Kiplinger ESG 20: Our Favorite ESG Stock and Fund Picks for Investors

Kiplinger's favorite ESG stocks and funds 

Environmental steward: First Solar

The policy clouds around First Solar (FSLR) have largely dissipated, but the stock still isn't basking in the sunlight. The shares are up 3.4% over the past year, but that masks a wild swing. In early June, they were up more than 60%, but then, worries about President Donald Trump's policy on solar-industry tariffs sank the stock.

Yet the policy that emerged — tariffs and duties on its competitors' imported materials — helped First Solar more than it hurt.

"The sell-off has overshot to the downside," says analyst Ameet Thakkar of investment firm BMO Capital Markets. He sees a snapback over the next 12 months, in line with the consensus of 35 analysts who cover the shares.

Environmental steward: Levi Strauss

Legendary jeans maker Levi Strauss (LEVI) does a good job of minimizing the water that goes into its manufacturing and the greenhouse gases that come out of it. The company is also making products people want.

Analyst Rick Patel of investment firm Raymond James says results for the quarter that ended May 31 showed "broad-based strength" across geographic markets, sales channels and product categories, with robust sales to both men and women. In two quarterly reports this year, Levi Strauss has beaten investor expectations and then raised its forecast for sales and profits.

Environmental steward: Microsoft

Microsoft (MSFT), which was slammed in the springtime software slump and took another hit this past summer, is up nearly 30% since the last time we checked in on the ESG 20 — though the gain puts the tech stock up just 0.8% over the past 12 months. The company reported robust revenue growth of 18% in the quarter that ended June 30, including 43% growth in Azure, its cloud-computing business.

The overall results were "much needed, considering the negative investor sentiment," says analyst Terry Tillman of investment firm Truist Securities. Microsoft aims to be carbon-negative and water-positive — replenishing more water than it consumes — by 2030. The data economy is energy-intensive, though, so we'll be keeping a close eye on Microsoft's promises.

Environmental steward: Prologis

Prologis (PLD), a real estate investment trust (REIT) that specializes in warehouses and distribution centers, says it's on track to achieve net-zero emissions by 2040, having already cut its greenhouse gases by 20% from 2019 levels.

A year ago, we touted Prologis' size, healthy balance sheet and global reach as reasons to look past a decline in the stock, and it's up 26.6% since then.

Prologis said in August it will buy U.K. peer SEGRO for $19 billion, furthering its international reach but adding SEGRO's energy-hungry data centers. Nonetheless, Sustainable Fitch, a division of the credit-ratings agency, says it may bump up Prologis' rating, as a far higher proportion of SEGRO's portfolio boasts green-building certifications. We continue to like Prologis' portfolio and positioning in the new economy.

Environmental steward: Xylem

Xylem (XYL), which sells systems that have helped users reduce or reuse trillions of gallons of water, is a favorite of the Hartford Global Impact Fund, manager Jason Goins says.

Over the past year, however, the shares have made a negative impact on the ESG 20, tumbling 21.0%. Wall Street is leery of Xylem management's attempt to strengthen its portfolio by letting go of less-profitable customers. Profit margins rose in the quarter that ended June 30, but sales growth was just 1.5%.

However, a turnaround could be in the offing. Analyst Bryan Blair of investment firm Oppenheimer says Xylem's "vastly improved execution" could help push the stock up to $158 over the next 12 to 18 months, a 40% jump from its recent close.

Social standout: Costco Wholesale

The Costco Wholesale (COST) machine keeps humming as it provides value to millions of members. Whether it provides value to investors at current price levels is another question.

The consumer staples stock, up just 0.6% over the past 12 months, trades at a lower price-to-earnings (P/E) ratio than it did a year ago after underwhelming results. But at 43 times estimated earnings for the next 12 months, it's still not cheap. We don't plan on betting against Costco anytime soon, but we'll keep an eye on whether it can keep meeting investors' heady expectations.

In the meantime, the retailer is legendary for its treatment of workers in terms of pay, health insurance and other workplace benefits.

Social standout: Novo Nordisk

Drugmaker Novo Nordisk (NVO) enjoys a strong record in product safety, animal testing, employee safety and environmental matters, but the healthcare stock has delivered a bumpy ride.

We wrung our hands over a springtime swoon in the stock, but we buckled up and left it on the list, believing traders were far too pessimistic about Novo's place in the market for GLP-1 diabetes and weight-loss drugs. Patient investors have been rewarded with a 32% gain since late March. But the stock is still down 16.5% over the past year, illustrating that investors still haven't fully come around.

