Green Investing

Story Planted On June 12, 2008

By: Morgan Olsen

Instead of putting your hard earned cash into money hungry companies, why not invest your green in some green? In return for your investments, big name companies found a new way to give back to the environment. Green investing is becoming an increasingly popular way for the world to invest its money.

“Green” stocks, bonds and funds give back to the environment and avoid associating with companies that are notorious for being hazardous to the earth. These companies invest in everything from hydrogen energy sources to clean water. Those who seek to invest in green companies look for a business that tries to repair environmental damage or stop future destruction.

Stacy Berenguel, 28, a financial advisor at Smith Barney in Des Moines, noticed the recent trend toward environmentally friendly investing.

“We live in an age of awareness,” said Berenguel. “Green investing is really part of a larger movement towards socially responsible investing.”

Two of the most popular terms for these types of investments are “socially responsible investing” or SRI and “green” investing. While SRI can refer to a broader spectrum of investments, green investing is solely concerned with the environment. SRIs are concerned with anything that improves society.

“Many investors have become interested in green investing because they favor socially responsible strategies,” said Berenguel. “In most cases, they favor socially and environmentally responsible investing because they want to avoid companies that they believe harm the environment.”

Another reason for the move to green investing can be linked to international regulations that deal with global warming. Berenguel cites the Kyoto Protocol of 1997, a regulation that encouraged countries to cap their greenhouse gas emissions, as a possible inspiration for companies to use environmentally safer practices. With the growing need for new energy sources, companies that make the effort get attention.

Berenguel noticed a definite increase in the amount of green investing done in the last few years. She explained that in a 2007 report done by Clone, LLC, found that this type of investing grew at an average annual rate of 26% and has reached $2.3 trillion in total assets.

Ready to invest in some green? Berenguel suggests that potential investors first think about what kind of environmental issues are most important to them. A multitude of companies advocate hundreds of causes. Consulting a financial advisor can help you figure out what kind of financial investment you are able to make. Berenguel warns that investors should not make the environmental issue the sole reason for investing. Although it is an important part of the investment decision, investors must also look at price, value and expected growth. New investors should also investigate the company to make sure they are really doing what they say they are. Consulting an advisor or doing some research online can help you make a smart choice.

“At Smith Barney, investors have access to a variety of environmentally sensitive investment vehicles,” explained Berenguel. “We can draw on research from both in-house and independent sources to help investors find a green investment that fits their values, risk tolerance and financial goals.”

Many have discovered not only the financial benefits of investing green but also the greater good that this type of investing does for our earth. By investing in companies that are already eco-friendly, you can also encourage other companies that have not made the switch to safer practices. After all, money speaks louder than words in the world of investments.