Build Wealth by Green Investing

In today’s depressive stock market it is hard to find a silver lining. Green investing is a way to feel good about your stocks and mutual funds while having the potential to make a healthy return on investment. Socially responsible investing makes sense during the corruption on Wall Street and the search for alternative energy sources.
Green investing is finally coming into the mainstream. People can do what’s right for the environment and build wealth too! Socially responsible investing has been around for decades and is now becoming popular. SRI already has $2.3 trillion in investments. SRI started by appealing to investors who wanted to avoid sin stocks, the stocks of companies that are involved in alcohol, tobacco, and gambling.  

Today, Social Responsible Investing is an all encompassing term that generally means screening companies out that are abusive to the environment, practice poor labor relations, are not responsible to their communities and lack corporate integrity. SRI has evolved to serve in an advocacy manner. The new focus by consumers, business and government on sustainability and the environment has created its own category of SRI. Goldman Sachs, the darling of Wall Street, has already set aside $1.5 billion to privately invest in green companies. CalPERS; one of the country’s largest institutional investors, has set aside more than a billion dollars for green investments.

How do you catch the green investing wave? The most practical and probably most efficient way to put money to work in a SRI is via an SRI mutual fund. Other ways to invest are via an Exchange Traded Fund and by owning stocks individually. The latter way takes more time, expertise and is riskier as you are not diversified as well as a mutual fund.

Not all SRI funds are alike. For decades SRI has screened out companies that were considered socially or ethically unacceptable. Now green funds screen in companies that are making a positive impact. Today’s green funds include some surprising choices as more and more blue-chip companies are becoming green-chip companies.

How do they work? Imagine if you or I try and ask a CEO about changing her packaging for products or about ending abusive consumer practices. We would not get too far. But imagine a pot of $2 trillion dollars invested by SRI managers speaking about these things to CEO’s? For better or worse, having that much money under management gives them an open ear to management. This shareholder advocacy becomes a powerful force for improvement.

SRI aligns your money with your interests. In my opinion, companies that focus on doing right by the consumer, the environment, the marketplace and all other constituents tend to do better over the long term. It is those who focus on the short term and take shortcuts that tend to be disappointing investments. Sustainability is not just about us as humans on this earth but is also relevant to companies and investments.

In the past, being altruistic and investing was not as correlated as they can be today. You can put money to work, funding newer renewable energy technologies and have your money working in an area that is the next challenge for our country while offering a potential favorable return on your money. A major Wall Street firm recently put out a research report titled “Clean Energy: Sustainable Opportunities.” They predicted that annual clean-energy revenue opportunities could reach $500 billion by 2020 and a trillion annually by 2030. This is an exciting time indeed!

Larry Burke is an award winning professor, and author. He has taught Internet Marketing at Seattle University and Starting a Green Business at Maui College. He recently wrote a book Green Makes Sense and is publisher of the very popular Green Maui Guide website.