Sustainable investing continues to be a dominant trend across boardrooms, investment teams, and consumers alike. It is estimated that ESG assets will nearly double from $18 trillion in 2021 to $34 trillion in 2026. At its current pace, ESG holdings are on track to constitute nearly 22% of total global assets under management.
In recent years, regulators have cracked down on ‘greenwashing’ claims and continue to establish protocols and guidance for ESG integration. In spite of these challenges, there are clear leaders emerging in the space, boasting impressive industry benchmark ESG ratings that edge out their peers.
It should be no surprise that many of these companies are also outright leaders in their respective industries—demonstrating that ESG integration constitutes a holistic, enterprise-wide undertaking and is a meaningful part of their corporate governance. It also refutes the notion that ESG integration is a compromise for performance.
Below, we explore the companies garnering top ESG rankings and are worth watching in 2024 and beyond.
Nvidia Corporation
MSCI ESG Rating: AAA
2024 NVIDIA Corporate Sustainability Report
2023 CDP Climate Change Questionnaire
Nvidia is a leading developer of graphics processing units (GPUs). Traditionally, GPUs were used to enhance the experience on computing platforms, most notably in gaming applications on PCs. More recently, artificial intelligence has enhanced GPU use cases as important semiconductors. Nvidia not only offers AI GPUs, but also a software platform called Cuda that is used for AI model development and training.
According to analyst research sourced from the AlphaSense platform, NVIDIA stands out as a leader in ESG practices. With a robust commitment to sustainable operations and ethical conduct, it is setting benchmarks for others to emulate within the technology sector and beyond.
The company’s ESG initiatives focus on the reduction of carbon emissions, developing energy-efficient GPUs, renewable energy, and promoting diversity and inclusion practices.
Best Buy Co., Inc.
MSCI ESG Rating: AAA
Best Buy Corporate Responsibility and Sustainability Report
With $43.5 billion in consolidated 2023 sales, Best Buy is the largest pure-play consumer electronics retailer in the U.S. 2023. Recently, the company pledged to be carbon neutral by 2040, and has reduced carbon emissions by 66% since 2009. Their corporate governance practices and independent board majority continue to be hailed as best-in-class among their global peers.
As a retailer of electronic products that traditionally rely on carbon-intensive supply chains, Best Buy leads the industry with programs to mitigate risks associated with its carbon footprint, serving as the nation’s largest collector of e-waste.
Texas Instruments Incorporated
MSCI ESG Rating: AAA
2023 Texas Instruments Corporate Citizenship Report
Texas Instruments generates over 95% of its revenue from semiconductors and the remainder from its well-known calculators. Texas Instruments is the world’s largest maker of analog chips and also has a leading market share position in processors and microcontrollers, used in a wide variety of electronics applications.
TI leads industry peers in adopting strategic initiatives to develop semiconductor products with low power consumption devices, and those that enable renewable energy systems and electric vehicles. The company is also hailed for its strong human capital and water management efforts amid planned site expansions.
Xylem Inc.
MSCI ESG Rating: AAA
Xylem Corporate Governance Principles
Xylem 2023 Sustainability Report
Xylem is a global leader in water technology and offers a wide range of solutions, including the transport, treatment, testing, and efficient use of water for customers in the utility, industrial, commercial, and residential sectors. Based in Rye Brook, New York, Xylem has a presence in over 150 countries and employs 16,200. The company generated $7.4 billion in revenue in 2023.
Xylem maintains strong environmental programs relative to competitors in the industry such as smart metering and leak detection technologies for its wastewater treatment solutions. Analyst research sourced from the AlphaSense platform notes that Xylem excels in partnering with customers on sustainability and energy efficiency initiatives.
Applied Materials, Inc.
MSCI ESG Rating: AAA
2022 Applied Materials Sustainability Report
Applied Materials is the largest semiconductor wafer fabrication equipment, or WFE, manufacturer in the world. Applied Materials has a broad portfolio spanning nearly every corner of the WFE ecosystem. Specifically, Applied Materials holds a market share leadership position in deposition, which entails the layering of new materials on semiconductor wafers.
