Eco-Friendly Economics for the Green Investor

Putting money where your mouth is can be a scary prospect for the Earth-friendly investor in the current economy. Making environmentally responsible investment decisions doesn't have to be a baldness-inducing gamble. Three strategies, each with different risks and rewards, can help an investor make more greenbacks while staying green. Eco-activist Economics: Socially responsible investing (SRI) seeks to profit from business ventures like clean energy or companies that make fair trade and workers' right a priority. Numerous stocks, exchange traded funds and mutual funds allow one to invest directly in businesses considered beneficial to the greater good by their purchasers. The goal of SRI is to use investment dollars to push for positive social change. Investment firms such as Calvert, Domini, and Pax provide mutual funds that screen out companies based on their practices, such as environmental impact or use of animal testing. The firms also actively push the companies they invest in to stay on an eco-friendly track. “On the activist owner front, Domini Social Investments has filed over 200 shareholder resolutions at companies, resulting in improved conditions for hundreds of thousands, perhaps millions of persons,” said Amy Domini, founder of Domini Social Investments in the Huffington Post. One down side of choosing an SRI mutual fund is that they tend to have high management fees, since so much research on business practices and shareholder activism is involved. But that doesn't mean SRI can't be profitable. “At the start of 2010, professionally managed assets following SRI strategies stood at $3.07 trillion, a rise of more than 380 percent from $639 billion in 1995... Over the same period, the broader universe of assets under professional management increased only 260 percent from $7 trillion to $25.2 trillion,” according to the Forum for Sustainable and Responsible Investment. Eliminate the Negative: If putting your eggs in the SRI basket leaves you worried that activist investing might not be all it's cracked up to be, you can follow Hippocrates advice, and “do no harm” by investing in established companies that have made environmentally sound operations part of their philosophy. For example, investment news website, the Motley Fool recently covered Unilever's decision to go green. “Of course, the consumer goods leviathan is not doing all this through the kindness of its heart, but because this is what customers want,” said the Motley Fool article. Coca-Cola, Whole Foods, and Disney were three titans of industry the Motley Fool mentioned as having gone this route. Environmentally Better Homes and Gardens: House prices are still low and investing in a fixer-upper could give you the opportunity to try your hand at green remodeling. Solar water heaters, energy efficient appliances, and landscaping with native species can improve the value of a property by making it stand out from the crowd to renters and buyers since it will be cheaper to maintain and carry eco-prestige. A report by Deutsche Bank noted the benefits of green building and called for lenders to increase recognition of those benefits in home valuation, reported MortgageOrb.com, a real estate professional information portal. "Those builders and re-modelers who have adopted a transparent green message have been quite successful," said Sean Penrith, executive director of the Earth Advantage Institute in the MortgageOrb article. You don't even have to buy another house, efficiency upgrades to your current home pay dividends in the form of lower electricity bills. Besides saving some money, you could be saving your health. HGTV noted that “green remodeling” can also be focused on creating healthy indoor environments.