Socially responsible companies are businesses that integrate social and environmental considerations into their core operations and decision-making processes. One of the key characteristics of socially responsible companies is their focus on environmental stewardship and they actively work to reduce their environmental impact by implementing sustainable practices, reducing waste, conserving resources, and minimizing carbon emissions.
Another important aspect of socially responsible companies is their focus on social equity. These companies promote fair labor practices, support community development, and respect human rights. This includes providing fair wages, safe working conditions, and opportunities for employee growth and development.
Ethical governance is also a cornerstone of socially responsible companies. They maintain high standards of transparency, accountability, and integrity in their operations and decision-making processes. This includes ethical business practices, fair competition, and responsible marketing.
Investors are drawn to socially responsible companies because of the alignment with their personal values. Many investors are driven by a desire to make a positive impact on society. By investing in socially responsible companies, they can support businesses that share their values and contribute to social and environmental causes they care about.
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The global shift toward sustainable investing is gaining significant traction. The Sustainability Megatrends Report by Cushman & Wakefield highlighted that 60% of global investors reported higher performance yields from Environmental, Social, and Governance (ESG) investments. This positive financial outcome is driving a surge in demand for ESG funds, with 78% of investors willing to pay higher fees for these products. One of the most significant trends is that Institutional investors are increasingly recognizing the financial advantages of ESG-focused investments, leading to a transformation in how companies allocate capital. Therefore, strong ESG performance is becoming a critical factor in attracting investment, with companies that excel in this area seeing a surge in capital inflows.
Mandatory ESG reporting is another critical trend, as governments and regulators worldwide are enforcing greater transparency in environmental and social impact metrics. Companies that integrate these reporting standards into their strategies are better positioned to manage risks and seize new opportunities. The global energy transition and decarbonization efforts are also reshaping industries, with companies investing heavily in renewable energy and implementing strategies to reduce their carbon footprints.
Investors are increasingly drawn to socially responsible companies due to the potential for risk mitigation, long-term value, and alignment with personal values. With that in context, let’s take a look at the 8 best socially responsible stocks to buy according to hedge funds.
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Our Methodology
To compile our list of the 8 best socially responsible stocks to buy according to hedge funds, we sifted through internet rankings to find 20 socially responsible companies. We then used Insider Monkey’s Hedge Fund database to rank 8 stocks according to the largest number of hedge fund holders, as of Q3 2024. 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 Socially Responsible Stocks to Buy According to Hedge Funds
8. Novo Nordisk A/S (NYSE:NVO)
Number of Hedge Fund Investors: 61
Novo Nordisk A/S (NYSE:NVO) is a global leader in diabetes care and chronic disease management. The company develops insulin therapies, GLP-1 medications, and treatments for obesity and rare endocrine disorders. Novo Nordisk A/S (NYSE:NVO) promotes health equity and responsible healthcare practices by making medications affordable and accessible.
Novo Nordisk A/S’s (NYSE:NVO) GLP-1 treatments, including Ozempic and Wegovy, have seen substantial sales growth, driven by their effectiveness in managing blood glucose levels and promoting weight loss. To further capitalize on this success, the company is investing heavily in scaling its supply chain to meet the high demand for these treatments. Novo Nordisk A/S (NYSE:NVO) has tripled its patient reach in the past three years, now serving over 11.5 million patients globally. Additionally, the company is expanding its GLP-1 portfolio with new formulations and indications, such as the oral semaglutide and the 2.4 mg dose for obesity, to cater to a broader patient base and address unmet medical needs.
Novo Nordisk A/S (NYSE:NVO) is also actively working to improve market access and patient support. In the U.S., the company has secured coverage for Wegovy for over 55 million people living with obesity. Internationally, Novo Nordisk A/S (NYSE:NVO) is launching Wegovy in more than 15 countries and is committed to re-establishing supply for its rare endocrine disorder products. The company is also investing in patient education and support programs to help individuals manage their conditions effectively.
7. Charter Communications, Inc. (NASDAQ:CHTR)
Number of Hedge Fund Investors: 61
Charter Communications, Inc. (NASDAQ:CHTR) is a leading broadband connectivity and cable operator in the U.S. that serves residential and commercial customers under the Spectrum brand. Charter Communications, Inc. (NASDAQ:CHTR) provides internet, television, and voice services. The company has launched a multi-billion-dollar Rural Construction Initiative to build new fiber-optic network infrastructure in unserved rural communities.
Charter Communications, Inc. (NASDAQ:CHTR) is investing heavily in its network infrastructure to ensure it remains at the forefront of technological advancements. The company is transitioning to a fully distributed and symmetrical multi-gigabit wireline and wireless network, which will cover its entire footprint of 58 million passings. This network evolution initiative, while initially more capital-intensive, is designed to provide customers with faster, more reliable connectivity and position Charter Communications, Inc. (NASDAQ:CHTR) as a leader in the broadband market. The company expects to complete this network evolution by the end of 2027.
Furthermore, Charter Communications, Inc. (NASDAQ:CHTR) has launched a new brand platform known as “Life Unlimited” which offers customers a unified and seamless experience across all their connectivity needs, including high-speed internet, mobile, and video services. This comprehensive approach is designed to drive higher penetration and reduce churn by bundling these services through Spectrum Mobile. The company has also introduced a set of customer service commitments, such as same-day technician dispatch and service credits for missed targets.