Applied Materials was recently upgraded to an MSCI ESG rating of AAA from AA. The company’s cleantech initiatives in 2023 included new product lines such as the Vistara
Platform, designed with reduced energy consumption, and the EcoTwin, a complementary software that helps monitor energy and material consumption in chambers and systems. In 2022, the company reached 100% renewable electricity in the US and continues to progress toward its goal of 100% renewable electricity globally by 2030.
Merck & Co., Inc.
MSCI ESG Rating: AAA
Merck is a leading global manufacturer of pharmaceutical treatments in a number of therapeutic areas, including cardiometabolic disease, cancer, and infections. Within cancer, the firm’s immuno-oncology platform is growing as a major contributor to overall sales. The company also has a substantial vaccine business, with treatments to prevent pediatric diseases as well as human papillomavirus(HPV).
The company prioritizes its sustainability efforts across four focus areas: expanding access to health; developing and rewarding a diverse, inclusive and healthy workforce; protecting the environment; and operating with the highest standards of ethics and values. Globally, Merck’s KgaA subsidiary works to improve access to healthcare in developing markets. It has robust access initiatives such as programs in Africa for treatment discovery and training healthcare workers to treat locally prevalent diseases such as malaria and schistosomiasis.
Adobe Inc.
MSCI ESG Rating: AAA
Adobe Corporate Social Responsibility Report
Adobe provides content creation, document management, and digital marketing and advertising software and services to creative professionals and marketers. The company operates within three segments: digital media content creation, digital experience for marketing solutions, and publishing for legacy products.
The company is hailed for its industry-leading measures to mitigate data risks. Adobe maintains robust cybersecurity threat management practices and is one of the few software companies that explicitly commits to privacy-by-design principles. The company leads the industry in improving gender and racial representation and is committed to gender pay parity and ethnic pay parity in the US.
Workiva, Inc.
MSCI ESG Rating: AAA
Workiva 2023 ESG Impact Report
Workiva is a leading cloud-based platform that simplifies the complexities of reporting and compliance. Workiva’s platform empowers customers by connecting and transforming data from hundreds of enterprise resource planning (ERP), human capital management (HCM), and customer relationship management (CRM) systems, as well as other third-party cloud and on-premise applications. The platform is used to create, review, and publish data-linked documents and reports with greater control, consistency, accuracy, and productivity..
The company differentiates its industry-leading data privacy practices by embedding ‘privacy by design’ principles and undertaking firm-wide cybersecurity training. Workiva continues to lead industry peers in workforce management initiatives. Moreover, its three-year (2020–2022) sales growth of 27% exceeded the industry average of 14.98%.
Microsoft Corporation
MSCI ESG Rating: AA
2024 Microsoft Environmental Sustainability Report
A global leader in enterprise and consumer software, Microsoft has pledged to be carbon negative by 2030. To that end, the company has purchased over 30 billion kilowatt-hours (kWh) of green power, reducing its emissions by 20 million metric tons of carbon dioxide equivalent.
In 2020, Microsoft maintained 100% green power usage across its U.S. operations for the 6th consecutive year. Microsoft has mostly powered its operations by renewable energy since 2013. Their Climate Innovation Fund, launched in 2020, commits to investing $1 billion over four years into new technologies and expanding access to capital around the world for people working to address the climate challenge.
Salesforce, Inc.
MSCI ESG Rating: AA
2024 Stakeholder Impact Report
Salesforce is a leading provider of enterprise cloud computing solutions. The company offers customer relationship management technology that brings companies and customers together. Its Customer 360 platform helps deliver a single source of truth, connecting customer data across systems, apps, and devices to help companies sell, service, market, and conduct commerce. As a cloud-based platform, Salesforce helps to optimize enterprises’ operations with process automation solutions.
In 2021, Salesforce achieved net zero emissions across their Scope 1, 2, and 3 emissions.
The company also continues to be an industry leader in data security and talent management initiatives, holding certifications to internationally recognized frameworks such as ISO 27001.
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Financial Research Leader
Barb is a Financial Research Manager covering the financial services segment at AlphaSense. Previously, she managed the content program at a global financial services firm.
Read all posts written by Barbara Tague
