Want to buy the dip in ESG concept stocks? First, understand the logic behind these listed companies.

As climate change increasingly becomes a focal topic worldwide, many investors are beginning to pay attention to an emerging investment theme—ESG concept stocks. But for ordinary people, which stocks are truly ESG-related, and whether this investment approach is really worth pursuing, there is still quite a bit of confusion. Today, we will delve into the underlying logic of ESG investing and examine the real performance of leading ESG companies in the market in 2024.

What exactly is ESG evaluating? Three dimensions investors need to understand

Speaking of ESG, it is actually an abbreviation of three English words: Environmental(, Social), and Governance(. But this is not just a conceptual label; it is a set of assessment systems used to measure a company’s sustainability and business ethics.

Environmental dimension looks at how companies reduce their burden on the planet—from carbon emission control and resource conservation to pollution prevention. Social dimension focuses on the relationship between companies and people, including employee treatment, customer rights, community contributions, and human rights protection. Governance dimension examines internal corporate standards—decision-making transparency, financial reporting accuracy, checks and balances, etc.

True ESG concept stocks are those companies that have made genuine investments and achieved results across these three dimensions. They are not just superficial efforts but integrate sustainable development into their business decisions.

Which ESG concept stocks are most worth watching in 2024?

The US stock market hosts the world’s largest number of pioneering ESG companies and is currently the most active stage for ESG investment. Let’s look at some truly leading representatives in this field.

) Tesla—Pioneer of the Electric Vehicle Revolution

Tesla(TSLA) has long been regarded as a flagship ESG investment target among global investors. In 2022, the company delivered over 1.31 million electric vehicles, actively transforming the energy structure of the global automotive industry.

In terms of market value, this stock has experienced ups and downs. It briefly reached a market cap of $1 trillion in October 2021 but then declined for over a year. By mid-2023, the stock hovered around $55.2, and by July 2024, although it rose to $57.56, the overall momentum remained steady.

Microsoft—Dual Advantages in the AI Era

Microsoft(MSFT) has made significant commitments in the ESG field—pledging to achieve net-zero carbon emissions by 2030 and offset all direct and indirect CO2 emissions since 1975 by 2050. This is not just lip service; environmental goals are embedded into the company’s strategic planning.

More importantly, as the backer of OpenAI, Microsoft holds a dominant position in the AI revolution. This ensures the company’s technological competitiveness for decades to come. Regarding stock performance, after a six-month rebound last year, it has returned to the high levels seen at the end of 2021. Since January 2024, it has continued to rise, reaching a closing price of $460.77 on July 3, setting a new high.

NVIDIA—GPU Chip Monopoly

NVIDIA(NVDA) was once considered a leader in the gaming industry, but the AI wave changed everything. The company’s GPU products have become core tools for AI training and inference, with high computational efficiency helping to reduce energy consumption across the industry—aligning perfectly with ESG environmental concerns.

Its market value growth has been meteoric—after releasing its mid-2023 financial report, it surpassed $1 trillion. By June 2024, its market cap had climbed to $3 trillion, making it the second-largest publicly traded company globally. Investor enthusiasm is clearly evident.

TSMC—Green Upgrader in Chip Manufacturing

TSMC(TSM) continuously optimizes semiconductor process technology, constantly launching more energy-efficient and lower-power chips. In the AI chip era, TSMC is the foundational enterprise supporting the entire industry. In the first half of 2024, this stock surged like a rocket, breaking through the $180 mark in June, with a total market value reaching $946.469 billion.

In addition, there are several other ESG-rated stocks such as Google###GOOGL(, Amazon)AMZN(, ExxonMobil)XOM(, Adobe)ADBE(, etc., with market values ranging from $200 billion to $3 trillion. For investors with different risk tolerances, there is ample room for choice.

How to invest in ESG concept stocks? Comparing three methods

Want to participate in ESG investing? Buying stocks directly is the most traditional way. Now, there are more flexible options.

) Method 1: CFD Contracts for Difference—Leverage Trading of Derivatives

CFD is essentially a derivative trading instrument. You do not need to own the actual stocks; instead, you sign a contract with a broker to speculate on the price movements of stocks. The biggest appeal of this method includes:

Leverage effect—brokers offer leverage from 1x up to hundreds of times, allowing you to control large positions with a small amount of capital. Two-way profit—you can profit from both rising and falling markets through long and short positions. Low entry barrier—transaction costs are often lower than buying actual stocks.

However, risks should not be overlooked. Leverage amplifies not only gains but also losses. Choosing the wrong broker can also expose you to credit risk.

In comparison, buying stocks outright requires more capital but grants you actual ownership, dividend rights, and relatively more controlled risk.

( Method 2: ETFs—A Lazy Way to Diversify Risks

Instead of painstakingly selecting individual stocks, you can entrust this task to professional fund managers. ESG-themed ETFs bundle many qualifying companies together, helping investors diversify risk automatically.

Popular ESG ETFs include:

iShares ESG Aware MSCI USA ETF)ESGU###—with assets of $13.437 billion, holding giants like Apple, Microsoft, Amazon, etc. This is an entry-level choice, tracking large-cap high-ESG-score companies.

Fidelity U.S. Sustainability Index Fund###FITLX(—with $2.14 billion in assets, mainly holding tech stocks like Microsoft, NVIDIA, Google. It focuses more on high-tech sustainable development.

Nuveen ESG Mid-Cap Growth ETF)NUMG(—smaller with $375 million, focusing on growing mid- and small-cap companies. For risk-tolerant investors, this option is more aggressive.

Final advice: Participate in ESG investing rationally

Investors choosing ESG investments often have a strong sense of social responsibility. But remember, a company’s ESG performance is not static. Market conditions, policy directions, and corporate strategies can cause these indicators to fluctuate dynamically. Regularly reviewing your portfolio is necessary.

If adjusting your portfolio is too troublesome, ETFs are a worry-free choice. If you are a short-term trader with some risk appetite, CFDs can help you participate in market volatility with less capital. Regardless of the method, always understand the product features, choose reputable licensed trading platforms, and prioritize protecting your own interests.