Being a green investor is just one area of social responsibility that has taken hold in recent years. Corporations have found it easier, if not necessary, to embrace a more environmentally friendly view on business. Sometimes this comes at the cost to profits, but technology improvements and lower costs have made it a much more practical and stockholder friendly view.
The idea of green investing is pretty simple, you look to invest in companies that are trying to make a positive impact on the environment. From a consumer standpoint this has been going on for years. We’ve seen advertising campaigns built solely around a company’s environmental awareness. Whether a company’s environmental stance is pure marketing or a concerted effort to make a difference, is an argument for another day. The fact that the environment is part of the business plan is what matters.
What Makes A Company Green?
There are two ways a company can be green. A company either maintains a green operation or runs a green business. By a green operation, I mean that the company is trying to carry on its day-to-day operations by using less energy, producing less waste, less carbon emissions, etc.
A green business on the other hand produces products or services that help in the fight against climate change and the destruction of the environment, like solar panels, wind turbines or environmental clean up. Of course, companies can fall into both categories too.
It’s easier to find a company with a green business than a green operation. Green businesses can be found in any number of new industries including: solar, wind, smart grid, geothermal, green building, electric vehicles, recycling/waste, LED, and biofuels.
Looking for companies with green operations can take a little more time. As a green investor, you’ll have to do a bit more digging. Companies that have a green initiative or are making a change to go green like to brag about it. Checking press releases or looking through the daily news is a great place to start.
Walmart is a perfect example of this. In recent years they have installed solar panels on store tops and attempting to carry out a zero waste initiative through reducing, reusing and recycling its waste. It’s been great for PR and shareholders.
Easy Way to Invest Green
If individual stocks and bonds are the best way to be a green investor, mutual funds and ETFs are the easy alternative. There are several fund options available today and more get introduced all the time. The best place to start is to search for a few terms these funds are using: clean tech, clean energy, new alternatives, alternative energy, and green fund.
If you choose to invest in a green mutual fund or ETF, read the prospectus thoroughly. Make sure the goals of the fund are truly green and fit with your financial values. Understand that even though green businesses have been around for decades, the industry and ideas of green operations are still relatively new. With continued research spending and technology improvements, this is an industry that should be viewed as a long-term investment.
