Can Green Investment Contribute To Solve The Ecological Crisis ?
More and more people are becoming aware of a fundamental conflict between economic growth and environmental protection. Governments, organizations, and society in general, have finally come to terms to the necessity of raising awareness and finding solutions to this core issue of current times. Pope Francis’s recent speech to the United Nations (2015) on ecology and climate change, and the WEF’s global risks report, launched last January (2016) in Davos, are paradigmatic of the widespread level of concern.
Trying to act upon this, many entrepreneurs, business people and investors , are becoming more conscious of the social and environmental issues. Due to their profound ecological awareness, this new breed of investors does not want to invest in any business that is acting inappropriately. They prefer to keep their ideals intact when investing. One way that some investors choose to do this is by green investing.
What is Green investment ?
As explained by Emerald Knight, a specialist in the alternative investment market, a green investment is an investment in a project that promotes and supports the health of the environment whilst providing returns for investors. Types of investments would include ecologically sound products, services or technologies; companies with environmentally friendly practices or goals; or companies that counteract negative effects on the environment.
According to “Blue and Green Investor” this is different to other kinds of investing such as ethical investing. Ethical trading began in the 18th century and it was initially tied to religion. An example that is cited is that of where companies that produced alcohol were avoided by some people that did not believe that alcohol was for the greater good. Another later example is from the 1960s when people boycotted armaments companies that had any involvement in the war in Vietnam. In the UK it is argued that ethical investing really began in 1984, with money in these funds increasing since then. For example, ethical investing is designed for those that want to only invest in certain parts of the market that behave ethically, while responsible investing focuses on a company’s CSR activities when considering whether to invest or not. Something different is then sustainable investment that focuses on investing in businesses where the model will survive the test of time.
Green Investment in the UK ?
In the UK there is £21.8 billion invested in ethical and green funds. A recent trend is that funds have become “thematic”. As outlined by Blue and Green Investor, they: “tend not to have ethical screens but focus on particular sectors such as Water or Agriculture.” the importance of Green Investment is growing so much that in the UK there is even a bank: the green investment , which is a £3.8bn funding institution that was created in 2012 to attract private funds for the financing of the private sector investments that concern environmental preservation and improvement. It’s initial goal was to “accelerate the UK’s transition to a greener, stronger economy” by investing in renewable energy and other “green” schemes. In the beginning of 2016, its rules change, as the bank will no longer be required by law to invest in green schemes, under moves put forward by the UK government. This measure is quite unfortunate and it is raising lots of debate.
Investing in green and ethical funds is important, to make sure that our world keeps working in the way that it ought to. That businesses become more ethical in their approach is also fundamental, if we want to solve the ecological crisis in which we live.
Image source: Green Investment Bank
How to become green investor:
Everyone can become a green investor. But how to do it ? There are a number of tips for investing in a manner that is ethical and green to achieve this. These are:
1. Consider your views – there may be certain ideals or thoughts that you hold that might influence what you want to invest in. There may be industries that you want to steer clear of. You also need to consider the level of risk that you are prepared to take. These are all important questions to ask.
2. Learn about different kinds of funds – as explained at the outset, green investing is different to ethical investing which is different again to sustainable, responsible or environmental investing. Understanding what you want and what is important for you is necessary before getting underway. Some innovative alternatives enable you to invest even small sums, through the internet. Abundance generation, a green and ethical investment platform, is great place to start learning about green investing.
3. Research as much as you can – Blue and Green Investor has a fund library that you can use to help you to compare and contrast different types of funds. Within this library there are 132 different funds, most of which are ethical or environmentally focused. This research will help you to be able to review important aspects that may sway your investment such as past performance of the fund. You can get summaries of the fund and the fund’s objectives. This is an excellent resource for understanding how to invest green. There are also other alternatives. You can subscribe to newsletters like Progressive Investor, which is a monthly, online green investing newsletter that guides people toward investments in companies leading the way to a green economy.
4. Seek financial guidance – it is recommended that financial advisors that have an expert knowledge in green investment are sought out, if that is something that you want to do. These people have the skills and the knowledge to help you to invest in the right way for you, specifically.
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