ESG Picks. Great Corporate Citizens. Articles covered include: “ESG Investing: 7 Profitable Stock Picks for the Socially Responsible”; “Canada’s Best 50 corporate citizens of 2022 continue to conquer the markets”; “This Renewable Energy Giant Sees Even More Powerful Growth Ahead”; “Looking for Passive Income? This Renewable Energy Company Is a Great Way to Go.” Plus

Podcast: ESG Picks. Great Corporate Citizens.

Transcript & Links, Episode 86, July 1, 2022

Hello, Ron Robins here. First of all, I want to wish my fellow Canadians a very happy Canada Day and my American friends a great Independence Day!

Welcome to my podcast episode 86 published on July 1, 2022, titled “ESG Picks. Great Corporate Citizens” — and presented by Investing for the Soul. Investingforthesoul.com is your site for vital global ethical and sustainable investing mentoring, news, commentary, information, and resources.

Remember that you can find a full transcript, and links to content – including stock symbols, quotes, and bonus material – at this episode’s podcast page located at investingforthesoul.com/podcasts.

Now if any terms are unfamiliar to you, simply Google them.

Also, just a reminder. I do not evaluate any of the stocks or funds mentioned in these podcasts, nor do I receive any compensation from anyone covered in these podcasts. Furthermore, I will reveal to you any personal investments I have in the investments mentioned herein.

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1. ESG Picks. Great Corporate Citizens

Now my first article has this title: ESG Investing: 7 Profitable Stock Picks for the Socially Responsible by Tezcan Gecgil on InvestorPlace.com. Here are Ms. Gecgil’s stock picks and brief comments that generally relate to the latest material developments of the company.

1. “Best Buy (BBY): A newly launched home pick-up recycling program will make it easier for customers to recycle old electronics.
2. Deere (DE): Announced a new joint venture that will improve productivity, growing more food using fewer resources.
3. iShares ESG Aware MSCI EAFE ETF (ESGD): Tracks the best ESG stocks.
4. Microsoft (MSFT): A new data center in Finland will provide carbonless surplus heating to the surrounding region.
5. Novo Nordisk (NVO): Positive results for a once-weekly insulin treatment will improve the quality of life for diabetes patients.
6. Procter & Gamble (PG): Developed a 3-in-1 product to clean, sanitize, and defend against 99.9% of bacteria and viruses for up to 24 hours.
7. Xylem (XYL): Developed a new wastewater treatment solution that will help improve nutrient removal, save energy and reduce costs.

To help investors choose ESG shares, MSCI (NYSE: MSCI), a leading supplier of investment decision support tools, provides the MSCI ESG Rating.” End quotes.

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2. ESG Picks. Great Corporate Citizens

This annual ranking, though they’re Canadian companies, could be of interest to ethical and sustainable investors everywhere. The following descriptive article is titled Canada’s Best 50 corporate citizens of 2022 continue to conquer the markets. It’s by the renowned Corporate Knights group and found on their website with this commentary by Toby Heaps. Here are some quotes from Mr. Heaps.

“Twenty years ago, Corporate Knights launched its quest for a more humane form of capitalism, placing people and planet ahead of profits, with the Best 50 Corporate Citizens sitting at the head of the roundtable to make business a force for good.

A lot has changed for the better in that time and a lot hasn’t.

Thankfully, the glass ceilings in Canada’s corporate boardrooms have been breached, with non-male members now making up almost a third of directors, double their one-sixth share in 2002…

Racial diversity on large corporate boards has also improved: 9% of members are now non-white, double the 4% level in 2011, when we first started tracking this metric…

While one workplace fatality is too many, it is encouraging that on a national level, a third less people died on the job in 2019 than was the case in 2002…

Over the last two decades, corporate profits have doubled, workers have been left behind and emissions have stalled, but the Best 50 firms are leading the way with 50% more gender diversity and triple the investments aligned with the clean economy…

The Best Corporate Citizens’ stock market performance has outperformed its peers earning 499% gross return since it was first launched in June 2002, versus 366% for S&P/TSX Composite.” End quotes.

Incidentally, the top three companies in the ranking are Hydro-Quebec, Innergex Renewable Energy Inc. (INE.TO), and Brookfield Renewable Partners LP (NYSE: BEP).

Go to this podcast’s webpage for a great statistical table titled…

The 2022 Best 50 Corporate Citizens vs. the rest*

*Large Canadian companies (with more than $1b in annual revenue) excluding the Best 50

**Based on Corporate Knights’ Clean Taxonomy

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3. ESG Picks. Great Corporate Citizens

It seems in every podcast I have an article and recommendation from Matthew DiLallo from fool.com! His latest article is titled This Renewable Energy Giant Sees Even More Powerful Growth Ahead. Here are quotes from Mr. DiLallo’s article.

“NextEra Energy (NYSE: NEE) is already growing faster than most utilities, powered by its focus on clean energy… That high-powered growth could enable NextEra Energy to continue generating market-crushing total returns for investors…

The company raised its 2022 and 2023 earnings ranges by $0.05 per share, while boosting 2024’s forecast by $0.10 per share. Meanwhile, it sees 2025 earnings growing by 6% to 8% off 2024’s higher base.

This updated forecast would see the company expand its adjusted earnings per share at a 9.8% annual rate from 2021 to the high end of 2025’s forecast range…

Several factors are helping power that growth. The company plans to significantly increase its core wind, solar, and storage business, expand beyond the power sector, and grow its already large-scale transmission business to help support the decarbonization of the U.S. economy…

In addition, the company expects to build a leading regulated water business…

NextEra Energy also unveiled its Real Zero plan to eliminate all the carbon emissions across its businesses no later than 2045 without the help of carbon offset credits…

NextEra Energy has proven that going green can generate some serious green for its investors… That makes it a great stock to buy and hold for the long haul because it can potentially deliver massive returns as it leads the way in decarbonizing the U.S. economy.” End quotes.

