Environmental, social, and governance (ESG) are the three domains in which an organization’s responsible and ethical business practices are evaluated. Governance mostly relates to the internal practices of a business, while the environmental and social practices of a business determine its outward impact.
Several independent bodies assign an ESG score to various publicly traded companies around the globe. If you are interested in ESG investing, you should consider the companies with the best ESG scores with the most reputable of these evaluation bodies.
A telecom company
When it comes to the three telecom giants in Canada, Telus (TSX: T) stands out from the bunch for a number of reasons, including its compelling combination of healthy dividends and capital-appreciation potential. It also has one of the best ESG ratings in the Canadian telecom sector.
The company has started and followed through with several social and environmental initiatives. This includes its shift to renewables by 2025, going net zero by 2030, and helping over 600,000 people in need by the next three years.
The company is also investing heavily in sustainable startups and has already grown into one of the largest digital health companies in Canada. If you combine all these ESG strengths of the company with the inherent resilience of the stock and its long-term growth and dividend potential, Telus stands out as a great pick for ESG investors.
A real estate service company
Colliers International Group (TSX: CIGI) is a real estate service company with an impressive international presence. It operates in 66 countries and has about $98 billion worth of assets under its direct management. The company has mediated thousands of real estate transactions and caters to both commercial and residential real estate clients.
It’s also a solid ESG investment. The company has undertaken several environmental and socially impactful projects over the years, including the project management of the country’s first mass timber, zero-carbon building.
As an investment, Colliers is a powerful pick for both its capital-appreciation potential and dividends. The stock has returned over 600% to its investors in the last 10 years through growth and dividends.
A gold royalties company
Thanks to the nature of their business, mining companies typically do not score well on environmental scales, and it’s easy to see why. But Franco-Nevada (TSX: FNV), one of the largest gold royalty companies in the world, has solid ESG scores with at least three of the most prominent ESG evaluators.
Since the company has a financial stake in various gold and other mining businesses and no operational overlap/oversight, the business model doesn’t weigh down the stock. The company also closely monitors its carbon footprint, including the scope three emissions, which few other businesses are currently doing.
Franco-Nevada has been a decent grower, and, compared to gold mining stocks, its performance has been relatively consistent over the past 10 years.
Foolish takeaway
The three companies are dominant in their respective industries and offer decent return potential to their investors. They are solid long-term holdings that also stand out as good ESG investments. By choosing these stocks, you can take the ethical/responsible investor route without compromising on profitability.
