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Ethical and sustainable stocks to watch

If you are one of the many who want to gain exposure to stocks, shares and other assets while having a positive impact on the planet, trading sustainably and ethically could suit you. As with every trade, there are no ‘best’ shares in the stock market, as this depends on your product, strategy and ethical goals. However, we have listed some of the largest and best-performing* shares in this article based on past performance and potential growth for the future to keep an eye on.

Why are traders interested in this topic?

The financial sector is more aware of climate change than ever before, especially amid heightened media coverage and global protests demanding urgent action to tackle rising temperatures. With both trader and corporate interest in the protection of the planet peaking, more are looking for opportunities that are both ethical and responsible, such as renewable energy shares​, for example.

The Global Sustainable Investment Alliance noted that sustainable trading across the global financial industry grew 15% between 2018 and 2020 to reach $35.3trn in assets under management (AUM) — a drastic rise compared to prior years.

Ethical trading vs sustainable trading

Although sustainability is classed as an ethical issue, there are some differences between an ethical trade and a sustainable trade.

  • Ethical stock trading involves choosing assets based on moral principles. Therefore, each trading decision should consciously align with a trader’s ethical beliefs. Ethical stock trading is also known as socially responsible trading. An ethical trader may avoid companies that profit from cigarette smoking, alcohol production, gambling and weapon manufacturing, and instead look for companies that follow strict ethical guidelines.

  • Sustainable stock trading also involves choosing assets based on their ability to have a long-term positive societal impact. One example is seeking out companies that contribute to causes such as women’s rights, civil rights and anti-war movements. Sustainable trading can refer to companies that want to solve the world’s challenges and create a more sustainable future.

8 sustainable stocks to watch

Many traders’ perceptions of ethical trading have changed over the last decade. The scope of the strategy has transitioned from simply trading on companies that align with personal ethical guidelines to a broad sustainable trading approach that involves actively seeking out companies committed to positive environmental, social and corporate governance (ESG) change.

With ethical traders paving the way with a strategy that considers non-financial factors, the below list of companies is compiled based on each stock’s potential to create positive change, whether in an environmental, social, or ethical sense.

1. Tesla [TSLA]

Since its inception in 2003, Tesla has pioneered the electric car market and achieved the rank of the leading global producer of electric cars. Besides Tesla’s prominence in the electric car market, the company also has expanded into renewable energy via its subsidiary, Tesla Energy (formerly Solar City). If successful, Tesla has several methods of creating positive ethical change, but namely electric vehicles, autonomous vehicles and renewable energies. The stock price has seen astronomical growth since publicly listing in 2010 — its value quadrupled in 2013 and saw another spurt of growth in 2020 when it was trading at eight times its value, showing that it's one of the best EV stocks​ out there.

2. United Natural Foods [UNFI]

Organic farming removes the use of pesticides, herbicides and insecticides. The result is a product that is more sustainable as many chemicals used in non-organic farming can damage the soil, increase waste or stay on the product resulting in a less environmentally friendly product. United Natural Foods are a wholesale distributor of healthy foods. Besides this, the company has many ethical initiatives such as fundraising for renewable energy and philanthropic activities. The company publicly listed its shares in 1996 and — despite a downturn in 1999 and 2008 — continued to grow steadily before peaking in early 2015. Its share price went on to bottom out in 2020 but has since rebounded in 2022.

3. Weyerhaeuser [WY]

Weyerhaeuser is a US timberland company that owns tens of million acres of land across the US and Canada. It may be strange to see a company that has a business based on chopping down trees in an ethical and sustainable stocks list, but Weyerhaeuser practises sustainability in its forestry efforts by planting more than 1 billion trees in the last 10 years. It is also committed to planting 150 million seedlings every year to replace trees it harvested. Additional to this, the company maintains a clear ethical stance with its commitment to responsible energy and clean energies. In 1963, the company went public on the New York Stock Exchange. The stock has seen incredible growth since then, reaching an all-time high in 2007.

4. Hannon Armstrong Sustainable Infrastructure Capital [HASI]

The company claims to be one of the first US stocks to provide capital exclusively in climate solutions. Hannon Armstrong provides capital to leading companies in energy efficiency, renewable energy and other sustainable infrastructure markets. As a result, the company has become a leading conduit for firms that want to boost ESG statuses, with more than $8bn in assets under management (AUM). Its share price has doubled over the past five years.

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5. Mowi ASA [MOWI]

Sustainable fishing market leader Mowi describes itself as one of the only salmon producers with full internal control of its own genetics, feed, farming operations, harvesting, processing and marketing. As one of the world’s leading aquaculture companies, it’s committed to furthering the Blue Revolution through an eco-efficient value chain. By 2025, the company’s strategic strategy aims to see growth throughout the value chain with a particular focus on Mowi Farming, cost savings across the group, greater sustainability, as well as further expansion into digitalisation and automation. The Norwegian firm’s share price is listed on the Oslo Stock Exchange and has seen consecutive growth since 2012.