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4. ESG Picks. Great Corporate Citizens

Now income from investments is particularly important for those who need cash flow in their daily living. So, this next article will interest those investors. It’s titled Looking for Passive Income? This Renewable Energy Company Is a Great Way to Go. It’s by Rekha Khandelwal, also on fool.com. Here’s some of what Ms. Khandelwal writes.

“At current share prices, Atlantica Sustainable Infrastructure (AY) offers a dividend yield of 5.6%… Utilities focused on renewable energy offer a great way to generate regular dividend income…

Atlantica Sustainable Infrastructure owns over 2 gigawatts of renewable electricity generation assets, roughly 72% of which are solar. Renewable power generation is expected to contribute around 70% of the company’s cash available for distribution (CAFD) from 2022 to 2026.

Atlantica also generates power using natural gas. The company expects its efficient natural gas and heat segment to contribute 15% of its cash available for distribution from 2022 to 2026. Transmission lines are expected to contribute 12%, and its water desalination assets are expected to contribute 3%. 

The biggest positives for Atlantica Sustainable Infrastructure as an investment are its stable and predictable long-term cash flows. At the end of 2021, the weighted average remaining term of agreements for the company’s assets was 15 years. All of its revenue comes from contracted or regulated assets…

Its assets are also geographically diversified, with 46% of its cash available for distribution coming from North America, 31% from Europe, and 15% from South America.

Protection from inflation

Rising interest rates are impacting the stock prices of companies in capital-intensive businesses. But the interest rates on 93% of Atlantica Sustainable Infrastructure’s project debt are either fixed or hedged…

Similarly, the company has escalation factors included in its contracts to protect it from inflation…

Management is targeting cash available for distribution per share growth of 5% to 8% through 2025…

In short, Atlantica Sustainable Infrastructure is a top renewables stock that can generate passive income for shareholders in the decades to come.” End quotes.

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5. ESG Picks. Great Corporate Citizens

This next article is by Joel Makower of GreenBiz.com, a well-known and highly respected figure in sustainable business. It’s not a direct stock recommendation but rather is here as a stock that some of you might want to look at.

The title of the article is In Brazil, Suzano harvests trees with deep roots in communities (BOVESPA: SUZB3). Here’s some of what Mr. Makower writes.

“What if the company had planted those trees years earlier, on degraded land that’s now been revitalized? And if it then planted millions more trees where the cut ones used to be — all to be harvested years later and replaced by yet more trees? And it did this for multiple generations in partnership with local and Indigenous communities?

Can that company be deemed sustainable?

These are among the questions I pondered last week during my visit to São Paulo, Brazil.

I was there as the guest of Suzano — a 98-year-old pulp and paper company, the largest in Latin America and one of the 10 largest in the world — to help host its annual ESG Call, an online event during which the company showcased its achievements and challenges to a global audience of investors, customers, activists and others. (I was paid for this work, but not for this article.)…

Suzano, founded in 1924 by Ukrainian immigrant Leon Feffer, pioneered the production of pulp and paper from eucalyptus as an alternative to pine. It invested in research and development — in the 1980s, for example, it began to apply biotechnology, adopting micropropagation practices in its plantations — and in sustainability measures, including the creation in 1999 of the nonprofit Ecofuturo Institute (Portuguese), with a focus on ‘socio-environmental responsibility…’

Social studies

I was impressed by the environmental aspects of Suzano’s operations, which have been informed by such global sustainability thinkers as John Elkington, Pavan Sukhdev and the late Tom Lovejoy…

The company has a longstanding rural development program in which it teaches communities how to make the best use of their land by producing high-value crops and helping them transform those crops into finished goods that go into local and global markets. For example, it supports honey producers and beekeepers in placing their hives inside Suzano’s eucalyptus plantations, which has the added benefit of reducing poaching by people afraid of bee stings.

Among other things, there is a history of distrust to overcome. A few years ago, for example, activists in the northern state of Maranhao claimed Suzano had behaved badly, stealing land from traditional communities, displacing families and making livelihoods untenable. Suzano disputes these claims…

Walter Schalka, the CEO, struck me as earnest as any business leader about the company’s social — and environmental — commitments.

‘Not everything that we are doing is perfect,’ he said. ‘But we are humble enough to bring the problems to the table and try to address how we are going to build the action plan to the future.’” End quotes.

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Other Honorable Mentions – not in any order, links on this podcast’s webpage

1) Title Introducing the three largest ESG ETFs found on Trackinsight.com. By Eddie Barrak.

2) Title 2 Top Dividend Stocks You Can Buy and Hold Forever on fool.com. By Beth McKenna.

3) Title Top Seven Socially Responsible Funds on GoogleWebStory.com. By Teknika Raman.

4) Title Three Sharia-compliant growth companies on MoneyWeek.com. By Scott Klimo.

Plus an article for Australian investors — again link on this podcast’s webpage

– Title 3 dividend-paying and ethical ASX shares to buy now: fund manager on monexsecurities.com.au. By Tony Yoo.

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Ending Comment

Well, these are my top news stories with their stock and fund tips — for this podcast: “ESG Picks. Great Corporate Citizens.”

To get all the links, and stock symbols, or to read the transcript of this podcast — and more — go to investingforthesoul.com/podcasts and scroll down to this episode.

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Contact me if you have any questions.

Thank you for listening.

Talk to you next on July 15. Bye for now.

© 2022 Ron Robins, Investing for the Soul