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Investing in Green Bonds and Environmentally Friendly Stocks

Updated on April 21, 2015
Marcy Goodfleisch profile image

Marcy lives in Austin, Texas and has written about environmental issues and conservation for more than a decade.

Trending Investments | Green Bonds

Green Bonds are the hottest new eco-friendly investment tool.
Green Bonds are the hottest new eco-friendly investment tool. | Source

Where to Find Green Bonds and Eco-Investments

If you want to join the trend toward sustainability and Earth-friendly investments, here are some things to look for in mutual funds, bonds, and corporate stocks:

  • Green Bonds: These are hot now - read below for more information!
  • Planned Growth & New Construction: Check to see if a corporation is installing a new plant in an area known for supporting the environment.
  • Local Tax Advantages for Green Businesses: Check which industries are housed in areas that place a high priority on environmental awareness.

Characteristics of Corporations Capitalizing on Green Trends:

  • Sustainability: Do they manufacture goods from sustainable materials? Do they use sustainable products and materials in their own factories, plants, offices or other locations? Does their packaging create needless waste?
  • Environmental Awareness: Do they address local and global environmental concerns in locating their sites and in their business practices?
  • Green Certification: Have they pursued and attained any of the Green certifications available locally, nationally or internationally?
  • Energy-Efficient Manufacturing and Products: Has the company adopted engineering and technology to produce products through manufacturing practices that save energy? Does the company manufacture products that are energy efficient?
  • Shipping and Transportation: How conscious are they of pollution, natural resources and conservation in their shipping practices? Do they use hybrid vehicles or other equipment that supports clean air through lower emissions?
  • Respect for Eco-sensitive Areas: Do their global operations avoid needlessly destroying ecosystems in other countries? Do they work to avoid polluting local areas through runoff or improper sewage disposal?
  • Social Awareness: How conscious is the company about fair practices in employment, work conditions and underage or disadvantaged workers in the global business arena?
  • Use of Local Materials and Goods: Does the company "buy local" when it procures materials, supplies or other goods and services in order to save on the fuel and energy consumption long-distance shipping would generate.

While it might be great to find investment opportunities that score high on all the above factors, if you find a company that suits your financial planning goals and it has at least one or two (or more) major value listed here, you may have a good fit for your personal investing philosophy. You may have additional Green standards or issues you want to add to the criteria when evaluating a company.

Stock and Bond Trends | Green Investments are Hot

Green Companies work to conserve the environment, energy and natural resources.
Green Companies work to conserve the environment, energy and natural resources. | Source

Newest Hot Investments | Green Bonds

Green Bonds are an investment option some may not know of just yet.

These bonds generally help fund environmentally friendly enterprises, such as green building, sustainable energy plants and other activities in the environmental field.

Although some consider green energy to be too costly (users may pay more for electricity from sustainable sources such as solar or wind plants), concerns about dwindling resources continue to create an interest in these sources of energy.

Green building is a smart move for industries trying to reduce their environmental footprint and at the same time get tax local or federal tax advantages.

Check with your broker about current offers on Green Bonds. This may prove to be a comfortable and profitable investing niche for you.

Where to find Green Companies for Eco-Investing

Researching a company's Green status doesn't have to take months, and it won't require a graduate degree in economics or environmental studies. Here are some ways to find out whether a particular company is environmentally conscious:

  • News Releases: Every company that does anything 'Green' will promote it in through news releases. You can do searches for the types of industries you'd like to invest in (medical, high-tech, clothing, etc.) and check for news stories on their products or advances in that area. You can find recent news releases on corporate sites, usually the links will say "News Room" or "Media."
  • Green Certification: Check to see if the company is LEED Certified at any level or recognized by a local Green Certification program. This not only shows intent, but it documents how well they have met stringent standards in energy efficient design and engineering.
  • Website Information: In addition to news releases, corporations will generally promote their Green image on their websites in some manner. Increasingly, industries are justifiably proud of the steps they've made to protect the environment and conserve our resources. They know it attracts customers and investors, and it often results in lower operating costs and tax benefits.

Society, the Economy and Ecology: A crucial connection

Source
You may need to do some research to find the right choice for your Green Investments.
You may need to do some research to find the right choice for your Green Investments. | Source

You can invest in alternative transportation options, such as electric cars

Hybrid Vehicles, Wind Energy and Solar Power

In addition to investing with companies that maintain high standards in energy conservation and environmental protection, you may want to consider companies that manufacture and produce alternative energy sources or otherwise create ways to protect the environment. Here are some possible industries:

  • Hybrid and Natural Gas Vehicles: The automotive industry is increasingly coming on board with engineering designs and technology to reduce gasoline consumption (which also reduces pollution). Gasoline engines aren't going away anytime soon, but you can show your support for the forward movement by investing in firms that embrace newer technologies.
  • Wind Energy: Wind farms are increasingly appearing across rural lands, and wind energy is growing as an industry and alternative source for power. Many areas with reliable wind patterns and acreage available to help harvest the energy are installing wind farms to offset petroleum and other non-renewable energy consumption.
  • Solar Power: Firms that design, create and install solar panels are growing in all parts of the world. This source of energy is especially popular in sunbelt areas, and many industrial sites are now built with rooftop solar cells to capture the energy and reduce the load on local power sources.

