These 8 European Stocks Are Widely Held by Global Sustainable Funds

The charms of Schneider, Iberdrola, and TE Connectivity

Liz Angeles 29 January, 2025 | 10:08AM
Facebook Twitter LinkedIn

Coin stacks with sustainability and finance icons amidst a backdrop of clouds

For sustainably minded investors, sifting through the stocks owned by sustainable funds is one way to unearth opportunity. Global sustainable funds emphasize companies committed to sustainability and responsible practices, usually measured by environmental, social, and governance criteria, while balancing their portfolios with traditional financial metrics. These funds often own stocks that traditional funds don’t hold, or hold to a much lesser degree. In this article, we found eight stocks that have a unique presence in comparison with traditional funds.

A Look at Our Methodology

To obtain top stocks widely owned by ESG global sustainable funds, we ran two searches on the open-end and exchange-traded funds coverage. We looked for large-cap global funds and selected the oldest share classes. We looked at the funds that are considered sustainable investment and compared them with the traditional funds. We pulled the top 500 holdings from the sustainable funds, and likewise for the traditional funds, and analyzed the average weights of each security.

With this approach, we were able to locate the stocks that were unique to the sustainable funds. Of the top 20, we looked for unique stocks that were not US domiciled. This created a list of unique stocks in the ESG global large-stock space.

List of unique stocks held by sustainable large cap funds and respective data metrics. - graphic - Liz Angeles - © Copyright 2025 Morningstar, Inc. All rights reserved.

1. Schneider Electric SE

Morningstar Rating: 2 Stars

Schneider Electric is a leading global supplier of electrical and industrial automation equipment. The group has four end markets: buildings, data centers, infrastructure, and industry, each of which relies on Schneider’s products and solutions to ensure their operations run safely and efficiently.

“Two thirds of Schneider’s revenue is generated from electric utilities, buildings, and data centers, which are three end markets enjoying multiyear secular growth themes. We expect the recently imposed stimulus and strict building regulations to encourage a significant increase in demand for electrical equipment and software solutions. Schneider Electric also earns the largest contribution of its sales from data centers relative to its peers through a combination of its electrical and cooling equipment. We anticipate that Schneider will increase its revenue by over 8% annualized through 2028, being the best in class across European multinational electrical equipment suppliers.”

-Matthew Donen, Director, Morningstar

“Schneider has the strongest management of its material ESG issues across the electrical equipment subindustry. It discloses robust human capital management, with best-practice human capital development and diversity programs. Regarding product governance, it has multiple initiatives to ensure product quality and system reliability. In fiscal 2023, it released a new quality strategy and enhanced its quality fundamentals for suppliers. Lastly, Green Premium-labeled products represented more than 80% of Schneider’s 2023 sales. This label integrates multiple environmental criteria, such as energy efficiency, lower impact material, and minimal use of hazardous substances. Moreover, Schneider embeds circular principles across the whole product lifecycle, including take-back programs.”

-Morningstar Sustainalytics

2. Iberdrola SA

Morningstar Rating: 3 Stars

“Iberdrola is the second-biggest integrated utility in Europe after Enel. Besides its domestic Spanish market, Iberdrola has strong exposure to the United Kingdom since the acquisition of Scottish Power in 2007. It is the European utility with the largest exposure to the United States thanks to its wind development and the acquisition of UIL in 2015.

Iberdrola boasts the second-largest onshore wind portfolio in the world with 20.8 gigawatts of capacity at year-end 2023, mostly in Spain, the US, and the UK. Renewable project revenue tends to be relatively secure through purchase power agreements. A bull’s perspective includes Iberdrola having one of the best records among European diversified utilities. Its early entry into onshore wind enabled the group to become the world’s largest operator/owner of wind farms.”

- Tancrede Fulop, Morningstar senior equity analyst

“Carbon pricing and regulation are in place or expected in the main markets in which Iberdrola operates. This will likely benefit the company, as its generation mix is relatively low-carbon: renewables, hydro, and nuclear comprised 61% of generation in 2023, while all remaining coal-fired power plants were closed in 2020. Iberdrola also has the world’s largest wind portfolio, at 21.4 gigawatts at the end of fiscal 2023. The company is a major developer of new renewable energy projects, including offshore wind, increasing its exposure to conflicts with local communities and Indigenous groups. Its large portfolio of generation and transmission assets in various regions exposes it to operational issues related to reliability, asset resilience in extreme weather, and cybersecurity risks. Furthermore, service disruptions and unfair billing practices can lead to fines, lawsuits, and reputational damage.”

