Earth Day 2022

We explore five highly rated ESG-friendly stocks that act as standouts in five key environmental areas.

One lesser-known impact of the fashion industry is its reliance on toxic "forever chemicals" that remain dangerous for years and easily migrate from landfills to water and air. Levi Strauss retooled its strategy by strengthening its e-commerce and direct-to-consumer business, and Wall Street tends to agree that the company is emerging from the trough. Although its flagship EV, the Chevy Bolt, has suffered from recalls and vehicle fires, GM is moving on to a superior "Ultium" platform in future vehicles. BMO Research's James Fotheringham (Outperform, equivalent of Buy) notes that the company's strength in transaction banking and consumer finance should help offset these risks. In 2005, for instance, Hurricane Katrina surprised the insurance industry with the high cost of climate change losses. Meanwhile, the Karner Blue Biodiversity Impact Fund ( KAIBX) holds Goldman Sachs in part because of the company's $750 billion commitment to finance climate-related projects by 2030. And after criticism that Goldman Sachs was taking advantage of loopholes to fund drilling in the Arctic, the Sierra Club filed a shareholder proposal in 2022 asking the company to report on its full greenhouse gas footprint within its lending portfolio. PEP has also shown a willingness to grow its portfolio via the acquisition of faster-growing, emerging brands." And last year, PepsiCo pledged to become the most water-efficient food and beverage company by 2030, ultimately recharging aquifers with more water than it extracts. Analysts' recommendations and other data as of April 18, courtesy of S&P Global Market Intelligence and YCharts, unless otherwise noted. Thus, finding ESG stocks that are able to effectively manage both is difficult – but ultimately rewarding to both portfolio and planet. In fact, many companies that now lead environmental efforts started out at the back or the middle of the pack.