6. Gilead Sciences [GILD]

Unlike many medical research and development (R&D) firms, Californian biopharmaceutical company Gilead Science’s mission statement is focused on providing medication access “to those who may not otherwise have it” and to “fight the stigma that prevents people seeking care”. Its pedigree includes manufacturing two of the world’s best-selling HIV medications, medical advances in the treatment of viral hepatitis and a long-standing commitment to fighting social inequality – it offers grant funding and annually provides free medication to eligible uninsured individuals in the US. The stock’s price performance had steadily increased since listing in 1992, reaching a peak in 2015.

7. Beyond Meat [BYND]

A growing number of people are subscribing to the idea that a meat-free diet is good for both oneself and the planet – and Beyond Meat is leading the market in alternatives. The LA-based plant-based manufacturer has built up its customer base in recent years with its plant-based burgers replicating the taste and texture of beef, pork, and chicken. When the company was listed on the Nasdaq, the stock rose 163% during its first day of trading, making it one of the biggest IPOs in 2019. Since then, it has announced increasing partnerships with major players such as McDonald’s, KFC and Subway.

8. Ecolab [ECL]

This Minnesota-based company is a water-treatment lab that aims to protect people’s health and vital resource. Ecolab was named one of the world’s most ethical companies by the Ethisphere Institute in 2021 for the 15th consecutive year in a row. Founded in 1923 with one product under it, Ecolab has since received numerous awards for its promotion of employment and equal rights for women, LGBTQ+ equality, diversity, sustainability, innovation and corporate citizenship. It has also targeted halving its carbon emissions by 2030 and achieving net-zero by 2050. Shares in the company publicly listed in 1957 and have steadily grown since then*.

How to trade on these types of companies

There are several methods traders can use to gain exposure to ethical companies, which include shares, exchange-traded funds (ETFs), and share baskets. When spread betting or trading CFDs with us, you will be using a feature known as leverage. Leveraged trading​ magnifies your profits and losses, which can result in more risks. Below are some steps you could consider before getting involved.

  1. Research the sustainability market. Read up on ethical trading to find out which companies align with your principles. For example, does the company meet certain ESG criteria, has it committed to the reduction of carbon emissions, or does it have inclusive and diversity-aware initiatives? Also, you could look out for macro and micro trends that might influence the market. For example, what are the innovations or accelerating trends in sustainable farming or eco-friendly business practices? Also, what out for existing and upcoming legislation or government spending announcements that will boost or falter particular ethical or sustainable sectors.
  2. Compile a watchlist of stocks. Follow each company by keeping an eye on its stock performance, earnings reports and any media stories or announcements that might impact its business. Look into potential headwinds and assess your choices objectively and analytically.
  3. Decide on a trading strategy. Do you want to actively trade on individual companies or spread the risk with a thematic ETF, which has a specific focus or tracks a particular sector, such as clean energy or carbon capture?
  4. Practise trading risk-free. Trading with a demo account in a simulated market environment can give you a feel for how the industry performs before you take the plunge in the live markets.
  5. Regularly review performance. Ethical viewpoints gather momentum quickly. That doesn’t mean making impulsive decisions but keeping an eye on trends that could quickly affect returns.

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Are there any ethical ETFs?

Exchange-traded funds can provide exposure to several relevant stocks using a single position, unlike when you trade on individual shares. This can provide several benefits, including lower trading costs and portfolio diversification. However, remember that leveraged ETFs are complex financial instruments that carry significant risks. Certain leveraged ETFs are only considered appropriate for experienced traders. Below are some relevant ethical and sustainable ETFs to consider, and there are also a number of electric vehicle ETFs​ that you may want to consider.

iShares MSCI KLD 400 Social ETF [DSI]

Launched in 2006, this ETF is made up of companies that have positive ESG characteristics. While the fund’s holdings, which include stocks such as Microsoft, Alphabet, Nvidia, Proctor & Gamble, and Visa, focus on companies that have ESG credentials, it also screens for certain businesses that are involved in adult entertainment, alcohol, firearms, and more.

US Vegan Climate ETF [VEGN]

The US Vegan Climate ETF tracks the Beyond Investing US Vegan Climate Index [VEGAN], which seeks to avoid companies involved in the slaughter, cruelty and mistreatment of animals. Outside of animal harm and exploitation, the fund also screens companies for environmental damage, including the burning of fossil fuels and human rights, such as child forced labour. The fund, which was launched in 2019, has holdings in stocks such as Tesla, United Health Group, Salesforce.

Gain exposure to the industry through our CFD share baskets

Share baskets are mini portfolios of stocks built around a specific theme and provide exposure to several assets that are handpicked by our traders and market analysts. We sift through data on popular themes and growing trends in the markets and handpick stocks to give you maximum exposure to those themes with a single position.

Although we don’t offer a share basket specifically focused on ethical companies, we do offer one for renewable energy, which is directly related to ethics and sustainability. Learn more about our Renewable Energy share basket​.

*Please note that past performance is not a reliable indicator of future results.


What is an example of unethical trading?

Some traders may consider unethical companies to be those involved with defence and military weapons, tobacco, gambling, alcohol, or any other product or service that could potentially cause harm.

What are some good environmental stocks?

Some examples of environmental stocks that have shown positive growth, revenue, and overall performance over the last decade include Tesla, NextEra Energy, First Solar, and Plug Power. See our guide to renewable energy stocks for more information.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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