In recent years, the investment landscape has seen a significant shift towards socially responsible investing strategies. Among these, humane investing has gained considerable traction. Humane investing is a comprehensive socially responsible investing strategy that encompasses several key aspects. Firstly, it involves the reduction of animal products. This can range from food and fashion to pharmaceuticals and cosmetics, focusing on companies that minimize or eliminate the use of animal products. Secondly, it ensures that businesses respect human rights and address any adverse outcomes. This includes fair labor practices, anti-discrimination policies, and ethical supply chain management. Thirdly, it promotes environmental conservation, such as reducing carbon footprints, sustainable sourcing, and waste reduction. Lastly, it involves shareholder activism, where investors engage with companies to improve welfare practices.
READ ALSO: 12 Most Promising Green Stocks According to Hedge Funds and 10 Best Ethical Companies To Invest In According to Reddit.
On January 24, Morningstar reported that the landscape of sustainable investing is entering a new era of complexity, characterized by a stark divide between the United States and Europe. This shift was precipitated by a series of significant events, including President Donald Trump’s withdrawal of the United States from the Paris Agreement. The decision underscores a growing divergence in environmental, social, and governance (ESG) priorities, with Europe taking a leading role and the US moving in the opposite direction.
Europe has positioned itself as a leader in sustainable investing, with a pledge to achieve “climate neutrality” by 2050, or net-zero emissions. The European Union has also implemented ambitious mandatory ESG and sustainability reporting requirements, setting a high bar for corporate transparency and responsibility. This regulatory framework not only supports sustainable investing but also creates a fertile ground for asset managers to develop and market ESG-focused products with higher profit margins and a global reach.
Conversely, the US under the Trump administration has taken a different path. Trump’s inaugural speech signaled a pivot toward promoting fossil fuels and scaling back support for renewable energy sources. This shift is reflected in the actions of major financial institutions, such as the world’s six largest banks withdrawing from a major climate coalition, and BlackRock, the world’s largest asset manager, pulling out of a similar group. This move is seen as a significant setback by sustainably-minded investors as the financial industry plays a crucial role in financing companies and achieving net-zero emissions targets set by the Paris Agreement.
For asset managers, this two-speed world presents both challenges and opportunities. European managers, who operate in a market where sustainability is mainstream, are likely to gain a competitive advantage. They can leverage their expertise in ESG to attract asset owners, such as pension funds and sovereign wealth funds, who are increasingly allocating to ESG-focused strategies. This could lead to a preference for European managers, especially in impact investing, where they can demonstrate greater commitment and expertise.
US-based managers, on the other hand, are likely to adopt a more pragmatic approach, aligning their strategies with local market demands and avoiding vocal advocacy for ESG. This “greenhushing” strategy is necessary to navigate the regulatory and political headwinds in the US while maintaining a global presence, particularly in Europe and the Asia-Pacific region.
As the demand for ethical and sustainable investment options grows, humane investing provides a compelling pathway to drive positive change while achieving financial growth. With that in context, let’s take a look at the 8 best humane stocks to invest in now.
Our Methodology
To compile our list of the 8 best humane stocks to invest in now, we used environmental, social, and governance (ESG) ETFs to compile a list of 25 companies. We then looked at their ESG rating from S&P Global and picked 8 companies that have a minimum ESG score of 60. We also used Insider Monkey’s Hedge Fund database as of Q3 2024 to find the number of hedge fund holders for each company. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Best Humane Stocks to Invest in Now
8. Ecolab Inc. (NYSE:ECL)
Number of Hedge Fund Investors: 47
ESG Score: 71
Ecolab Inc. (NYSE:ECL) specializes in water, hygiene, and energy technologies that provide sustainable solutions to optimize resource use for its clients. The company primarily serves industries such as food service, healthcare, and energy to maintain cleanliness and comply with health standards.
Ecolab Inc. (NYSE:ECL) is concentrating on innovation, the company has allocated nearly $1.5 billion to developing new technologies and solutions and has a robust innovation pipeline that emphasizes clean tech, high tech, and biotech sectors. In clean tech, Ecolab Inc. (NYSE:ECL) is advancing solutions for water circularity and data center cooling solutions, which are critical areas as global demands for water and energy efficiency continue to rise. In high tech, the company is addressing challenges in microelectronics to support the growing needs of AI and data processing. By investing in cutting-edge digital tools and service capabilities, Ecolab Inc. (NYSE:ECL) aims to accelerate sales growth to a 5% to 7% range and achieve a 20% operating income margin within the next three years.
Ecolab Inc. (NYSE:ECL) is also enhancing customer value and operational efficiency through its One Ecolab initiative. This program leverages digital technologies to deliver superior business outcomes, operational performance, and environmental impact.
7. Gilead Sciences, Inc. (NASDAQ:GILD)
Number of Hedge Fund Investors: 59
ESG Score: 63
Gilead Sciences, Inc. (NASDAQ:GILD) is a biopharmaceutical company renowned for its antiviral drugs used for the treatment of HIV, hepatitis, and other critical diseases. Gilead Sciences, Inc. (NASDAQ:GILD) is known for its efforts to improve global health outcomes and its commitment to ethical business practices, including access to essential medicines for underserved communities. The firm’s innovative research and development makes it a leader in the healthcare industry.
Gilead Sciences, Inc. (NASDAQ:GILD) is concentrating on maintaining its long-term leadership in the HIV market, which remains a core focus of the company. The company recently introduced Biktarvy, a once-daily single-tablet regimen, which has solidified its position as the market leader. Furthermore, the company is progressing in the development of Lenacapavir, a groundbreaking capsid inhibitor, which represents a significant step forward in HIV treatment and prevention. Lenacapavir, the first and only twice-yearly injectable treatment for HIV, has shown exceptional efficacy and safety in clinical trials. Gilead Sciences, Inc. (NASDAQ:GILD) plans to launch Lenacapavir for both treatment and prevention, which is expected to transform the HIV landscape and address the needs of patients who require more convenient treatment options.
While HIV remains a cornerstone of Gilead Sciences, Inc.’s (NASDAQ:GILD) business, the company is also diversifying its portfolio to drive additional growth. Over the past five years, the company has invested heavily in oncology and inflammation. In oncology, Gilead Sciences, Inc. (NASDAQ:GILD) has 10 programs in Phase 3, including six for Trodelvy and four for its cell therapy platform, Yescarta and KTE-X19.