If you’ve topped out your greenability at home, you can invest your money in funds that support environmentalism elsewhere.
Green Living
Investing your greens in ‘green’
A personal value investment strategy can help you put your money where your heart is.

Financial planning is a sensibly standardized process based on criteria unique to each person. There are rules for how much time you have, what kind of returns you need, what risks you’re willing to take — and, now, how your personal beliefs play into the system. How a nest egg grows is as significant to some as how much it grows.

A fairly recent introduction to the planning scene is the inclusion of personal value systems, meaning investors are adding restrictions and rules for investment choices based on their beliefs. An example of this would be instructions to your financial advisor to exclude from purchase any stocks of alcohol, tobacco or weapons manufacturers. There are often a lot of “Thou shalt not…” clauses. A commitment to a green investment strategy generally gives guidelines on what to include. Advisors get direction to seek out companies actively exploring ways to improve the environment and also to find the companies that embrace the latest sustainable design systems and  technologies. There is a lot of overlap between socially responsible investing and green investing, but there are differences.

You need a plan and both financial and ethical benchmarks to check the performance of your social and/or  environmental investments. A plan is the strategy and tactics you will make use of to reach your goal; the financial benchmark is a calculated value to be reached within a specific timeframe. The ethical benchmark is a guideline that describes the nature of your investment universe and includes statements like: I want to support companies that research and develop technologies to reduce carbon emissions, or: The managers of companies I invest in must embrace environmental awareness as an essential component of standard business practice.

Ethical dictums can be a bit ambiguous and idealistic. You can say, “I will/will  not invest if… .” These kinds of principles will reduce your options but not necessarily your opportunity. Whether you work alone or with an advisor, you should  articulate your rules in an ‘Investment Policy Statement.’ This document is a declaration of the strategies that you deem acceptable and sets general rules that might be refined for practical execution within the current real world. Think of it as the Constitution of John and Mary’s Retirement Plan (but feel free to substitute your own name). Like the U.S. Constitution, your plan is subject to interpretation and review. Personal investigations and trusted advisors can explore website content, corporate reports, news media and market research reports.

You can set lofty ideals, but realize they could be unattainable in the real world. For example, a stated policy to only invest in companies that recycle 100 percent of their waste, use energy generated from 100-percent, non-carbon-based sources, use materials found within 50 miles of their operation and work only with natural, renewable materials is probably too restrictive. Sweater-knitting shepherds come to mind — but they’re not likely to be a shrewd investment opportunity.

A green investment policy must take a position on the strength of a company’s relationship with the ecosystems that support its activities. I include five topics on my green list: renewable and alternative energy sources; eco-efficiency and resource conservation; recycling, safer technologies and lifecycle design; pollution control and abatement; and  long-term environmental sustainability.
 
A company does not need to be actively creating new methods for environmental improvements to be included on my green list. It is not just about research and development. A company that uses the technologies that support change for the good, reduces its own carbon footprint or invests in projects that are environmentally sound can be acceptable. Acceptability is situational. For example, a construction firm that has LEED-certified architects and engineers as staff or partners can be a good citizen of the world. A manufacturer that sets and keeps a clean, non-polluting plant site standard at all locations is a candidate. An automobile manufacturer that brings cars to the market that get more and better mileage might be included. In short, any company that makes sure its suppliers, supplies, buildings and staff are environmentally conscious will usually make the list.

I firmly believe that good stewardship of the environment translates directly into good corporate management. Well-run companies tend to perform better, and good performance usually leads to better rewards for investors. It follows that the opportunity is there — it just takes a little more work to maximize it.