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Investing in ESG stocks : Our selection

10/07/2021 | 05:27am EDT

Taking ESG criteria into account allows the investor to include environmental, social and governance criteria to build a socially responsible portfolio. But how can one also benefit from good performance? Our team of experts has created a selection of stocks with the best ESG ratings that also have solid fundamentals.

Our team used the ESG ratings provided by Refinitiv, and more precisely the ESGC score, adjusted for any controversies to which a company is exposed. This score is available on Marketscreener in the Ratings section of the stock pages. The score compares companies in the same sector and takes into account efforts made by each of them. It is possible that a very polluting company obtains a better note on the environmental level than another less polluting, in a different sector. Hence the importance of the controversy score, which balances out the other independent scores for the sectors studied. 

Refinitiv's ESG scores are designed to transparently and objectively measure a company's relative ESG performance, commitment and effectiveness on 500 measures grouped into 10 main themes (environmental issues, environmental innovation, use of resources, etc).(emissions, environmental innovation, resource use, societal engagement, human rights, product responsibility, human resources, CSR strategy, management and shareholders) based on published data.

The environmental criterion takes into account a company's commitment and effectiveness in reducing environmental emissions in its production and operating processes, its ability to reduce environmental costs and burdens, and its ability to improve its environmental performance. The environmental criterion considers a company's commitment and effectiveness in reducing environmental emissions in its production and operating processes, its ability to reduce environmental burdens and costs to its customers, and its ability to reduce the use of materials, energy and water to improve its supply chain management.

The social criterion takes into account the company's commitment to being a good citizen, protecting public health, respecting business ethics and human rights, its ability to The social criterion looks at the company's commitment to being a good corporate citizen, protecting public health, respecting business ethics and human rights, its ability to produce quality goods and services that incorporate customer safety and data privacy, and the company's commitment to diversity and employee job satisfaction.

The governance criterion looks at the company's practices in communicating its CSR strategy, management's commitment to good governance practices and the company's effectiveness in treating its shareholders fairly.

These criteria are then weighted by a controversy rating calculated on the basis of 23 ESG controversy topics. During the year, if a scandal occurs, the company involved is penalized and this affects its final ESG score. The impact of the event can still be observed the following year if there are new developments related to the negative event. For example, lawsuits, legislative disputes, fines and overall media elements are captured as the controversy progresses. The controversy score also takes into account the market capitalization bias that large-cap companies suffer from, as they attract more media attention than smaller-cap companies.

Our Selection

Marketscreener's team of experts has selected companies with the highest ESG ratings based on Refinitiv scores and with relatively strong fundamental configurations. The combination of fundamental and extra-financial ESG analysis allows us to build portfolios that perform well, while investing in ethical and responsible companies.

Several lists are proposed according to geographical areas. The global list includes companies listed on the world's main financial markets. The other lists are regional: Europe, North America (Canada, United States), Asia (Japan, Australia, Singapore, Hong Kong), Emerging Markets, France, Germany, Netherlands, Switzerland and United Kingdom.

Our selection by geographical area is available here

© 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.51% 94.014 Delayed Quote.12.79%
LEGRAND 0.65% 80.56 Real-time Quote.-22.22%
MSCI SINGAPORE (GDTR) -0.66% 5698.44 Real-time Quote.-9.23%
STMICROELECTRONICS N.V. 3.23% 37.1 Real-time Quote.-17.13%
VINCI 0.15% 94.31 Real-time Quote.1.36%
WASTE MANAGEMENT -0.46% 174.48 Delayed Quote.5.03%
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