Is Green Investing
Right for You?

Green investing, also grouped into socially responsible investing, is not a new concept. Recall that for decades financial advisors have asked investors to choose companies and products that they know, use and trust.

An example is Fritos Corn Chips. Invented in the 1930s, they began as all natural and have remained unchanged. The same is true for Lay’s Potato Chips. Both were popular, and the Frito-Lay Company now accounts for 59% of the U.S. snack chip industry.

If you like these products, use them and trust that any company with that great a market share after 80 years in business is pretty sound, then you are taking part in the core concept of green investing or socially responsible investing: apply your personal values as well as financial analysis when choosing where to invest.

What Is Green Investing?

The history of socially responsible investing can be traced to the 18th century Quakers prohibiting members from participating in the slave trade. During the politically active 1960s in the U.S., Martin Luther King managed economic development projects with social goals and limits, and trade unions used their pension funds to target investments that would directly benefit members, in areas such as medical care and housing.

Green investing in areas that promote environmentally sustainable development has grown dramatically since the late 1990s. Each year since 1990 the SRI (socially responsible investing) in the Rockies Conference draws investment planners, research analysts, mutual fund companies, and community development professionals to discuss how to redirect investment capital to promote a sustainable economy and world.

What Should You Look For?

The conference's sponsor, First Affirmative Financial Network, observes that over the past 30 years, the responsible investment industry has had three phases. The first was characterized by “screening” investments and practices to avoid harmful substances like tobacco and alcohol. Phase two saw companies try to “do good” by reducing pollution and waste and improving efficiency, thereby increasing investor profits while building goodwill. Phase three has companies helping customers reduce emissions, save money and enhance their health, while creating more business opportunities in these growth areas.

You should consider all of these “phases” as you consider what is most important to your objectives. For example, funds may be organized simply to indicate which “screens” are applied—such as product focus (tobacco), labor relations practices, workplace diversity, animal testing, industry focus (gambling, weapons systems) or environmental practices.

If you are not satisfied that these descriptors provide you with enough information to feel comfortable with the investment’s overall practices, products and impact, ask for more details. The fund prospectus should be more complete, but do not be shy about asking to speak with a company representative. Remember that it will be difficult to find a “perfect” match since a company that produces a recycled product may produce a small amount of environmentally unfriendly waste.

How to Learn More

There are some comprehensive sites and books from which you can learn more. With the 2008/2009 global economic world crisis, brace yourself to see here what you will see practically everywhere you look to invest: negative performance figures. Keep in mind that in part you should look for opportunity, both by purchasing a promising investment at a lower than normal price, and by making your values work as well as your money.

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