-Morningstar Sustainalytics

3. TE Connectivity PLC Registered Shares

Morningstar Rating: 3 Stars

“TE Connectivity designs and manufactures connectors and sensors, supplying custom and semicustom solutions to a bevy of end markets in the transportation, industrial, and communication industries. TE has maintained a leading share of the global connector market for the last decade, specifically dominating the automotive connector market, from which it derives almost half its revenue. While the firm’s entire business benefits from trends toward efficiency and connectivity, these are especially notable in cars, where shifts toward electric and autonomous vehicles provide lucrative opportunities for TE to sell into new vehicle sockets, like an onboard charger or advanced driver-assist system. TE Connectivity is a leader in the automotive connector and sensor market, enabling original equipment manufacturers to build more advanced and efficient electric and autonomous vehicles.”

- William Kerwin, Morningstar equity analyst

In its 2023 Corporate responsibility report, TE Connectivity reported that it reduced its absolute scope 1 and 2 greenhouse gas emissions by 39% in 2023. This included achieving 77% renewable electricity use globally. Similarly, the Science Based Targets initiative has approved TE Connectivity’s near-term science-based emissions-reduction target. This is the culmination of their ambitious carbon-reduction goals that aim for a 70-plus-percent absolute reduction in scope 1 and 2 emissions by 2030 and 30% in scope 3 by 2032.

4. Trane Technologies PLC Class A

Morningstar Rating: 1 Star

“Trane Technologies is a leading supplier of climate control products and services; it is a dominant player in commercial and residential heating, ventilating, and air conditioning systems (approximately 85% of sales) with its Trane and American Standard brands, as well as in transportation refrigeration (15% of sales) with its Thermo King brand. The leading HVAC manufacturers have all embraced a pure-play model. Johnson Controls shed its automotive battery and seating businesses and Carrier spun off from United Technologies and later divested its fire and security businesses. Lennox is already a pure-play climate control company, although it has rid itself of some underperforming domestic and foreign refrigeration businesses.

We have a positive long-term outlook for Trane’s growth prospects, driven by what we see as secular global trends in urbanization, energy efficiency, and healthful building solutions (for example, indoor air quality). Trane’s large installed commercial HVAC base generates a stable stream of higher-margin service revenue, and we think the company has opportunities to expand its service mix, which should promote improved profitability and help dampen the firm’s cyclicality.”

-Brian Bernard, director of industrials equity research for Morningstar

“Heating, ventilation, air conditioning, and refrigeration, or HVACR, systems face scrutiny over their efficiency, as they are responsible for about a fifth of total electricity usage in buildings worldwide. Moreover, HFC refrigerants contribute to the depletion of the ozone layer and HVACR manufacturing releases GHG emissions through its logistics and use of refrigerants and electricity. In light of pressure from regulators and customers, failure to shrink the environmental footprint of HVACR solutions could lead to fines and loss of market share. Additionally, the company manufactures specialized equipment where competition is limited. This can lead to monopolization of product lines and create opportunities for the company to become involved in anticompetitive practices, such as price fixing and collusion. Trane is also exposed to asbestos-related claims from its former operations.

The company’s overall exposure is Medium and is similar to subindustry average. Business Ethics, E&S Impact of Products and Services and Carbon - Own Operations are notable material ESG issues.”

-Morningstar Sustainalytics

5. Prysmian SpA

Morningstar Rating: 1 Star

Prysmian SpA is an Italian manufacturer of electric power transmission and telecommunications cables and systems. Its business is organized in three segments: Projects, which focuses on the execution of underground and submarine cable projects; Energy Products, which provides power distribution, and industrial and network components; and Telecom, which makes cable systems and connectivity products. More than half the firm’s revenue is generated in the Europe, Middle East, and Africa regions, with the rest coming from North America, Latin America, and Asia-Pacific regions.

“Prysmian SpA has assigned responsibility for overseeing ESG issues at the board level. Additionally, the environmental policy is assessed as strong. Moreover, its whistleblower program is assessed as very strong.

The company’s overall management of material ESG issues is strong.”

-Morningstar Sustainalytics

6. Aptiv PLC

Morningstar Rating: 3 Stars

Aptiv PLC signal and power solutions segment supplies components and systems that make up a vehicle’s electrical system, including wiring assemblies and harnesses, connectors, electrical centers, and hybrid electrical systems. The safety and user experience segment provides body controls, infotainment and connectivity systems, passive and active safety electronics, driver-assist technologies, and displays, as well as the development of software for these systems.