Morningstar analyst Karen Andersen says Novo has a long track record of innovation as well as a strong balance sheet and healthy cash flow to help it find its way back to investor favor.

Social standout: Salesforce

Like Microsoft, Salesforce (CRM) got sucked into the springtime software-stock downdraft. Investors abruptly changed their minds in summer when the company forecast accelerating revenue gains for the remainder of 2026 — the shares rose more than 30% in the second half of August, and are in the black for the past year.

Analyst Brad Zelnick of investment firm Deutsche Bank says the most recent quarter's results "provided tangible evidence that artificial intelligence can expand, rather than diminish" the value of Salesforce's customer management software. Example: The company's Agentforce product, which allows Salesforce's customers to build their own AI agents linked to the Salesforce platform, is growing rapidly.

Salesforce has long been a leader in philanthropy and diverse hiring, but we'll monitor how ESG rating firms evaluate the company's diversity efforts after it said in 2025 it would abandon formal hiring targets.

Social standout: Trane Technologies

We were concerned a year ago that Trane Technologies (TT), a maker of heating, ventilation and air-conditioning systems, was fully valued, but the industrial stock has tacked on another 7.9% since then.

Valuation remains a concern, with the shares trading at 27 times estimated earnings. Still, that's a bit cheaper than the P/E of 30 a year ago.

Analyst John Eade of research firm Argus says the lower multiple makes the stock worth considering, citing the company's history of consistent sales and profit growth. Management has been able to navigate the pandemic, supply-chain woes and high inflation, he says, and will be able to guide the company through trade wars and Middle East conflict. Trane also excels at worker health and safety.

Social standout: W.W. Grainger

Industrial company W.W. Grainger (GWW) has high employee-satisfaction ratings and is a consistent presence on lists of the best places to work, including for women and for millennials.

Stockholders should be pleased as well, given a 30.1% return in the shares over the past year. The stock now trades at 27 times estimated earnings, well above its average of 21 over the past decade, according to S&P Global Market Intelligence.

Just three of 19 analysts who cover the stock consider it a Buy, but we don't consider it a Sell either. Sales continue to increase by double digits as Grainger gains from increasing U.S. industrialization. If you own the stock, hold on, but wait for a dip to add more shares.

Governance leader: Accenture

With Novo Nordisk beginning to rebound, the most problematic member of the ESG 20 is Accenture (ACN), the global consulting firm that's consistently underperformed since we added it in the spring of 2024.

The communication services stock is down 24.5% over the past year on fears that AI will damage its business, worries that governments will scale back on contracts, and Accenture's own poor profit forecasts. However, we're not ready to exile Accenture, which ISS says has a "well-designed" governance structure that earns it a "very high" rating for transparency in its disclosures.

The bulls on Accenture think there's too much pessimism about the prospects for a company that many consider to be at the pinnacle of its industry. Analyst Kevin McVeigh of investment firm UBS, who sees a sharp recovery over the next 12 months, says Accenture deserves the benefit of the doubt, in part because of its "25-plus years of rich public history."

Governance leader: Applied Materials

Look to Applied Materials (AMAT) for the flip side of the AI story. An explosion in AI spending has helped shares in the company nearly triple in value over the past year. Yet that hasn't resulted in nosebleed valuations.

Trading at 26 times estimated earnings, the shares are cheaper than those of many peer companies, says analyst Stacy Rasgon of research firm Bernstein, who also notes that Applied Materials is in the most attractive key markets for AI suppliers — a good place to be as spending continues.

The firm earns praise from ESG experts for its excellent compensation disclosure and a strong code of business ethics.

Governance leader: CBRE Group

ISS says real estate services company CBRE Group (CBRE) has robust anti-corruption policies, training and whistleblower protections that earn an ESG rating that's significantly above peers.

But CBRE is another company caught in AI's crosscurrents. CBRE charges its clients for market research, financial modeling and other services that AI attempts to replicate. But the company also manages data centers for their owners, which would seem to make it an AI beneficiary.

The stock is down 10.1% over the past year, but analyst Seth Bergey of investment firm Citigroup sees CBRE as a long-term victor, saying that AI fears are overblown and that CBRE continues to benefit from a brand and business lines that are globally respected.

Governance leader: Hilton Worldwide Holdings

Hotelier Hilton Worldwide Holdings (HLT) earns marks for strong governance, particularly the independence of its board.

