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Whether you’re a newbie looking for investments opportunities or seeking eco-friendly ideas to round out your socially responsible investment (SRI) retirement portfolio, green stocks may be a good option for you. By putting your money in green investments, you’ll be supporting growing green companies that are contributing to a more equitable, sustainable world.

How to invest in eco-friendly stocks

Interested in playing the market but don’t have thousands to invest? Looking for ways to pad your retirement fund? Then buying stocks might be the right choice for you. Some sell for as little as $20 a share so they’re great for beginners, and although a far bit riskier than mutual funds, they offer the ability to control which stocks you own and when, allowing you to customize your portfolio completely.

This investment method is also attractive to greenies who want the ability to screen which companies their money supports. To get you started on the eco-investment path, here are a few tips:

  1. Green-listed: Your best bet for finding eco-friendly stocks is to check out one of the socially responsible investment lists put out by organizations specializing in responsible money management. They have relatively stringent standards for who’s allowed in, so you can weed out the ones that support nuclear or big oil. Here are some you can try:
    • Global 100: A project by Corporate Knights, the Global 100 is a list of the most sustainable corporations in the world. Companies are measured against social, environmental, and strategic governance performance criteria. Their collective performance between 2000 and 2005 was 80 percent better than the common benchmark.
    • Climate Counts: Measuring companies on their commitment to fighting climate change, this list tracks companies' carbon footprints, their efforts to reduce their impact on global warming and support for progressive legislation, and whether they've publicly disclosed their climate plans. They cover companies like Microsoft, Nike, McDonald's, and Google.
    • SustainableBusiness.com: Sustainable Business looks for companies that best contribute to a sustainable economy, compiling them into a list of publicly traded Sustainable Stocks. They also publish a Top 20 every year.
    • SocialFunds.com: Social Funds’ Sustainability Report Center provides a corporate sustainability report for over 200 companies—information that might come in handy while researching which companies you want to support.
    • Toxics Release Inventory: The US Environmental Protection Agency (EPA) publishes a Toxics Release Inventory (TRI) database that allows the public (or your money manager) to compare companies against their industry average to see who’s polluting the most. It’ll help you filter out the not-so-green stocks.
    • Renewable Energy Stocks.com: This website features a listing of Cleantech Sector stocks in categories such as environment, fuel cell car, renewable energy, and water.
    • WilderHill Clean Energy Index: This new index (under the symbol ECO) tracks 36 US clean energy stocks.
    • Progressive Investor: They keep a good list of sustainable stocks that lead the way on issues such as fuel cells, renewable energy, green building, and organic foods.
  2. Trend-spotting: If you’re going to play the market, you’ll likely want to stay abreast of the trends in green investing. Here are some environment-focused publications that’ll get you going in the right direction:
    • Green Money Journal: Get investment tips and news from this quarterly publication that’s been around for 15 years.
    • Environmental Finance: This monthly magazine addresses investment- and environment-related issues.
    • Winslow Management Company: A respected eco-friendly investing firm, Winslow Management publishes the Winslow Environmental News online, covering a variety of investing topics.
    • GreentechMedia: Aiming to be the green tech source of choice, greentechmedia provides clean technology news, research, and analysis.
  3. Mainstream listings: If you don’t want the hassle of doing the research yourself, you could try one of the mainstream indexes. The Financial Times and London Stock Exchange (FTSE) Good Index Series, for instance, lists socially responsible companies (rated according to several criteria, including environmental sustainability, labor standards, etc). Keep in mind, though, that there are no worldwide standards for measuring a company’s eco-performance—some indexes list only the non-sinners while others list those that truly integrate green standards. If you’re looking for something more forward-thinking, the less stringent nature of this option may not work for you.

Choosing eco-friendly stocks helps you go green because…

  • It means your money’s supporting environmentally friendly industry practices.
  • Green technologies advance more quickly when they’re supported financially.

Funneling funds away from polluting industries and companies and toward those that operate in a sustainable manner ensures that money is available to stimulate and expand clean, environmentally safe industry practices.[1] Though some argue that SRI stocks lag behind the market average, most who choose these stocks do so in order to avoid earning money or leaving a legacy at the expense of the environment.[2]

Controversies

Trade-offs

Recently, bank users were faced with confusing propaganda about the two largest banking institutions in the world. In 2007, both CitiBank and Bank of America announced their commitment to spend billions in an effort to combat climate change.[3][4]

Yet despite highly publicized statements about their green financial commitments, the Rainforest Action Network (RAN) asserts that these moneylenders are pulling the green wool over investors’ eyes. RAN believes these environmental announcements are an attempt to hide their participation in a new “Coal Rush” that could result in the construction of over 150 US coal-fired power plants and upwards of $50 to 90 billion per year in associated social and environmental costs.[5] RAN points out that although Citi has pledged billions of dollars (0.2 percent of their assets) to address climate change, they continue to spend 200 times more on dirty energy.[6] Likewise, Bank of America spends 100 times more on dirty energy than on clean energy initiatives,[7] investing heavily in mountaintop removal mining companies, big greenhouse gas emitters, and other environmental offenders.[8]

Different shades of green

Some have lodged serious criticisms against SR investments, claiming that green options often invest in environmentally unsound industries such as oil and gas and that they rarely include progressive companies such as organic food producers or alternative energy firms.[9] Individual investors should be aware that stocks, funds, and money managers will vary in their depth of environmental commitment, being careful to investigate individual investment options to find the one that best fits their moral values and financial goals.

Suing to keep you in the dark

Corporate disinformation campaigns aimed at glossing over environmental concerns and silencing techniques used to keep people quiet about eco-issues often cloud investor decisions. For instance, on her April 16, 1996 show, Oprah Winfrey attempted to draw attention to the public health hazards of mad cow disease, or bovine spongiform encephalopathy (BSE), after which cattle prices dropped dramatically. In a move to salvage their reputation, feedlot owners filed suit against Oprah, one of the first of many Strategic Lawsuits Against Public Participation (SLAPPs). Concerned citizens now fear that SLAPP lawsuits make it easy for corporations to hide potentially damaging information that would otherwise influence shareholder activity.[10]

External links

  • Ceres Works to network investors with environmental organizations and public interest groups to cooperatively work on environmental challenges.
  • Co-op America’s Social Investing information They’re a nonprofit member organization working to use economic power (consumer, investor, business, marketplace) to stimulate a just and sustainable world.
  • Environmental Finance A monthly periodical addressing investment-related environment issues.
  • Green Money Journal A quarterly publication that gives tips and current events in the investing world.
  • Investor Network on Climate Risk A $4 trillion network of investors promoting understanding of climate change’s risks and opportunities.
  • Investing with Your Values A book that covers most investment options and how to get into the money-making game without compromising your values.
  • Social Funds.com Publishes news, daily market trends, and investment research, and gives performance information for 75 socially responsible mutual funds.
  • Social Investment Forum Encourages responsible investing by evaluating various mutual funds against a variety of indices.
  • Social Investment Organization A Canadian member organization working to promote socially responsible investing.
  • SRI Studies A project affiliated with the Haas School of Business at the University of California, Berkeley, this site contains some intriguing socially responsible investment studies.
  • Sustainable Business.com Publishes a monthly newsletter read by many green money managers, and reviews company financial and environmental performances.
  • TerraChoice An environmental marketing firm with an EcoBuyer Database that might be useful in investment research.