ESG investing -- or investing with a higher emphasis on environmental, social, and governance criteria -- is simple. It just means investing in companies that do well by doing good.
On the Nov. 25 edition of "The Wrap" on Motley Fool Live, host Jason Hall explained why a leading wind turbine manufacturer and services provider Vestas Wind Systems (OTC:VWDRY) is his top ESG stock and a major holding in his own portfolio.
Jason Hall: I cover the energy space pretty closely, and my attention has been steadily pulled more toward renewables over the years. A company that I'm a big fan of that I think does good for every single stakeholder of the company, and also every single individual that's in an area that they operate in, is Vestas Wind Systems. It's a Danish company, they're European. They are the largest manufacturer, they have more market share of onshore wind turbines of any company in the world.
They're a pure-play in this area and here's the bottom line. Number one, every wind turbine that's deployed means that's hydrocarbons that are not being produced. That's a net win for the globe. Whatever your position on climate change, reduced emissions. I had asthma when I was a kid. I lived in West LA for a long time and had problems as an adult with my breathing because of the air quality. Emissions are a major problem. Wind turbines mean those emissions (go away) -- it's a huge solve right there.
Number two, the renewable energy industry is a wonderful source of great jobs, that's durable, that pay great incomes and can replace a lot of the lost jobs in places. Here is why I think it's really big. It's easy to miss is that Vestas, their services backlog is over $20 billion. It's bigger than their equipment backlog. Services is maintenance and repairs and work like that. Those are jobs where the turbines are located, not where they're manufactured. That's a huge business for Vestas.
For shareholders, the returns are wonderful. This is the stock has done incredibly well. You think about the cost curve for turbines. The technology gets better on every iteration is a little bit better. The cost per watt come down. That should work out for them to be able to maintain good margins. I love the business. I think everybody wins from a company like Vestas. It makes everybody's life a little bit better. It's one of my favorite companies. I'll leave it at that.