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.
6. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Investors: 68
Intel Corporation (NASDAQ:INTC) is a global technology leader that manufactures semiconductors, processors, and integrated circuits. The company’s products are integral to a wide range of devices, from personal computers and data centers to cloud services and the Internet of Things (IoT). Intel Corporation (NASDAQ:INTC) collaborates with industries worldwide to enhance digital transformation.
Intel Corporation (NASDAQ:INTC) is focusing on developing world-class products that are competitive in the market. The company is doubling down on its product roadmap, particularly in key growth areas such as data centers, AI, and client computing. Intel Corporation (NASDAQ:INTC) is investing heavily in its 18A process technology, which is crucial for regaining process leadership and ensuring that its products are at the cutting edge of performance and efficiency. The company has already begun delivering early samples of these products to customers. This focus on innovation is critical for Intel Corporation (NASDAQ:INTC) to compete effectively with rivals such as AMD and ARM.
Intel Corporation (NASDAQ:INTC) is taking a pragmatic approach to manufacturing, recognizing that not all products need to be manufactured in-house. The company has expressed a willingness to outsource certain products to foundry partners such as TSMC, to enhance their quality. This flexibility is particularly important in the data center segment, where Intel Corporation (NASDAQ:INTC) is facing intense competition. Additionally, the company is also making significant investments in its Foundry services.
5. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Investors: 74
QUALCOMM Incorporated (NASDAQ:QCOM) is a prominent semiconductor and telecommunications company renowned for its advancements in wireless technology. The company generates revenue by licensing its intellectual property and selling semiconductors for mobile devices and IoT applications. QUALCOMM Incorporated’s (NASDAQ:QCOM) customers include smartphone manufacturers and technology firms.
QUALCOMM Incorporated (NASDAQ:QCOM) is capitalizing on the increasing demand for on-device artificial intelligence (AI) and edge computing. The company views edge AI as a revolutionary technology that improves the human-computer interface by delivering context, immediacy, and personalization while ensuring privacy and security. At the recent Snapdragon Summit, QUALCOMM Incorporated (NASDAQ:QCOM) presented its vision for AI-enabled edge computing and announced collaborations with Meta to support Llama 3.2 on Snapdragon-powered devices and with Amazon to create a cloud-to-edge solution for customizing and deploying AI models. The company also unveiled the Snapdragon 8 Elite which features a second-generation custom Oryon CPU and a redesigned hexagon NPU that enables advanced AI functionality in mobile devices.
QUALCOMM Incorporated (NASDAQ:QCOM) is also broadening its presence in the Industrial IoT (IIoT) market with the introduction of the Qualcomm IQ Series and the IoT Solutions Framework. These offerings are designed for next-generation industrial edge applications, providing tools for inspection, automation, robotics, and advanced computer vision. Additionally, the company has enhanced connectivity and computing power in its Networking Pro A7 Elite Platform to strengthen its capabilities in edge networking and reinforce its leadership in industrial and IoT solutions.
4. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Investors: 75
NIKE, Inc. (NYSE:NKE) is a global leader in the design, development, and marketing of athletic footwear, apparel, equipment, and accessories. The company has built a reputation for excellence, driven by its commitment to performance, innovation, and a deep connection with athletes and sports enthusiasts worldwide. NIKE, Inc.’s (NYSE:NKE) initiatives in sustainable manufacturing, such as using recycled materials and reducing carbon emissions, reflect its commitment to environmental stewardship and corporate responsibility.
NIKE, Inc. (NYSE:NKE) is reinvesting in its brand to create stories that inspire and emotionally connect with consumers during important sports moments and critical product launches. The company has launched marketing campaigns such as “Winning Isn’t Comfortable” and has announced long-term partnerships with major sports organizations and leagues, including the NBA, WNBA, NFL, and the Brazil Football Confederation. These partnerships aim to enhance brand visibility and provide a platform for showcasing the company’s innovative products and athlete stories to drive consumer interest and loyalty.
Additionally, NIKE, Inc. (NYSE:NKE) is rebuilding trust with its key wholesale partners, who have been impacted by recent business decisions. The company is also committed to delivering new and innovative products, telling compelling stories, and supporting mutually profitable growth. This includes providing partners with access to the latest innovations, marketing support, and strategic collaboration to ensure successful sell-through and a healthy marketplace.
3. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Investors: 116
Salesforce, Inc. (NYSE:CRM) is a leading customer relationship management (CRM) platform that provides cloud-based solutions for sales, marketing, and analytics. The company’s comprehensive suite of products, including Sales Cloud, Service Cloud, Marketing Cloud, Commerce Cloud, and Slack, is designed to provide a 360-degree view of the customer, enabling businesses to enhance customer engagement, streamline operations, and drive growth.
Salesforce, Inc. (NYSE:CRM) is revolutionizing the way businesses operate with the introduction of Agentforce, a groundbreaking AI-powered platform that transforms customer service and support. Agentforce leverages autonomous AI Agents to handle customer interactions with unparalleled accuracy and efficiency. This not only reduces the workload on human agents but also enhances the overall customer experience. By automating routine tasks and providing real-time insights, Agentforce is unlocking new levels of productivity and operational excellence. Companies such as Vivint and Adecco are already seeing significant benefits from adopting Agentforce, with Vivint resolving service cases 40% faster and Adecco processing 300 million job applications annually with unprecedented speed and accuracy.
Salesforce, Inc. (NYSE:CRM) is expanding its footprint globally, with a particular focus on highly regulated industries such as healthcare, manufacturing, and automotive. The company’s industry-specific solutions, such as the new Life Science Cloud, are tailored to meet the unique needs of these sectors.
2. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Investors: 202
Alphabet Inc. (NASDAQ:GOOGL), the parent company of Google, is a global technology conglomerate that encompasses a diverse range of innovative businesses. The company is known for its pioneering work in search, advertising, cloud computing, and artificial intelligence (AI). Alphabet Inc.’s (NASDAQ:GOOGL) investments in renewable energy projects and eco-conscious data centers position it as a leader in environmental sustainability within the tech sector.
Alphabet Inc. (NASDAQ:GOOGL) is uniquely positioned to lead in the era of AI due to its robust infrastructure, world-class research teams, and broad global reach. The company is investing heavily in state-of-the-art data centers, advanced AI chips, and a global fiber network to support its AI efforts. Notable initiatives include the development of the sixth-generation Trillium TPUs, which offer significant performance improvements and cost efficiencies. Alphabet Inc. (NASDAQ:GOOGL) is also making clean energy investments, including the world’s first corporate agreement to purchase nuclear energy from multiple small modular reactors, which will provide up to 500 megawatts of carbon-free power.
Alphabet Inc. (NASDAQ:GOOGL) is continuously innovating to enhance user experiences and drive engagement across its platforms. In search, recent advancements such as AI Overviews, Circle to Search, and new features in Lens are transforming how users interact with information. AI Overviews, now available in over 100 countries, have reached more than 1 billion users and are increasing overall search usage and user satisfaction. Circle to Search, available on over 150 million Android devices, is being used for shopping, translation, and learning, with a third of users engaging weekly. Additionally, Lens is handling over 20 billion visual searches per month, making it one of the fastest-growing query types on search. These features are not only enhancing user experiences but also creating new opportunities for advertisers to connect with consumers.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Investors: 279
Microsoft Corporation (NASDAQ:MSFT) is a global technology leader with a diverse portfolio of products and services, ranging from operating systems and productivity software to cloud computing and artificial intelligence (AI). The company is known for its ethical efforts including achieving carbon negativity, empowering underserved communities through technology access, and maintaining rigorous data privacy standards.
Microsoft Corporation (NASDAQ:MSFT) is at the forefront of the AI revolution, with a significant portion of its growth strategy centered around AI-driven solutions. The company is investing heavily in AI infrastructure, including data centers, GPUs, and proprietary accelerators such as Maia 100. The partnership with OpenAI has been pivotal, enabling Microsoft Corporation (NASDAQ:MSFT) to offer services such as Azure OpenAI and GitHub Copilot, which are being adopted by a wide range of customers, from startups to large enterprises. By continuing to innovate and build end-to-end AI platforms, Microsoft Corporation (NASDAQ:MSFT) aims to help customers transform their workflows and drive new growth.
Azure, Microsoft Corporation’s (NASDAQ:MSFT) cloud computing platform, continues to gain market share and is a cornerstone of the company’s growth strategy. The company is focusing on optimizing its Azure fleet for AI workloads to offer a broad selection of AI accelerators and the latest GPUs from AMD and NVIDIA. By enhancing Azure’s capabilities and expanding its reach, the company aims to capture a larger share of the growing cloud market and support the AI-driven transformation of businesses worldwide.
While we acknowledge the potential of Microsoft Corporation (NASDAQ:MSFT) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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