Publicly traded companies have an obligation to do whatever they can to generate profits for investors, but that doesn’t mean they are all solely focused on money. Some companies also make it a priority to operate both ethically and humanely. To help identify these socially responsible companies, Ethisphere International publishes an annual list of the world’s most ethical companies. What might be most surprising about the list is the performance of its member stocks.
According to Ethisphere, the companies on the 2019 world’s most ethical companies list outperformed the large-cap sector by 14.4% over a five-year period on Wall Street and by 10.5% over a three-year period, proving that sustainable investing can be profitable. While not all of the companies are always the best companies to invest in, when it comes to socially responsible investing, these are some of the companies you might want to consider.
Last updated: Nov. 13, 2019
- Share price as of Oct. 29, 2019: $168.81
- Price range, 52-week high/low: $150.58-$219.75
International conglomerate 3M views its Code of Conduct as not just a representation of its values but a competitive advantage as well. In the words of Veena Lakkundi, 3M’s vice president and chief ethics and compliance officer, “We know that doing the right thing, everywhere, every day is key to having a sustainable global business. We honor the trust that is placed in us by our customers, employees, communities and shareholders.” In the 3M workplace environment, compliance and ethical business conduct are expected.
Originally known as Minnesota Mining and Manufacturing Company, 3M now provides a number of well-known products, from Post-It notes to Scotch tape. Over its long history, the company’s stock has performed well, though the recent picture isn’t as bright with two straight years of declines.
- Share price as of Oct. 29, 2019: $53.58
- Price range, 52-week high/low: $41.88-$57.18
Aflac is a major insurance company known for its ads featuring a talking duck. The company’s core mission, however, is anything but silly. Aflac takes claims-paying and ethical behavior seriously, often paying customer claims in a single day. The company believes that acting ethically and responsibly is an important part of its business and is the only insurance company to make Ethisphere’s 2019 list. The stock is currently about 7% off its all-time high. It trades at a P/E ratio of about 13 and pays a dividend yield just over 2%.
- Share price as of Oct. 29, 2019: $39.97
- Price range, 52-week high/low: $33.55-$49.03
Ever since being founded by Charles Avnet nearly a century ago, electronics components supplier Avnet Inc. has based its corporate culture on values such as transparency, integrity, empathy and objectivity. The company has committed to upholding human rights across its broad operations and is also taking strides toward a conflict-free supply chain. Avent’s stock has been a winner over the long term, though it has stagnated over the past five years or so, stuck in an up-and-down trading range. Analysts have an average rating of “hold” and a consensus price target of $41.33.
Best Buy (BBY)
- Share price as of Oct. 29, 2019: $73.90
- Price range, 52-week high/low: $47.72-$78.53
Consumer electronics retailer Best Buy has had a tumultuous history. After soaring to a then-record high of more than $57 per share in 2006, fears of bankruptcy punished the stock six years later. The threat of competition from the likes of Amazon and other online retailers drove Best Buy’s stock below $12 before it executed an amazing turnaround that pushed it to new highs in 2018. A focus on customers, relationships and competitive prices helped restore the company to the position of a thriving retailer.
Best Buy has a written, 23-page code of conduct that it requires employees to sign. It’s one of only two U.S. retailers to make Ethisphere’s list of most ethical companies for 2019.
- Share price as of Oct. 29, 2019: $67.92
- Price range, 52-week high/low: $57.51-$76.41
Colgate-Palmolive is a leading global consumer products brand. In addition to its namesake Colgate and Palmolive brands, the company is also the name behind Ajax, Irish Spring, Speed Stick and numerous other products.
In addition to operating by a Code of Ethics, Colgate-Palmolive has an Ethics Line that employees can contact to get advice or ask questions about potential violations of the company’s policies. It also operates a Sustainability website, outlining its progress in three key areas: people, performance and planet. Initiatives the company highlights include its promotion of women in the workforce, its diversion of more than 9 million pieces of oral care waste from landfills and its 30% reduction in greenhouse gas emissions since 2012.
