The Motley Fool

2 ESG stocks I think Warren Buffett might like to buy

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

close-up photo of investor Warren Buffett
Image source: The Motley Fool

Responsible investing is a phenomenon that goes by many names. Some know it as ethical investing. Others give it the more convoluted title of Environmental, Social and Governance (ESG) investing. It’s a share-buying strategy that more and more people are adopting as consumers become more conscious about how the products and services they buy come into being.

I own a number of ESG stocks. Biffa and TI Fluid Systems even sit on the London Stock Exchange’s Green Economy Mark list. Companies and funds that meet this criteria “derive more than 50% of their revenues from products and services that are contributing the environmental objectives such as climate change mitigation and adaptation, waste and pollution reduction, and the circular economy.”

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Early morning sunlight filtering through the green foliage of an tranquil forest clearing

Investors don’t need to settle for lower future returns by buying ESG stocks either. I certainly expect the stocks I mentioned above to make me decent long-term profits as the recycling industry grows (in the case of Biffa) and electric vehicle sales take off (TI Fluid Systems).

Here are two other top-quality ESG stocks I think could make me lots of money. I even think billionaire investor Warren Buffett would approve of them!

An ESG stock I also own

DS Smith (LSE: SMDS) is another stock on the Green Economy Mark list I currently own. It recycles paper back into boxes and other packaging products. And it collects the corrugated packaging once it’s been used, significantly reducing waste in the process. It’s also sold off all its plastics-manufacturing assets and has plans to become carbon Net Zero by 2050. I think this FTSE 100 company could make me terrific returns as e-commerce grows rapidly.

Now DS Smith faces a problem in the form of soaring paper costs. But I think Buffett would like this UK share because its colossal manufacturing and distribution network gives it economies of scale that helps it beat many of its rivals on cost. The business is in the process of building two new packaging plants in Italy and Poland to keep growing its global footprint.

A penny stock Warren Buffett might love

I think Nanoco Group’s (LSE: NANO) another stock Buffett would really like. In this case its long-term competitive advantage — or economic moat as he would say — is that it has a considerable portfolio of around 700 patents in the field of quantum dots. Incidentally, the company’s currently litigating against Samsung over alleged patent infringement.

One risk here is that litigation’s a long and expensive process. This has the capability to stretch penny stock Nanoco’s balance sheet to the limit and hit investment in other parts of the company.

But I still think this ESG stock could be a great long-term buy as its nano-materials are becoming increasingly popular in the manufacture of displays, electronic products and lighting. Nanoco’s products contain no toxic heavy metals and can help improve energy efficiency, hence its Green Economy Mark status.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Royston Wild owns shares of Biffa, DS Smith, and TI Fluid Systems. The Motley Fool UK has recommended DS Smith. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.