We recently compiled a list of the 7 Best Ethical Companies To Invest In According to Reddit. In this article, we are going to take a look at where HA Sustainable Infrastructure Capital, Inc. (NYSE:HASI) stands against the other ethical companies to invest in according to Reddit.
Ethical investing involves choosing investments based on ethical principles, such as environmental, religious, or social values. Unlike socially conscious investing, which follows a specific set of guidelines, ethical investing is more individualized. Investors typically avoid being involved in gambling, alcohol, or firearms, and carefully research to make sure their investments align with their values.
Other stocks that are avoided by ethical investors include the shares of companies where employees are mistreated, have high gender parity, or discriminate against employees due to their race, religion, or sexual orientation. Environmentally conscious companies are also a huge part of ethical investing.
Is Ethical Investing the Future?
A 2022 report by Stamford University noted that the younger generation considers ethical investing quite crucial. A 2022 survey of 2,470 individual investors, conducted by Stanford University’s Rock Center for Corporate Governance, found significant differences in Environmental, Social, and Governance (ESG) preferences based on age and wealth. Younger and wealthier investors are more likely to support ESG initiatives, even at the expense of returns, while older and less wealthy investors are generally opposed.
Over recent years, support for ESG proposals has surged, with average support among S&P 500 companies increasing from 18% in 2012 to 35% in 2021, and the number of proposals passed rising from 0 to 28. The survey found that 70% of young investors (18-41 years old) are very concerned about environmental issues, compared to only 35% of older investors (58+ years old). Similarly, 65% of young investors are very concerned about social issues, versus 30% of older investors. When it comes to governance, 64% of younger investors express significant concern, while only 28% of older investors do.
Moreover, 86% of older investors would not give up any or only a trivial amount of returns for carbon emission reductions, while 64% of younger investors would give up moderate or large amounts. Additionally, 91% of older investors are unwilling to sacrifice returns for workplace diversity improvements, compared to 62% of younger investors who are willing to do so.
The survey also found that investor attitudes towards ESG differ across fund companies. Investors in State Street and Invesco funds exhibit nearly twice the concern for environmental issues compared to those in Fidelity funds. A significant percentage of investors in Fidelity (40-45%) and Vanguard funds are unwilling to forfeit returns for ESG, while a smaller percentage in American Funds and BlackRock (25-30%) share this reluctance.
Despite these differences, 83% of investors across all demographics believe that fund managers should consider their views when voting on ESG issues. The results suggest that fund managers might need to allocate votes on a proportional basis to reflect the diverse preferences of their investor base.
Our Methodology
For this article, we scoured through several subreddits to discover which companies were considered ethical according to the users. We narrowed down the list to 7 stocks that were most widely mentioned and used the hedge fund sentiment of each stock as a tie-breaker. The companies are listed in ascending order of the number of hedge fund holders as of the second quarter of 2024. The hedge fund data was taken from our database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? 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).
A rooftop view of a busy city skyline with solar energy panels and wind turbines illuminating the skyline.
HA Sustainable Infrastructure Capital, Inc. (NYSE:HASI)
Number of Hedge Fund Holders: 16
HA Sustainable Infrastructure Capital, Inc. (NYSE:HASI), previously known as Hannon Armstrong Sustainable Infrastructure Capital, Inc., is a company focused on climate investments. It collaborates with clients and provides capital to support the transition to cleaner energy. The company invests in behind-the-meter (BTM) building or facility-specific distributed energy projects, which are tailored to reduce energy consumption or costs for specific buildings or facilities. It is one of the best companies to invest in according to Reddit.
Additionally, it supports grid-connected renewable energy initiatives, including solar, solar-plus-storage, and onshore wind projects, aimed at generating cleaner power. It also invests in various Fuels, Transport & Nature projects, such as fleet decarbonization and ecological restoration efforts. The company carries out a range of investment approaches, including equity stakes, joint ventures, land ownership, and lending activities.
At a stake value of $58.42 million, 16 hedge funds held positions in HA Sustainable Infrastructure (NYSE:HASI) in the second quarter. As of Q2, Encompass Capital Advisors is the top shareholder in the company and has a position worth $18.76 million.
HA Sustainable Infrastructure (NYSE:HASI) is known for its innovative approach to climate investments and its expanding portfolio in sustainable infrastructure. The company has distinguished itself by targeting projects that aim to reduce or offset greenhouse gas emissions. According to the company’s website, it is the first publicly traded U.S. company to report the avoided emissions from each investment using its unique CarbonCount metric.
Since its initial public offering in 2013, it has channeled over $12 billion into assets that collectively prevent 7.4 million metric tons of carbon emissions, which is equivalent to removing the emissions from over 1.6 million passenger vehicles. Additionally, these investments help conserve more than 7 billion gallons of water each year. In 2023 alone, the company invested $2.3 billion in climate solutions. It is one of the best ethical companies to invest in.
HA Sustainable Infrastructure’s (NYSE:HASI) recent performance is evidence of the effective execution of its mission. For the second quarter, the company reported non-GAAP EPS of $0.63, which surpassed expectations by $0.07. Moreover, the company reported revenues of $94.52 million.
During the quarter, managed assets of the company grew by 21% year-over-year to $13.0 billion, while its portfolio expanded by 27% to $6.2 billion. The yields on new investments made during the first half of 2024 were over 10.5%, and the total portfolio yield stood above 8.0% at the end of the quarter, which reflects its ability to secure high returns.
As the demand for clean energy rises, due to advancements in AI technologies, and the growing adoption of electric vehicles, the company is well-positioned to capitalize on the shift from traditional oil markets to renewable electricity markets. Its renewable energy investments currently reduce CO2 emissions by about 8 million metric tons annually. This combination of effective climate action and robust financial performance suggests that it is well-placed to continue thriving in the evolving energy landscape.
Overall HASI ranks 7th on our list of best ethical companies to invest in according to Reddit. While we acknowledge the potential of HASI as an investment, 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 HASI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.