Analysts have an average rating of “buy” on Colgate-Palmolive’s stock with a consensus price target of $77.50.
- Share price as of Oct. 29, 2019: $132.94
- Price range, 52-week high/low: $106.00-$143.50
Kimberly-Clark is another consumer products company and a rival of fellow list-mate Colgate-Palmolive. Like its competitor, Kimberly-Clark has a well-defined ethical approach to its business. In 2017 alone, the maker of Huggies, Kleenex, Scott and other leading brands conducted 238 social compliance audits across its supply chain, seeking to ensure it adheres to its founders’ core values of quality, service and fair dealing. Its board of directors includes 11 independent members and has 46% minority representation.
The stock has moved in fits and starts over the years but has been a huge winner for shareholders over the long run. Analysts are divided on the near-term potential for KMB, with a target price right around the current share price.
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- Share price as of Oct. 29, 2019: $142.83
- Price range, 52-week high/low: $93.96-$145.67
Microsoft needs little introduction as a company, considering it has a $1 trillion market value and is in a daily battle with Apple for the title of most valuable company in the world. The software giant is well known for the charitable work of the founder, former CEO and current board member Bill Gates. Microsoft also has placed on Ethisphere’s list of most ethical companies nine years in a row. Beyond that, the company received countless other ethics awards, including a 100% rating from the Human Rights Campaign’s Corporate Equality Index, which ranks LGBTQ equality; and a first-place ranking on the Just 100, which ranks the company as “the best at doing right by America.”
- Share price as of Oct. 29, 2019: $136.08
- Price range, 52-week high/low: $105.03-$140.45
PepsiCo has a beautiful mountain-shaped stock chart over the long term and its shares currently lie near their all-time high. Analysts still see the stock continuing to climb, with a consensus price target of $142. One reason for the company’s success is its willingness to diversify away from its core product, Pepsi-Cola. PepsiCo is now one of the world’s leading providers of food and beverages, with brands ranging from Quaker and Gatorade to Frito-Lay and Tropicana.
In terms of sustainability, diversity and engagement, PepsiCo has earned numerous awards, including the following:
- 13 consecutive years on Ethisphere’s world’s most ethical companies list
- Two 2019 awards for climate action
- 100% on the Corporate Equality Index for its LGBT-focused Human Rights Campaign
- Ranked in OMNIKAL’s top 50 companies for inclusion
Analysts have a buy rating on PepsiCo stock.
Royal Caribbean Cruises (RCL)
- Share price as of Oct. 29, 2019: $113.27
- Price range, 52-week high/low: $89.48-$131.04
Companies like Royal Caribbean are known as “consumer discretionary” because they sell products that customers want rather than need. If your budget is tight, for example, you’re likely to prioritize essentials such as food and shelter over taking a cruise. This makes stocks like Royal Caribbean cyclical in nature, going up when consumers feel confident and coming down in periods of economic uncertainty. For now, Wall Street is bullish on Royal Caribbean. Analysts have an average rating of “strong buy” on the stock and a consensus price target of $140.
Because RCL relies on the oceans for its vessels, it publishes a “Seastainability” report that focuses on three areas: emissions reduction, sustainable sourcing and destination stewardship. As of 2018, the company had reduced emissions by 37% since 2005.
- Share price as of Oct. 29, 2019: $155.09
- Price range, 52-week high/low: $113.60-$167.56
Salesforce is much loved on Wall Street, with analysts slapping an average “strong buy” rating on the stock and a $188.33 consensus price target. Although the stock has performed well, many investors still don’t really understand what Salesforce does. In response, the $130 billion company launched an ad campaign explaining that it “brings customers and companies together” through customer relationship management solutions.
On the ethical front, Salesforce announced in December 2018 that it hired its first-ever chief ethical and humane use officer, Paula Goldman. The focus will be on the ethical use of technology to uphold the human rights of all individuals.
