Top 5 ESG stocks | ESG Investing - YouTube

Hi, Investors use different approaches and strategies while investing in the stock market.

In today's video, we will discuss one such approach, ESG investing.

We will know what ESG investment is, what its importance is, and how to choose companies based on it.

So let's first understand the meaning of ESG Investing.

ESG means - Environment, Social, and Governance.

A company can be ESG compliant if it satisfies all the conditions of environmental, social, and corporate governance benchmarks.

Let's break down the points.

Environmental factors indicate how a company is following environmentally friendly practices in its operations.

So that our natural resources and environment are safe for the coming generations.

The second factor is social. It tells us how a co. is managing its relationships with its employees, suppliers, customers & community.

Also, many socially responsible companies participate in many socio-economic causes through their CSR initiatives.

The third factor i.e. Governance or Corporate Governance is the foundation on which a company is judged.

It is to be seen whether a company is transparent in its operations and treats its stakeholders respectfully and fairly.

Now that we have understood the meaning of ESG, you must be wondering what ESG has to do with investing.

Why should investors consider ESG investing?

According to a study by MSCI Research, companies that best satisfy ESG factors have a lower cost of capital work than companies not satisfied.

Cost of capital represents how easily a company can raise funds through equity or debt.

So if the cost of capital is less, then that is a positive sign for a company.

Also, it is generally seen that the companies that stand on these factors also have less risk.

Due to the regulatory reforms of the government, there will not be much trouble in the companies and there will be no negative impact.

With all government & internal organizations focusing on sustainable development and eco-friendly practices.

The importance of ESG investments becomes even greater.

So these are some of the reasons why retail investors and institutional investors are increasingly interested in ESG-compliant companies.

So in today's video, we will tell you about 5 companies that have low ESG risk scores.

The lower this rating, the better that company is.

But before proceeding further let us understand which method we have followed while selecting companies.

To find the ESG risk ratings of stocks, we have used Sustainalytics ESG risk ratings.

Sustainalytics, a subsidiary of Morningstar, is involved in ESG and corporate governance research, ratings, and analytics.

Each stock of these firms has an ESG Risk Score.

The lower a company's ESG risk score, the lower its ESG related to risk and vice versa.

To calculate ESG Risk Scores, consider the factors that you attribute to the firm.

Exposure: Exposure indicates the extent to which a company is exposed to the ESG issue.

What is done varies by sub-industry and company-specific factors such as the company's business model.

Management: Management tells you how well a company is managing its ESG issues.

Management scores also reflect the extent to which the company is following ESG programs, practices, and policies.

These two factors tell us how exposed a company is to ESG issues and how well it is managing its ESG issues.

After this, the dispute level is resolved by looking at the past red flags of the company.

Like any customer or employee-related issues, etc. So on the basis of all these factors, companies are given ESG risk ratings.

So, today we will tell you 5 companies that have the lowest ESG risk rating.

We will cover the ESG risk rating in descending order, that is, the company with the lowest ESG risk will be covered last.

Let's start today's list.

The first company is Tata Consultancy Services Limited i.e, TCS.

As you know that the company is the flagship company of Tata Group which is involved in the business of IT Services and Consultancy.

The company has an ESG risk rating of 14.2.

The company has a PE ratio of 34.36, and a Debt to equity ratio of 0.08.

The company has a Return on equity of 39.06%, and a Net profit margin of 20.37%.

In the last 5 years, the company's sales have been compounded at the rate of 8.61%.

The company's share price has increased by 30.49% in the last year.

In the last 5 years, the company has given a compounded annual return of 24.73%.

The second company is Adani Ports and Special Economic Zone Limited.

This company is involved in the business of development, operation, and maintenance of port infrastructure.

The company's ESG risk rating is 13.7.

The company has a PE ratio of 26.05, and a Debt to equity ratio of 1.48.

The company has a Return on equity of 17.70%, and a Net profit margin of 40.25%.

In the last 5 years, the company's sales have been compounded at the rate of 12.04%.

The company's share price has increased by 95.78% in the last year.

In the last 5 years, the company has given a compounded annual return of 18.63%.

The third company is Wipro Limited. This company is involved in the business of IT and Consulting.

The company's ESG risk rating is 13.3.

The company has a PE ratio of 29.26, and a Debt to equity ratio of 0.22.

The company has a Return on equity of 19.59%, and a Net profit margin of 17.55%.

In the last 5 years, the company's sales have been compounded at the rate of 3.86%.

The company's share price has increased by 92.25% in the last year.

In the last 5 years, the company has given a compounded annual return of 30.70%.

The fourth company is Tech Mahindra Limited which provides consultancy-led integrated portfolio services.

The company's ESG risk rating is 13.1.

The company has a PE ratio of 28.20, and a Debt to equity ratio of 0.10.

The company has a Return on equity of 18.97%, and a Net profit margin of 11.50%.

In the last 5 years, the company's sales have been compounded at the rate of 7.40%.

The company's share price has increased by 87.22% in the last year.

In the last 5 years, the company has given a compounded annual return of 28.79%.

The fifth company is Hero MotoCorp Limited. This company is India's leading motorcycle manufacturing company.

The company has an ESG risk rating of 11.2.

The company has a PE ratio of 17.04, and a Debt to equity ratio of 0.04.

The company has a Return on equity of 18.73%, and a Net profit margin of 9.08%.

In the last 5 years, the company's sales have been compounded at the rate of 1.70%.

In the last year, the share price of the company has declined by 4.24%.

In the last 5 years, the company's share price has fallen at a compound annualized rate of 4.22%.

These were those 5 companies that have the lowest ESG risk rating.

You can see these 5 companies and their ESG risk rating on your screen.

We hope you found today's video interesting.

We remind you that this video is for educational purposes only and is not a buy or sell recommendation of any kind.

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