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Investing for the Environment – How to strike a balance between Profits and Green investing

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Green Investing

Choosing investments options that support your environmental concerns can be a challenge. Attempting to structure your portfolio around emerging green technologies has historically proven to be less profitable. Some of the prime examples in this regard could be the companies like Evergreen Solar Inc. and Coda Automotive that not only had strong investor support but also substantial government backing by way of low or no interest loans and tax incentives. If it is difficult to choose a winning stock with millions of government backing to support it, then simply choosing one based on its own financials would be somewhat difficult and impossible.

Another concern to the planet conscious investor is the fact very often the information you are looking at is based only on its holdings in it home country. A large corporation often has manufacturing plants scattered widely throughout the world. A primary reason for this is less regulatory requirement in some regions of the world than others. The fact a company has an award in the US or Europe for operations there says nothing about its stewardship in less monitored areas.

How to Balance between Profit making and Green Investing

As with any investing, your strategy must include areas you can expect to make reasonable profits in. If you cannot
accurately determine a company’s commitment to the environmental programs when choosing from the mainstream companies or newer/ start-up green technologies which need to be reserved for high risk capital only, then there are few choices left. One area that has shown growth is in the construction sector. While green technology companies have been hit or miss with far more misses, the growth of construction companies in the last 2 years has been impressive and choosing the ones that specialize in the field of construction implementing environmentally sound building practices can be as close to a sure bet as you can get. The difficulty in them is that most of them are privately held stocks, so investment opportunities are limited.

One area that you invest in with high profit expectations is in the Foreign Currency Exchange markets. Trading currencies you are simply facilitating global trade rather being forced to choose a particular stock to support. This is obviously speculative investment, but also gives the opportunity to earn high returns equally well in an up or down global economy. While considered a risk capital investment by most when trading on the Forex, it will still help diversify a limited portfolio.

To balance off the higher risk of your Forex and Green technology emerging stocks, look at government and municipal bonds being sold to fund environmentally progressive projects such as solar installation into public buildings and clean water or air initiatives. These will provide small, but relatively safe returns that still make clear where your values lie. You may also consider making your commitment known by the purchase of Renewable Energy Certificates to help sponsor and endorse clean energy initiatives.

PG

Niraj Satnalika

Niraj is an MBA in International Business (Finance). Prior to this he completed B.Tech in Electronics and Instrumentation. He is currently working with Confederation of Indian Industry (CII), Kolkata in capacity of Consultant. Satnalika is actively involved with an NGO and works towards promoting education among the underprivileged.

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