It is the conscience of eco-minded individuals that allows them to make ”green” investments that specifically support the environment. These may include any efforts that generally speed up our progress towards sustainability, develop alternative energy, clean the earth’s oceans or reverse global warming. There are now several green stock market indexes, dozens of green mutual funds and hundreds of public companies that constantly advertise how green they are.
Just because a company is green does not mean investing in them will automatically make you a financial winner. The riskiest of all investing endeavours are start-up companies. Green investing might be the answer for you if you like to encourage earth-friendly innovations and want to use your money to protect the environment.
Green Investing
Steering investment dollars towards companies and projects that are environmentally friendly or conscious is known as the green investing philosophy. Investors’ opinions differ on what makes up a green company. In some instances, these companies are actively engaged in organic production, development of alternative energy sources or solving environmental problems. Companies who usually conduct their business in an environmentally way, conserve natural resources and recycles, qualify as green for others.
Although ”socially responsible investing’’ (SRI) embraces not only the environment but also companies that are known for having a positive impact on society. Socially responsible investing and green investing are often thought of as interchangeable. A company such as CMC Markets that donates a sizeable amount to charity and treats its employees particularly well may be considered socially responsible. Not all socially responsible investments are necessarily green, while all green investments are socially responsible.
You can do an internet search using keywords such as green investing, green bonds, green mutual funds and green stocks when looking for specific investments that will suit your criteria. When attempting to select green investments, you will find that there are numerous green investments to choose from. It is important that you evaluate a fund’s financial performance, find investments that fit your environmental criteria and steer clear of companies that overstate their greenness.
Several options to consider for building a green portfolio:
- Bonds – green bonds generate funds for eco-friendly business ventures and are a fairly new investment option. This fixed-income vehicle may provide tax-exempt income when offered by governments for the funding of green projects.
- Securities – A handful of companies that fit the performance and environmental criteria are where investment dollars are funneled to, as individual stocks by investors.
- Mutual funds and exchange-traded funds (ETFs) – An affordable way of diversifying across multiple sectors or industries for the average investor is by investing in a pool of securities. A green investment website will over more options.
Evaluate investment
Identify what your investment desires are. Are there certain industries that are off limits? If a timber industry follows sustainable logging practices, would you be willing to invest? Are you in favour of investing in companies that financially support environmental causes, have great recycling energy and conservation programs or do companies that focus on the development of solutions, such as alternative energy or waste reduction, interest you?
You should analyse stocks and bonds when purchasing to determine whether they are appropriate for your portfolio. To ensure your philosophies are a good fit with those of your investment, you should read the prospectus so that you are informed about the way in which the fund selects its holdings.
Companies that have been dubbed “greenwashing” use environmentalism as a marketing strategy and you should avoid these. Some companies attempt to make themselves more attractive to investors by overstating their greenness. Looking into the past financial performance of a company, it is essential to determine whether it is a viable investment option for your green criteria; however, your choices should reflect your values you also require growth on your investment.
By comparing and investment to a benchmark, you can evaluate it. Furthermore, a financial advisor can also help you make the best green investment choices.
Article Submitted By Community Writer