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 First Solar, Inc. (NASDAQ:FSLR) stands against the other ethical companies to invest in.
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 threads 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 solar panel farm with an orange sky illuminating the vast landscape.
First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 66
First Solar, Inc. (NASDAQ:FSLR) is an American company in the solar energy industry that specializes in manufacturing solar panels and developing utility-scale photovoltaic (PV) power plants. The company is recognized for its innovative use of cadmium telluride (CdTe) in thin-film solar modules, a technology that has allowed the company to achieve significant cost efficiencies and energy production milestones.
It became publicly traded in 2006 and has since established itself as a key player in the global solar market, focusing on sustainable energy solutions that do not rely on government subsidies. With manufacturing facilities across the globe and a commitment to advancing solar technology, it continues to be a driving force in the transition to renewable energy. It is one of the best ethical companies to invest in.
It is one of the best ethical companies as it mandates that all suppliers follow the Responsible Business Alliance Code of Conduct, which includes commitments against using forced or child labor. First Solar (NASDAQ:FSLR) emphasizes voluntary employment, humane treatment, and a safe work environment. It offers competitive wages and benefits, ensures non-discriminatory practices, and respects employees’ rights to freely associate and bargain collectively.
Additionally, the company provides a confidential grievance channel and a third-party Ethics Hotline to report and address concerns. The company ensures there is no retaliation for reporting issues and conducts audits to monitor supplier compliance and environmental and social performance. This comprehensive approach shows the company’s commitment to ethical and humane practices within its global operations.
According to First Solar’s (NASDAQ:FSLR) CEO, Mark R Widmar, sustainability is central to the company’s mission and drives its operations. It aims to surpass industry standards in areas such as recycling, supply chain transparency, and environmental impact. Its commitment is reflected in the development of solar technology that prioritizes social and environmental responsibility.
This approach, termed “Responsible Solar,” ensures that the company’s products are not only high-quality but also support the fight against climate change and uphold ethical practices, including the prohibition of forced labor.
As of the second quarter, 66 hedge funds had stakes worth $1.7 billion in First Solar (NASDAQ:FSLR). This is up from 51 hedge funds with stakes worth $1.12 billion in the previous quarter. Robert Pohly’s Samlyn Capital is the company’s largest shareholder with $1.068 million shares worth $240.78 million, as of June 30.
Overall FSLR ranks 4th on our list of best ethical companies to invest in. While we acknowledge the potential of FSLR 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 FSLR 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.