The Best ESG Stocks in the Dow

Only a third of the stocks in the Dow rank as industry leaders according to MSCI's ESG rankings. Fortunately, most of those who do also are favored by Wall Street analysts.

Concept art of ESG/responsible investing
(Image credit: Getty Images)

Here's something for investors to celebrate on Earth Day 2021: Environmental, social and corporate governance (ESG) matters have never been more important to shareholders and, by extension, the folks leading the nation's publicly traded companies.

As investors' focus on ESG stocks has grown, sustainability reporting has gone mainstream. Bank of America Securities recently found that 90% of companies in the S&P 500 publish corporate social responsibility (CSR) reports, up from 20% in 2011.

And that's not just because corporations are bending to societal pressures. It turns out that taking ESG issues seriously is good for the bottom line.

"It pays to be green," say Bank of America Securities equity and quant strategists Savita Subramanian and Marisa Sullivan. "We see higher multiples for low emissions, net zero targets, and water efficiency."

Even members of the Dow Jones Industrial Average – that old and elite bastion of just 30 blue-chip companies – are increasingly concerned with how they measure up when it comes to ESG matters. However, it might come as a disappointment to some investors that only a third of the Dow's constituents rank as ESG leaders in their respective industries.

MSCI, the investment research firm specializing in indexes, portfolio analysis and various analytic tools, has set itself up as a leader in ESG ratings. The firm maintains MSCI ESG ratings on nearly 3,000 companies, and it has become a go-to provider of information for investors who hold ESG issues close to their investment processes and hearts. We decided to see where all 30 Dow companies rank as ESG stocks using MSCI ratings, which range from industry leader (AAA, AA), to average (A, BBB, BB) to laggard (B, CCC), and found that just 10 of them are considered "leaders."

So read on as we look at the 10 best ESG stocks within the Dow 30. Happily, in many cases, it does indeed pay to appear to be green. Dow stocks with high ESG scores often happen to be some of analysts' favorite blue-chip stocks to buy, too.


Data is as of April 20, courtesy of S&P Global Market Intelligence, MSCI and YCharts, unless otherwise noted.

Dan Burrows
Senior Investing Writer,

Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.

A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.