US Bancorp (USB)
- Share price as of Oct. 29, 2019: $57.34
- Price range, 52-week high/low: $43.14-$58.88
U.S. Bank, a subsidiary of U.S. Bancorp, is the fifth-largest commercial bank in the United States, with more than $467 billion in assets. The stock sits near its all-time high and just about at the consensus target price of $58. In 2019, U.S. Bank was named to the Ethisphere’s world’s most ethical list for the fifth year in a row. Chairman, President and CEO Andy Cecere takes the honor seriously, noting in a press release that “in banking, relationships are built on trust.”
Since 2008 the bank has invested more than $20.5 billion in environmentally beneficial business opportunities. U.S. Bank also has committed to reducing its operational greenhouse gas emissions by 40% by 2029 and 60% by 2044, using 2014 as a baseline.
Voya Financial (VOYA)
- Share price as of Oct. 29, 2019: $54.79
- Price range, 52-week high/low: $36.66-$57.57
Voya is one of five financial services companies that made the Ethisphere’s list for 2019. For Voya, it was the sixth year in a row and extended a run in which it has been named to the list every year it has been eligible. The company releases an annual Impact Report that focuses on Voya’s efforts regarding ethics and integrity, human capital, responsible products and service. Highlights of its most recent report include:
- A focus on Environmental, Social and Corporate Governance (ESG) investing and how it helps clients meet investment objectives
- Strategies to safeguard data by mitigating cyber risks
- A look at how Voya addresses the financial wellness of the American worker
- An overview of the company’s efforts to optimize diversity
Wall Street analysts remain bullish on the stock even though it’s trading near its 52-week high. The consensus analyst rating is “strong buy” with an average $66.75 price target, more than 15% above its current price.
- Share price as of Oct. 29, 2019: $29.66
- Price range, 52-week high/low: $20.52-$30.28
Investors might have trouble spelling Weyerhaeuser but they don’t have trouble buying it as it currently trades near the top of its 52-week range. The company is one of the largest private landholders in the U.S. It has used that land for more than a century, primarily to produce wood products.
Weyerhaeuser has placed on the Ethisphere list 10 times. The company frequently updates and improves its code of ethics, which focuses on areas such as conflicts of interest, antitrust and competition laws, international business conduct, human rights, preventing harassment and discrimination, and health and safety.
Weyerhaeuser’s stock continues to recover from the hit it took in 2008, along with the broader markets. Though its shares trade below their all-time high, Weyerhauser has had a strong 2019 thus far, gaining more than 35% in value all while paying a lofty 4.66% dividend as of Oct. 31, 2019.
Wyndham Hotels & Resorts (WH)
- Share price as of Oct. 29, 2019: $52.29
- Price range, 52-week high/low: $43.03-$61.49
In its first year as a publicly-traded company, Wyndham Hotels & Resorts was tagged by Ethisphere as one of the world’s most ethical companies. Some of the company’s primary objectives when it comes to acting responsibly include the following:
- Creating an inclusive, diverse workplace
- Implementing a values-driven culture of ethics and integrity
- Developing new training programs and initiatives for team members regarding acceptable business conduct standards
- Protecting human rights through training and awareness tools to identify human trafficking
The stock only has a short trading history, but analysts see good things ahead with an average “strong buy” rating and a consensus price target of $65.80, significantly above the current price.
- Share price as of Oct. 29, 2019: $97.31
- Price range, 52-week high/low: $65.64-$101.14
Hilton is another hotel group that ranks among the most ethical companies. In 2018, it announced a major commitment to cutting its environmental footprint in half and doubling its social impact investment. To achieve these ends, the company intends to:
- Reduce carbon emissions by 61%
- Reduce produced waste and water consumption by 50%
- Eliminate plastic straws from managed properties
- Sustainably source all seafood, poultry, meat, produce and cotton
- Send zero soap to landfills through a soap recycling program
- Double its monetary support to natural disaster relief
- Double the amount it spends with local, minority-owned and small businesses
- Double investment in opportunity programs for youths and women
- Attempt to eradicate forced labor and trafficking
- Contribute 10 million volunteer hours
Hilton’s stock has been on an uptrend over the last year and currently trades near its all-time high. Wall Street doesn’t expect it to go much higher, however, as the consensus price target is $98.
