Environmentally friendly companies are businesses in any industry that are dedicated to reducing the negative impact of their production and distribution on the planet. This ethical interest in global wellbeing was once a driving force for a few boutique businesses that served environmentally conscious consumers.
Top 9 Environmentally Friendly Companies
These days, more and more major companies are chipping in to reduce their carbon footprint and go green, and some of them doing so while simultaneously getting great stock analyst ratings and strong consumer endorsement. Some of these companies are not publicly traded, so outside of their private shareholders, they won’t make for great monthly dividend stocks. Regardless, each one is a mover and shaker in their respective industry, and some of them are poised to generate a lot of excitement in the coming years, with cutting edge products like electric cars and meat substitutes.
These sustainable companies have tried to do everything from discontinuing the use of plastic packaging to the reduction of their carbon footprint, while seeing benefits in terms of consumer trust and even reduced costs. Their product life cycle strategies involve recycling, renewable energy, and tighter emissions standards, along with humanitarian aid and ethical labor. Here are a few companies that have made saving the planet part of their business plan.
IKEA is a private business registered in the Netherlands and owned by the heirs of Feodor Ingvar Kamprad, a Swedish business magnate. He is the founding father of the world’s largest furniture retailer for the past decade, the revenue of which helped him become the 8th richest person in the world, with an estimated net worth of almost $60 billion. There are over 400 IKEA megastores operating in more than 50 countries, and the IKEA website receives around 2 billion visitors annually.
In response to public upset over the use of formaldehyde, IKEA has chosen to take a proactive environmentally friendly stance with green initiatives, such as removing PVC from wallpaper, textiles, shower curtains, furniture, and packaging. IKEA manufactures furniture using wood from responsibly managed forests geared toward maintaining biodiversity. IKEA also has an extensive team of auditors who make sure all their suppliers are working in accordance with the laws of their country, and invests in sustainable energy through its venture capital fund, Green Tech.
Unilever (NYSE: UL, UN)
Unilever (NYSE: UL, UN) is a manufacturer of consumer staples, co-based in Rotterdam and London. Among its 400 companies, the most recognized are personal grooming products like Axe and Dove, and food products like Lipton, Knorr, and Best Foods. Unilever is one of the top ten most valuable companies in Europe, with operations in 190 countries, and thirteen of its brands surpass one billion Euros in annual sales.
Unilever has a goal to make sure its growth is unaccompanied by environmental impact, in part by sourcing all of its raw materials through sustainable agricultural practices. The company plans to halve its current footprint over the next decade. So far, Unilever is ahead of its own timetable, with production sites across five continents 100% powered by renewable energy. Consumer staples stocks are rarely among the biggest stock losers, and by contrast, tend to be extremely stable and consistently growing investments.
Panasonic (TYO: 6752)
Panasonic (TYO: 6752) is one of the largest producers of electronic equipment in Japan, and one of the largest distributors of televisions, cameras, personal electronics, refrigerators, and audio equipment around the world. Despite the size of their electronic goods manufacturing operation, Panasonic is actually ranked 11th out of 16 companies specifically nominated by Greenpeace International, which ranks businesses in their Guide to Greener Electronics based on their policies affecting reduced climate impact and sustainable operations.
Panasonic products are praised for their long product life cycles, lack of PVC-based plastics, and energy efficiency—with every single television produced by Panasonic meeting Energy Star standards. However, Panasonic still has room to grow in this area, prompted by Greenpeace to reduce its greenhouse gas emissions by 30% and achieve renewable energy use in 2020.
Patagonia is a privately-owned company founded by rock climber, environmentalist, and billionaire Yvon Chouinard. Patagonia produces and sells outdoor clothing that is ethically sourced. The company has always responded to concerns from animal activist groups by eliminating suppliers that force-feed geese or abuse sheep—materials that are used to manufacture the company’s down jackets and wool products.
Patagonia touts itself as an activist company with innovative employee policies and proactive stances on environmental issues—which have included leading boycotts of trade shows and suing the United States government over land preservation. Patagonia donates 1% of its sales to environmental groups and a remarkable 100% of its Black Friday profits, which in some years have totaled $10 million.
Nike (NYSE: NKE)
Nike (NYSE: NKE) is an international company based in Oregon that designs, markets, and sells athletic apparel and shoes. Nike is the most valuable brand among sports businesses, with 2019 revenues surpassing $37 billion. Nike has been criticized for working with overseas contractors that engage in exploitative labor practices, but it has put effort into environmental best practices. The Clean Air Cool Planet organization has ranked Nike as one of the top three companies out of 56 surveyed climate-friendly companies. The Nike Grind and Reuse-a-Shoe programs are their ongoing attempt to use recycled footwear products to make new footwear, apparel, and athletic surfaces like turf and running tracks. Nike has also partnered with other companies like American Express to fight the generational transmission of HIV in areas heavily affected by the AIDS virus.
