A Guide for Green Investing

chillibreeze writer — Pranjal Dutta

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Remember the last time when you visited Dal Lake in Kashmir and saw sewage & excess weeds instead of pristine clear water. Or when you toured the “Pandava Caves at the “idyllic” Bicholim village in North Goa and you got a first hand account of the mining industry. These are some of the most common trysts, which seem to be on the increase with rapid industrialization and high GDP growth. Or we could say the price we are paying for economic prosperity! So you might ask if there is a solution to stop or curb such hazardous environmental depletion – RTI? NGO style Andolan? Or something tangible as well as practical. If you have chosen the latter, read on!

It is referred to as socially responsible investing or green investing, which implies its primary objective. To invest in organizations, which are socially responsible and accountable to the local culture, community, history and most importantly to the environment. The earliest form socially responsible investing were the Religious leaders. In the early days of investing, churches kept investments out of so-called "sinful" industries such as alcohol or tobacco products. In the 1960's and early 1970's, many religious institutional investors were looking to invest their money wisely for the future without compromising their religious beliefs. From this stemmed the idea of using investment as a tool to usher in socio-economic change. A recent example of this was the concerted effort to not invest in South African companies by the global investor community to put in end to Apartheid. A true show of power for righteous change!

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Green investing today is gaining credence! The world has taken notice of Al Gore’s efforts to educate the public about the severity of the climate crisis and implications on humanity portrayed in, “An Inconvenient Truth”. Its time we as investors played our part to help clean our environment as well as make a social change through green investing. A good way to begin is to ensure that your investments are in companies with a legacy of socio-economic and environmental consciousness. So if you care about the world around you or at least act like you care and want to make a positive difference, its time to put your money where your mouth is!

Positive screens are in place to help investors identify companies that they want to support as well as those that they wanted to avoid. In addition to the selection of companies, investors can became active owners (shareholders) of the companies in which they invest in. These investors can use shareholder advocacy to encourage corporations to change their ways.

Here is a simple guide to Green investing.

• Invest in companies that are leading the way toward a greener future or investing in machinery & equipment for a cleaner future. Companies whose products and services contribute to a safe and healthy environment should be invested in. Investors will help promote environmental solutions and leadership by investing in a well-managed, environmentally responsible company. By minimizing environmental risks, these companies will enjoy competitive advantages from cost reductions, quality improvements, profitability enhancements and access to expanding and new growth markets.
• When you invest ensure that you are aware of the company’s operations, products and services. Stay clear of businesses that can be environmentally destructive. The economic reason being that companies that do not pursue environmentally sound practices can be at the greatest risk of negative economic consequences such as being held liable for an operation or a service that is detrimental to the planet. By staying away from such companies that flaunt basic standards for environmental responsibility, investors can directly support responsible companies and create an incentive for less responsible companies to clean up their acts.
• Leverage your position and power as a shareholder to pressurize a less responsible company to rectify its operations or dealings. Such Shareholder Advocacy can go a long way in getting companies to behave and is a great way to get the big fish to listen to us small fry.

Global warming is the biggest environmental threat humanity has ever faced and it's not enough just to be aware. One has to care enough to act upon it. And investing in a socially and eco-friendly manner is a key to fighting environmental disasters without turning the clock back on development. And world over it's now hip to be socially responsible. Last year, Investments in renewable energy hit a record 30 billion dollars. That's a whopping 20-25% of the total investment in the energy industry worldwide. The future will belong to those who adopt clean technology and green investing. It is a huge opportunity for investing in such companies right now and to catch the early wave of investing for people, planet and of course profit.

 

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