Environmentally Friendly Investing

Business Environment Trends & Culture - August 17th, 2007
Magellan Japan

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Tel. 03-3769-5511

When was the last time we saw so many major companies make a mad dash to become more “eco-friendly”? From oil companies to banks, “green” is the thing these days. And it’s not just another “con­sumer trend” either…the financial sector is paying close attention too. “Going Green” is not just about changing your lightbulbs anymore; it’s something that has managed to trickle over to the financial market, at­tracting major investment as well some of the world’s most sophisticated investors.

It seems that energy saving alternatives for just about everything are springing up these days. There’s now a more “eco-friendly” version of this, or an organ­ic version of that, for nearly every consumer product known to man.

Is there a way to make your investments greener?
There are plenty of ways for the average investor to start greening their nest-egg now, in a rather more profitable and secure way than you might think. So, where to start? Speak with your financial advisor first to clarify your investment objectives and timescales for investing.

Green Banking
When it comes to choosing the right bank, there are lots of options. All of them are scrambling to off­set their emissions and throwing money at climate change, so which are bluffing? HSBC— committed $90 billion to environmental initiatives. Citibank—have committed $50 billion to fight climate change; $30 bil­lion of that is specifically for financing investments in geothermal, solar, wind, and other renewable energy projects and technologies. Bank of America announced that they have committed $20 Billion to make green loans to “eco-preneurs” with environmentally friendly or sustainable businesses and finance environmental projects around the world. They also recently unveiled plans for a new online carbon trading program.

Greener Returns
If you’re not a skilled trader, odds are you’re probably leaning towards a broader, more diversified group of investments. The most typical, and easiest ways to get started are usually index funds, mutual funds, and ex­change traded funds (ETFs). Before diving head first into an investment vehicle, make sure you speak with your financial advisor.

Just how profitable is this new wave of socially con­scious investing?
According to an article in Newsweek, the returns have proved to be rather hefty:
“Wall Street’s own change in climate is nothing less than astonishing. ‘Save-the-planet’ investing has sud­denly, well, heated up. Four major investment banks —Citigroup, Goldman Sachs, Lehman Brothers, and UBS—have recently issued fat global-warming reports looking at stocks and industries likely to gain or lose. Investments in clean energy have more than doubled, to $70.9 billion worldwide, in just three years.”

Determining Investment Objectives
Are you looking for something high growth? Or secu­rity and risk management with a more conservative return? Small-cap or large-cap? Do you want entirely “green” or a fund that just focuses on alternative en­ergy? Do you just want to avoid investing in cigarettes and alcohol, or do you want stocks that are environ­mentally sustainable and produce “fair trade” prod­ucts? The list of criteria you can apply are endless….