Beyond Meat (NSDQ: BYND)
Beyond Meat (NSDQ: BYND) is one of the hottest topics of conversation among both investors in the stock market and consumers. This Los Angeles company produces plant-based substitutes for beef, chicken, and pork sausage, and has formed partnerships with A&W, Carl’s Jr., Dunkin’ Donuts, KFC, McDonald’s, Subway, and other chain retailers.
According to a study by the University of Michigan, production of the Beyond Burger is a lot better for the environment. It produces 90% fewer greenhouse gasses while requiring 46% less energy and carrying 99% less impact on water scarcity and 93% less impact on land usage—all in comparison to a quarter pound of domestic beef. The sustainability of Beyond Meat has garnered praise from international organizations, such as the United Nations. The company was awarded the Environment Champion of the Earth Award in 2018 for its multifaceted environmental practices, which included the use of compostable trays for their Beyond Sausage line.
Seventh Generation | Unilever (NYSE: UL, UN)
Seventh Generation became a Unilever brand (NYSE: UL, UN) in 2016 for $700 million. This Vermont-based business is founded on the Iroquois concept of Seven Generation Sustainability, whereby people live and work while thinking ahead to the seventh generation into the future. The company is committed to the implementation of environmentally sustainable best practices.
Seventh Generation sells paper goods, cleaning products, and personal care products that are made with minimal impact on the environment, distributing them through natural food stores, online retailers, and supermarkets. Seventh Generation has received numerous accolades from companies and organizations in recognition of its ethical production and distribution, such as Microsoft, KeyBank, Fast Company, Vermont Business Magazine, and the United States Chamber of Commerce.
Tesla (NASDAQ: TSLA)
Tesla (NASDAQ: TSLA) is an American car and energy company that manufactures electric cars and solar powered energy sources, the latter through its subsidiary SolarCity. The brand is named after inventor Nikola Tesla, who contributed heavily to the advent of alternating current electrical supply. Though consumers often associate Tesla with Elon Musk, he did not create the company but joined it around a year later after leading a Series A round of investments. Tesla’s goal is to commercialize electric vehicles, moving from sports cars that targeted a wealthier niche into more standard vehicles, like sedans and vans. Tesla has produced a number of models over the years and partnered with established carmakers like Mercedes and Toyota.
Though Tesla is not specifically known for its environmental stewardship, the principle of an electric car is inherently more environmentally friendly than traditional fossil fuel-powered vehicles. Tesla has forged a new path in electric car making that has since been taken up by companies like Ford and will likely yield new benchmarks in affordability and reduced energy consumption.
REI, short for Recreational Equipment Incorporated, is not publicly traded but operates as a consumer cooperative—a type of enterprise geared toward service over profit and owned by its consumers. REI sells camping equipment, sporting goods, travel gear, and outdoor clothing through its 158 stores across 37 states and its mail-order catalog and online retail operations. At first, true to the interests of its founding members, REI was dedicated to serious mountain climbers like Jim Whittacker, the first American to climb Mount Everest and REI’s first full-time employee. But in the 1980s, REI shifted to sell more family camping equipment and branched out into outdoor sports like biking and kayaking.
A lifetime membership to the REI coop is only $20, and though it doesn’t pay cash dividends of company profits, coop members do get a dividend in the form of 10% of their purchases back in their pocket. Despite its relatively small size compared to other retailers, REI is one of the top ten purchasers of green energy in the country. REI has made a commitment to become a zero waste to landfill company, and actively donates to environmental causes. The company also sends volunteer teams to clean up the environment and build new trails.
What Makes a Company Environmentally Friendly?
Many companies may tout themselves as being environmentally friendly. However, without solid evidence of their carbon footprint and sustainability, the term is often nothing more than a marketing ploy pandering to consumers who have become increasingly interested in making environmentally friendly choices. This consumer interest in the environment is, in part, due to popularized unfolding research about the state of the global environment and climate change, investigative journalism, social media, and celebrity endorsements of particular causes.
Being an eco-friendly company can include anything from using green energy or sustainable energy in their production and operations to sourcing materials from ethical suppliers. Environmentally friendly companies will also attempt to reduce the impact of their product life cycle by recycling materials from their own production cycle or obtaining recycled materials. These eco-friendly companies might also donate to environmental causes, engage in political lobbying meant to facilitate environmental protection, or contribute manpower to green causes.
Top Environmentally Friendly Companies
Some eco-friendly companies have built environmental commitment into their company ethics from the beginning. Other companies have shifted to renewable energy sources and recyclable packaging because efforts to become energy efficient and reducing their environmental footprint actually cut costs. It may also reduce taxes from the state, federal, and even local governments in which they conduct business. And some companies have embraced environmental concerns only in response to scandals or lawsuits.
No matter the motivation, companies in every industry are joining the bandwagon and attempting to embrace sustainable business practices, whether these companies are smaller operations like REI (2019 annual revenues of $2.4 billion) or larger retailers like Nike (2019 annual revenues of $36.4 billion). It seems that going green is a business trend, and this, in turn, might yield some new and exciting areas for investors.
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