Embracing sustainability doesn’t have to come at the expense of financial performance – Morgan Stanley names some European companies it says have been able to demonstrate that. “Famous names” have generated “measurable financial impact” on top of making improvements in ESG (environmental, social and governance), Morgan Stanley analysts, led by Stephen Byrd, wrote in a note on Friday. The stock is rated overweight and has an average upside of around 20% to 35%, the bank added. Oil major BP’s stock pick is one of the bank’s top picks. The company has several “transitional growth engines,” such as biofuels, renewable energy, hydrogen, and electric vehicle chargers. These growth areas are expected to contribute $9-$10 billion by 2030, according to BP’s own estimates. The company is spending more on new initiatives, with spending in growth areas to make up more than half of its overall capital expenditure (capex) by 2030. BP is also Morgan Stanley’s top pick in the energy sector. The bank said BP could achieve dividend growth per share of between 14% and 16% annually and generate between $28 and $32 billion in cash flow from operations annually. Swiss building materials manufacturer Holcim is one of the bank’s top picks. Morgan Stanley describes the company as a “global leader” in cement decarbonization, and its “ambitious” medium-term decarbonization targets put it in a “league of its own.” The bank noted “strong delivery of cost savings” and saw scope for margin improvement in its non-cement business. Over the long term, the bank sees “potential growth” from the company’s “M&A transformation” and believes that changes in the mix of the company’s portfolio can lift cash conversion and return on capital. Morgan Stanley also named German utility company RWE to the list. The bank said the company is a “champion of energy security” and noted its commitment to allocate more than 90% of capex to renewable energy by 2030. The bank estimates that RWE will have around 16 billion euros ($17 billion) of free cash flow by 2023. . . . “In the near term, our analysts expect RWE to trade at [earnings per share] upgrade given power / commodity environment. As this can last for 3-5 years, the generation of cash for reinvestment is material,” the bank said. – CNBC’s Michael Bloom contributed reporting