative return of almost 33% since inception
  • Reasonable 0.50% expense ratio

Cons: 

  • The value of the stock has decreased over time
  • Small asset base

See Related: Best Paying Jobs in Energy

Gilead Sciences Inc: Best Investment for Medical Research

Gilead Sciences Inc is a medical research and development company that aims to further global health standards to provide accessible and high-quality healthcare to every single person.

Focusing on people who may not have healthcare access or the money to pay for private care, Gilead Science wants to help everyone get the care they deserve.

By coming up with new therapies and medications to help individuals suffering from long-term illnesses and diseases, such as HIV, hepatitis B, pulmonary disease, and cancer, this business is trying to make necessary medications more accessible. 

Pros:

  • Patient Assistance Programs offers free medication to those in need
  • Working to make medicine more accessible
  • Ongoing research to revolutionize the medical field

Cons:

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