Beyond Meat (BYND)
- Share price as of Oct. 29, 2019: $81.99
- Price range, 52-week high/low: $45-$239.71
Beyond Meat has been one of the most noteworthy IPOs of 2019, skyrocketing from an initial offering price of $25 to more than $60 in early trading. The ride didn’t end there, however. Shares peaked at nearly $240 before settling down to the recent level of around $80. Initial shareholders have more than tripled their investments, though they might be weary of the extreme swings. On the bright side, Beyond Meat posted its first quarterly profit in its earnings release on Oct. 28, 2019. The company also raised its full-year revenue outlook for 2019.
One reason for the excitement around the stock is that its main products are plant-based alternatives to meats. Supporters claim the company will revolutionize how people eat, with the shift toward a plant-based diet also helping to reduce ancillary problems such as climate change. In terms of ethics, the Harvard T.H. Chan School of Public Health found that plant-based burgers are good for the planet from an environmental standpoint. However, the verdict is still out on whether a meatless diet is good for your health.
Vanda Pharmaceuticals (VNDA)
- Share price as of Oct. 29, 2019: $14.06
- Price range, 52-week high/low: $11.83-$33.44
If you’re hitching your future to Vanda Pharmaceuticals’ stock, you’d better hold on for the ride. The company has a notoriously volatile share price, peaking above $30 per share in 2007 before cratering below $1 a year later. Since then, the stock has had some extreme ups and downs — including more than doubling in value in 2018 — though shares have dipped considerably in 2019.
On the ethics front, the company is much more stable. In 2019 Vanda received kudos for taking a stand against the FDA, which required a drug designed to treat eczema to undergo a nine-month toxicity test on dogs. This is in line with the company’s policies to treat animals ethically.
- Share price as of Oct. 29, 2019: $316.22
- Price range, 52-week high/low: $176.99-$379.49
Tesla has always been a controversial stock, thanks mostly to the antics of its outspoken CEO, Elon Musk. However, many say that a touch of craziness is as much a part of genius as anything — and Musk is certainly a visionary if nothing else.
In terms of trying to be an ethical company and advancing the human race, Tesla has made some extraordinary gestures. In 2014, for example, Musk announced that he was no longer protecting Tesla patents on electric vehicle technology, making them open-source and available to any interested parties.
In making this announcement, he said Tesla “was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”
It’s not often that you’ll find a company that will open up all its secrets to others in defense of the common good.
- Share price as of Oct. 29, 2019: $194.52
- Price range, 52-week high/low: $135.77-$209.87
Ecolab has been on Ethisphere’s most ethical list since its inception in 2007, marking 13 consecutive years of receiving the honor. The company continues to receive this honor due to its focus on a wide range of ethical, humane and environmental issues. In addition to the Ethisphere awards, Ecolab has received various other awards in the following areas:
- Employment for women
- LGBT equality
- Corporate citizenship
Ecolab keeps striving to improve in the future, setting sustainability goals for 2020 of a 10% reduction in greenhouse gas emissions and a 25% reduction in water withdrawal over 2015 baseline levels.
The stock has been a huge winner, rising more than 75% over the past five years. It currently sits within 10% of its all-time high.
- Share price as of Oct. 29, 2019: $84.13
- Price range, 52-week high/low: $60.42-$99.72
Starbucks is another long-time member of Ethisphere’s most ethical list, having landed on it 12 years in a row from 2007 through 2018. The iconic coffee retailer didn’t make the list in 2019, however. Whatever caused Starbucks to fall off the list for a year doesn’t diminish its commitment to corporate responsibility. As of 2018, the company reported that all 9,000-plus of its stores in the U.S. and Canada were powered by renewable energy, while 99% of its purchased coffee was ethically sourced. Plastic straws will also be phased out by 2020.
As a growth stock, Starbucks has occasionally had big moves. For example, its share price more than doubled from its 2018 low to its 2019 all-time high. Wall Street analysts have an average “hold” rating on the stock with a target price of $92.50 over the next 12 months.
