As individuals who care about the environment,green eco-friendly investing is maybe where we have the most leverage for real change. The problem is even the greenest consumers have issues making financial decisions in this realm.
Read next: What is fossil fuel divestment? All you need to know
In this guide I’ll tell you about the power of eco-friendly investing (or divesting), the options you have for “greening” your portfolio, and how to get it done without too much hassle.
What is eco-friendly investing?
Eco-friendly investing, or green investing, is the act of investing your capital in companies that contribute to finding green technological solutions to environmental problems and divesting your money from companies that have a negative effect on the environment.
Today our biggest environmental concern is global warming. Global warming is mainly caused by the amount of fossil fuels we burn – it ends up in the atmosphere as carbon atoms.
This is where the fossil fuel divestment movement comes into play. We convince people and organizations to move their money from big oil companies and invest it in renewable energy companies instead.
Why eco-friendly investing is important?
Shifting to a green investment portfolio takes more time and research than choosing regular every-day eco-friendly products, especially for individuals with minimal financial background.
But doing so has huge impact on the environment.
Almost all of us have some kind of savings that are invested in the capital market. Whether it’s throughout pension funds and bank trusts or through professional brokers.
In past years, before ethical investing was even a thing, it was common to care only about the bottom line. If a company was making a profit, people would invest their money there, no questions asked.
Today things are starting to change (there’s still a long way to go) as big organization and private investors are asking questions other than “Where’s the money?”
People want to know where the company operates, how it treats its employees, is it harming animals, is it hurting the environment and so on. By considering these factors in the decision-making process, they are making a change.
Companies are losing investors over their non-ethical practices. It makes them try harder and forces them to change. By greening your investment portfolio you are contributing to a good cause.
How to do eco-friendly investing?
Start by finding out where your money goes. Contact your pension company/insurance fund and ask for a report. Chances are you are deeply invested in oil companies because they lead all the popular indexes.
Then you can ask them if they have a green product or a fossil-fuel-free product for you to choose from. If they don’t, consider moving your capital to a company that does.
If you’re an independent investor, then you must already know where your money stands. If you are invested in big indexes like S&P 500 for example, you can simply shift to the “S&P 500 Environmental & Socially Responsible Index” which excludes all the companies with negative environmental impact in it.
There are many other examples, all it takes is a little research. More green funds and indexes are appearing in the capital market as demand for them rises.
Eco-friendly investing takes research and it takes time, but in my opinion, it’s one of the best things we can do for our planet.