By Kim Robson
Would you be interested in making your “green” more green? In other words, does your investment portfolio reflect your values about the environment? Many people would be shocked to learn that their mutual funds include stocks in oil, nuclear, and coal companies. How can an individual find companies to invest in that contribute to a clean, healthy environment? Ideally, these companies should embrace fair business practices and equal opportunity, produce safe and useful products, and support efforts to promote a more peaceful world. Sounds daunting, I know. Where to start?
By far, the most common method is to invest in one of the more than 260 socially screened mutual funds operating in the United States. Green mutual funds such as Portfolio 21 or Green Century Funds are the fastest-growing option for socially responsible investing. These funds seek out companies that are committed to a sustainable future, while avoiding those who’ve proven their environmental negligence.
Look for companies that demonstrate a commitment to preserving and improving the environment, based on the products and services they provide. They should maintain clean environmental records, openly disclose their policies and performance on critical environmental issues, and respond positively to shareholder demands on environmental concerns.
Do your own research. Don’t just take a company’s word for it that they’re green. Avoid companies that practice “greenwashing,” jumping on the green bandwagon by loading up on buzzwords like “carbon intensity,” “sustainable development,” “carbon offsets,” or “clean technology.” Indexes such as the Dow Jones Sustainability Indexes are excellent impartial tools to determine a company’s financial andenvironmental performance.
Don’t hesitate to ask for help. Many investment analysts now specialize in green and socially responsible stock options. Ask about the screens on funds because some green-minded mutual funds screen out companies that produce tobacco and military products, but not nuclear power or clean coal technology. Your investment should match your beliefs and values as well as create an excellent earning opportunity.
What if the stock market gives you the heebie-jeebies? You could put your money into precious metals, but that doesn’t help make the world a better place. Instead, consider community investing. Friends and neighbors can form investment clubs when they want more control over which companies to invest in than they would have with mutual funds but lack the capital to set up a separately managed fund. By pooling money, an investment club can make larger financial investments (and hopefully larger profits) while maintaining a high degree of personal control. All members should be able to freely express their personal goals and concerns. You can start a new green investment club or encourage the members of your current investment club to “make green” by investing in green.
The British firm Green World eschews the stock market altogether, instead embracing real assets. They invest in tangible, sustainable assets such as timber, bamboo, or farmland that have an inherent economic value. The advantage is that real assets frequently pay good incomes, yet also act as an excellent hedge against inflation and global instability. Unfortunately, due to SEC restrictions, they are unable to do business with U.S. citizens. But the concept is certainly replicable here.
Another non-stock option to consider is microfinance. Microloans are short-term loans of typically small amounts. They give lenders the opportunity to invest at a very affordable contribution level (often less than $100), and the loans have a very high rate of return (the recipients usually have outstanding payback records). Microfinance often is linked with sustainable businesses, giving borrowers the opportunity to make the world a better place for us all to live in. Websites like Kiva.org and even theSmall Business Administration can help you find small investments that can make a BIG difference.