The consumer discretionary stock treaded water for much of 2025, but this year the shares began to warm with the weather and an improved travel outlook.

Hilton has been outpacing the industry in revenue per available room, says analyst Michael Bellisario of investment firm Baird. Reflecting the optimism, shares are up 14.8% over the past year. Trading at more than 33 times estimated earnings, Hilton may be due for a breather.

Governance leader: Nvidia

Over the course of its five years in the ESG 20, Nvidia (NVDA), a governance leader due to its independent board and laudable compensation practices, has become the elder statesman of the AI industry.

The chip giant's sales and profit growth is still amazing, particularly for a colossus that now tops $300 billion in revenue. But Nvidia's valuation reflects a mature company: The shares trade at 18 times estimated earnings. If AI is a bubble that bursts, Nvidia will be one of its biggest casualties.

But we don't see an AI-pocalypse on the horizon. Morningstar analyst Brian Colello says tech titans may seek out other suppliers, but their efforts "will, at best, only chip away at Nvidia's AI dominance."

ESG fund: Calvert US Mid-Cap Core Responsible Index

We're adding the Calvert US Mid-Cap Core Responsible Index ETF (CVMC) to replace the Putnam fund. Its expense ratio of 0.15% is less than one-fourth of the Putnam fund's 0.64%, so it's a more affordable alternative. But the performance is there as well: Over the past year, the Calvert fund returned 23.2%.

Calvert US Mid-Cap tracks a proprietary index that holds mid-capitalization stocks chosen through Calvert's Principles of Responsible Investing (pdf).

Calvert, owned by Morgan Stanley, says it underweights or simply doesn't own companies that are doing a poor job managing the transition to renewable energy, have bad governance or overlook human-rights violations in their supply chains. It also excludes stocks in certain industries, including tobacco, alcohol, guns and gambling. The fund holds nearly 600 stocks.

Learn more about CVMC at the Calvert provider site.

ESG fund: Fidelity Sustainable Multi-Asset Fund

The Fidelity Sustainable Multi-Asset Fund (FYMRX) replaces the iShares ETF. It has an expense ratio of 0.48%, which is higher than the iShares fund's 0.18%. But the Fidelity fund is among the cheapest multi-asset ESG mutual funds; other options approach or exceed expenses of 1% of assets.

Started in 2022, the fund finished in the top 5% of similar funds, according to Morningstar, in its first full year of 2023, and it was in the top 17% in each of the next two full years.

Fidelity Sustainable Multi-Asset is a fund of funds, normally investing at least 80% of assets in Fidelity mutual funds and ETFs with sustainability and ESG themes. The typical asset mix is 70% stock funds and 30% bond funds. Its biggest holding at last report, at 42%, was the Fidelity U.S. Sustainability Index Fund (FITLX).

Learn more about FYMRX at the Fidelity provider site.

ESG fund: iShares Environmental Infrastructure & Industrials

The iShares Environmental Infrastructure & Industrials ETF (EFRA) has had a rough first year in the ESG 20. The ETF returned 8.4% over the past 12 months, which placed it near the bottom 5% of infrastructure funds, according to Morningstar. But we're holding fast for now.

The iShares fund tracks a global index of utility, industrial and basic-materials companies with positive environmental impacts, such as energy efficiency or pollution reduction. A top holding is utility American Water Works (AWK).

Learn more about EFRA at the iShares provider site.

ESG fund: Northern Trust STOXX Global ESG Select ETF

FlexShares STOXX Global ESG Select has rebranded. The original member of the ESG 20 fund list is now known as the Northern Trust STOXX Global ESG Select ETF (ESGG).

The performance remains excellent, however: Its 25.3% return over the past 12 months places it in the top 9% of global large-company funds investing in a mix of growth and value stocks. Northern Trust's five-year and 10-year returns put it in the top 9% and top 3% of the category, respectively.

Learn more about ESGG at the Northern Trust provider site.

ESG Fund: Saturna Global Sustainable Bond

The Saturna Global Sustainable Bond Fund (SEBFX) joined the ESG 20 in May. So far, so good: Its one-year return of 4.1% puts it in the top 10% of global bond funds (funds that invest a meaningful percentage of assets overseas).

Managers exclude firms in industries such as alcohol, tobacco, pornography, weapons, gambling and fossil-fuel extraction. Top holdings recently included debt from Majid Al Futtaim, a major Dubai-based conglomerate.

Learn more about SEBFX at the Saturna Capital provider site.

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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