- Share price as of Oct. 29, 2019: $19.66
- Price range, 52-week high/low: $16.00-$49.45
Fluor might not be a household name to the average American, but it’s one of the world’s biggest engineering, procurement, construction and maintenance companies, providing assistance for capital projects across numerous industries around the globe. Even if you’ve never heard of Fluor, the company likely has impacted your life in some way. If you live in Los Angeles, for example, a Fluor joint venture will be responsible for the construction of the new LAX Automated People Mover system.
Fluor has been a good enough corporate citizen to land on Ethisphere’s most ethical list. The company’s stock, however, hasn’t done much for shareholders lately, having fallen more than 60% over the past year. On the bright side, analysts have an average “buy” rating with a consensus price target of $23.13.
Texas Instruments (TXN)
- Share price as of Oct. 29, 2019: $120.29
- Price range, 52-week high/low: $87.70-$132.20
Many older investors know the name Texas Instruments from the first generation of handheld calculators back in the 1970s, but the company has grown up quite a bit since then. In addition to being a global leader in numerous tech products, TI also dedicates itself to being a good corporate citizen.
In the Texas Instruments 2018 Corporate Citizenship report, the company said it conserved 248.8 million gallons of water, reused 2 billion gallons of water and had $33 million in philanthropic giving.
Texas Instruments’ stock hit an all-time high in October 2019 and still trades near there. Analysts have a consensus “buy” rating on the stock, but the 12-month average price target sits at $124.27 — not much higher than its current price.
- Share price as of Oct. 29, 2019: $116.91
- Price range, 52-week high/low: $89.89-$123.78
UPS is probably one of the best-known companies on the most ethical companies list, as many Americans have either received packages from the company or at least seen its signature brown vans traveling through their neighborhoods. Analysts have a “buy” rating on the stock and a 12-month average price target of $130.70, suggesting more than 10% upside.
As a delivery company, UPS understands the impact it has on the environment. The company has a stated goal of reducing its greenhouse gas emissions by 12% by 2025. UPS also looks to source 25% of its total electricity needs from renewable sources by 2025, along with sourcing 40% of ground fuel from low carbon or alternative fuels in the same time span.
UPS also focuses on diversity and inclusion in its workforce, especially pertaining to the LGBTQ community. The company received a 100% rating on the Human Rights Campaign Foundations’ Corporate Equality Index and earned the designation of being a best place to work for LGBTQ equality.
International Paper (IP)
- Share price as of Oct. 29, 2019: $42.69
- Price range, 52-week high/low: $36.45-$48.24
International Paper is considered a cyclical stock. When the economy is booming, IP shares tend to trade up, and when the economy retracts, the stock price typically suffers. For now, analysts are lukewarm on the company, with an average “hold” rating and a price target of $43.20, or just about where the stock currently trades.
From an ethical standpoint, International Paper is a standout, having appeared on Ethisphere’s list for 13 straight years. As the world’s largest user of wood fiber, the company is motivated both economically and ethically to protect the forests. One of its goals for 2020 is a 50% increase in the recovery of old corrugated containers, which will help divert usable fiber from landfills. The company also fosters an inclusive workforce by establishing mentoring boards for traditionally under-represented communities and holding inclusion forums twice per year.
- Share price as of Oct. 29, 2019: $56.34
- Price range, 52-week high/low: $42.86-$59.59
Like many large tech stocks, Intel hasn’t quite returned to the highs it established during the tech bubble of 1999-2000, but it’s been on quite a roll since its 2009 lows. The stock trades near its 52-week high and analysts have a “buy” rating, though the consensus 12-month price target of $56.50 suggests that they don’t expect much upward movement over the next year.
Intel has received numerous accolades on the ethical front. In addition to appearing on the Ethisphere list for seven consecutive years, Intel also won the Responsible Supply Chain Award in 2019 for its work on human rights in the supply chain, particularly regarding abolishing recruitment fees.
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About the Author
After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.