ESG stock picks to buy: 4 recommendations from Russell Investments - Business Insider

Analysts at Russell Investments have outlined a group of stocks across sectors that satisfy their criteria for strong returns and ESG (environmental, social, and corporate governance) investing standards. The investment manager, which sources its “do-good investing” framework from the ESG research provider Sustainalytics, recommended names including tech giant Intel.“By identifying some doing good metrics, we are able to evaluate some sector leaders that have been doing good and evaluating their ability to do well at the same time,” the analysts wrote.Visit BI Prime for more investing coverage.

The coronavirus pandemic has renewed questions that have long surrounded sustainable investing strategies. Market participants are scrutinizing companies' crisis responses as it relates to shareholders, employees, and customers — or “stakeholders” — alike.Critics have questioned how investors can square a restrictive environmental, social, and corporate governance framework with achieving strong returns, and the lack of a standardized ESG criteria hasn't helped skeptics.The turbulence has put these strategies to the test — and Wall Street analysts and strategists on have noted for weeks that do-good investing funds have fared better than the broader market during stocks' unprecedented volatility.Investor flows into ESG funds “have not been hindered” by the sell-off, Barclays strategists said in an April 29 report.

“The resilient performance of ESG funds in dire market conditions is noticeable, which will likely continue to fuel demand and inflows from investors, in our view,” they wrote, noting the likely explanation for the stocks' strength is the “clear overlap” between names that fit quality and growth investing styles.At RBC Capital Markets, strategist Sarah Mahaffy noted in late March that companies with “better overall ESG risk profiles have outperformed those with worse ESG profiles” during the downturn, Business Insider reported. Two-thirds of actively managed sustainable equity funds beat their benchmarks in March, Mahaffy said. And while every corner of the market is under its own kind of duress, ESG fund losses have been less severe than the wider market's redemptions. Of 17 exchange-traded and mutual funds with more than $250 million in assets that S&P Global Market Intelligence analyzed in mid-April, 12 had fared better than the S&P 500. “ESG fund managers said their focus on nontraditional risks led to portfolios of companies that so far have been resilient during the COVID-19 downturn,” the firm said, adding the top performer in its analysis had lost 5.4% for the year through April 9, compared with the S&P 500's 13.7% decline.

Other firms are taking note of the solid performance they believe can be found in companies that also fit the bill for ethical investing. Russell Investments, which manages some $270 billion in assets, in a recent report picked a group of stocks they say showcase healthy returns — “doing well” — along with ethical or sustainable features — “doing good.” The investment manager's analysts defined “doing well” in a financial sense as “strong excess over index and excess over sector returns for three years trailing December 2019,” and a company “doing good” as “a bit more loosely in acknowledgement that there are many ways one can either measure or track goodness.” Russell Investments also relies on ratings and data from the firm Sustainalytics for sussing out which companies have a strong sustainability track record.“By identifying some doing good metrics, we are able to evaluate some sector leaders that have been doing good and evaluating their ability to do well at the same time,” the analysts wrote. “From our perspective, it is definitely possible, but requires skill to get the balance right.”

Here are the four stocks they picked to showcase stocks with strong returns and meet their ethical investment standards.