“To keep pace with the changing automotive industry and increasing consumer demand for new sustainable mobility solutions, Aptiv boosted investments into vehicle electrification solutions and other research and development projects. In 2023, Aptiv’s revenue from products designed to increase fuel efficiency and/or reduce emissions accounted for approximately 72% of its total. Furthermore, the company has implemented some best practices for addressing product governance risks. It has obtained IATF 16949 certification for all of its production sites and has implemented a comprehensive product safety program. The company also operates in countries with labor relations risks, but it does not report on a detailed program to mitigate its exposure to human capital risks. Moreover, the company does not disclose relevant human capital metrics such as its employee-turnover rate.

The company’s overall management of material ESG issues is strong.”

-Morningstar Sustainalytics

7. Infineon Technologies AG

Morningstar Rating: 4 Stars

“Infineon is a leading broad-based European chipmaker, with significant exposure to secular growth drivers in the automotive chip sector. Infineon should emerge as a leading supplier for electric vehicles and active safety systems used in cars, with increasing exposure to car “infotainment” systems. However, like most chipmakers, Infineon’s business remains highly cyclic as demand rises and falls with the health of its various end markets.

Looking at the automotive chip market, electric vehicles and cars with advanced power train technology and safety systems require a variety of sensors and power voltage chips supplied by firms like Infineon. Silicon-carbide, or SiC-based semis, used to handle higher voltages and improve the range and efficiency of EVs, are a particularly attractive opportunity for Infineon, but also for its rivals. Infineon’s exposure to power semis also allows it to benefit from trends in the electronics industry toward power conservation, not only in more efficient devices like industrial drives, but also in green energy solutions like solar panels and even artificial intelligence. Infineon is also a leader in chip card and security products, such as chips for chip-and-pin credit cards.”

-Brian Collelo, Morningstar Strategist

“Product Governance for the semiconductor industry encompasses functionality, cost, marketability, reliability, form, packaging, and delivery time of chips. The industry faces significant pressure to meet ambitious targets and are responding through increased investment in R&D. The specialized nature of a semiconductor as well as the associated production volume require companies to mitigate the probability of a failure or disruption. Therefore, development and technical support capabilities are essential in maintaining client trust.

The company’s exposure to product governance issues is Medium and moderately above the subindustry exposure.”

-Morningstar Sustainalytics

8. Siemens AG

Morningstar Rating: 3 Stars

Siemens is a multi-industry company focused on the areas of automation, electrification, mobility, and healthcare. Its top three geographic regions—the United States, Germany, and China—contribute over half group revenue. Siemens has a 75% investment in separately listed Siemens Healthineers. Recent portfolio activity included the listing of Siemens Energy, spinning out its power and gas, and Siemens Gamesa business divisions in 2020.

“Siemens’ smart infrastructure segment has over one third exposure to electric utilities, buildings, and data centers, three end markets enjoying multiyear secular growth themes. However, given the size of some of its other segments, we estimate the group’s overall exposure to these themes is less than 10%. We anticipate Siemens will grow its organic revenue by 5% annualized through 2028, broadly in line with other multinational electrical equipment suppliers but still comfortably above expected GDP growth. Our 7% EPS growth estimate annualized through 2028 is on the low end of some of its peers, attributable to the cyclicality in its discrete automation business.”

-Matthew Donen, Director for Morningstar

“Siemens commits to integrating ESG priorities in its business strategy with its DEGREE framework. It formally commits to product safety, including legal conformity, quality, environmental compatibility, and compliance with applicable technical regulations. There is room for improvement in product governance, including employee training on product and service safety, testing of emergency response procedures, and conducting regular external product safety audits. The company has a strong GHG reduction program, whereby it has set a net zero target to be achieved by 2030. In fiscal 2023, 80% of its purchased electricity was renewable. Regarding business ethics, the company has assigned oversight for it both at board and management levels, conducts compliance risk assessments, and applies disciplinary sanctions such as warnings and dismissals in case of ethical breaches.

The company’s overall management of material ESG issues is strong.”

-Morningstar Sustainalytics


The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Liz Angeles  Liz Angeles is a member of the Morningstar Development Program as a financial product specialist who served a previous assignment with Editorial.

© Copyright 2025 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures