There are many investors that are becoming more conscious of social and environmental issues. This new breed of investors does not want to invest in any business that is acting in appropriately. They do not want to invest in tobacco companies or companies that have a low social conscience. 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.
An important fact cited by the Blue and Green Investor is that there is £21.8 billion invested in UK ethical and green funds. In addition they explain that 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 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.
Investing in green and ethical funds is good to make sure that our world keeps working in the way that it ought to, and that businesses become more ethical in their approach.
How to become green investor:
Blue and Green Investor offer 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.
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.
Additional resource: infographic by canadian international council
Paula Newton is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Paula’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Paula has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Paula has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.