Other Options:

  • Industries that Focus on Natural and Organic Products: Firms that produce non-chemical cleaning alternatives and those that use or produce renewable and sustainable fibers and building materials are just a few of these industries.
  • Environmental Clean-up: Some firms specialize in cleaning up oil spills, hazardous waste and other harmful contaminates. You can invest money with them and be part of the solution.

Finding Green Investments and Green Mutual Funds

Individual Account: If you're a private investor, and if you've narrowed your search to a specific company or two, you're ahead of the game. Create an online account or go to a broker and develop a plan for investing regularly. Or, you can shift your existing account to those stocks.

Managed Retirement Plans: If you participate in a 401k or other retirement savings plan at work, examine the choices available to see whether any are identified as "Green" funds. Your account management firm can answer questions about this. If there are no Green options currently, ask when they plan to offer those options for members.

Green Mutual Funds: These funds specifically target socially responsible companies for their investors. As with any mutual fund, you will need to research the performance, the overall fund profile and the history and age of the fund. Because Green Mutual Funds have grown in popularity, there are often new players in the game; check management track record in several funds before you make your choices.

Start-up Investing: You might find an opportunity to help fund a small firm at its inception. These are, by nature, risky ventures. But some do pay off (and many don't).

What do you think about Green Investing?

Would you prefer to choose Green Companies for your investments?

See results

Researching and Understanding Mutual Fund Management

If you're choosing a Mutual Fund as your Green Investment option, and if you're investing as an individual rather than through your retirement plan at work, take time to learn about the fees and overhead costs that fund management can charge. These can be (and often are) good investment vehicles, but you'll be a smarter investor if you learn what expenses funds are allowed to charge and do some background work.

The U.S. Securities and Exchange Commission has information on the types of expenses, fees and other charges that fund managers can charge to investors who hold shares. A wide range of fees can be charged, but there are regulations covering the nature of the fees.

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  • Marcy Goodfleisch profile image
    Author

    Marcy Goodfleisch 5 years ago from Planet Earth

    Hi, TahoeDoc - thanks for the field report from your amazingly beautiful area! You have a great point about not relying on a company's word on Greeness. I'm glad there are certification programs to at least help identify in some cases.

    I've not heard of a magnet school emphasizing the environment - what a terrific idea! There are many areas of study that could fall under that focus. Thanks for sharing that bit of news!

  • TahoeDoc profile image

    TahoeDoc 5 years ago from Lake Tahoe, California

    Good job Marcy. There is a lot of emphasis on environmental preservation here in Lake Tahoe. In fact my kids' school is the Lake Tahoe Environmental Science Magnet School. Even with all of that focus in our area, it is often difficult to pinpoint the companies that are truly 'green' and differentiate them from the ones who claim to be, but are not.

    Thanks for the useful tips.

  • Marcy Goodfleisch profile image
    Author

    Marcy Goodfleisch 5 years ago from Planet Earth

    Hi, alocsin - It will probably continue to be challenging to find the businesses that are environmentally friendly; it's an evolving industry and trend, and the number of corporations on board changes almost daily. So the results from a search done today will be different from one done last month, or six months from now. It's a bit like moving to the latest hot suburb or trendy town - growing rapidly, and very exciting. Fortunately, the growth is for solid, well-grounded reasons!

    Thanks for reading and commenting! Stay tuned!

  • alocsin profile image

    alocsin 5 years ago from Orange County, CA

    I think the tough part here might be finding the companies themselves, but you've laid out some great ways to locate them. Voting this Up and Useful.

  • Marcy Goodfleisch profile image
    Author

    Marcy Goodfleisch 5 years ago from Planet Earth

    Hi, Eliza - Thanks for your comments! The more I learn about Green Energy, the more I want to build a house that's Green from the ground up. I doubt I'll ever get to do that, but it would be nice! Especially if it got you off the electric grid!

  • ElizaDoole profile image

    Lisa McKnight 5 years ago from London

    Hi Marcy, this is an excellent appeal to corporations to put some investment money to good use. Green energy in particular is something we all need to invest in for the future. Great reading.

  • Marcy Goodfleisch profile image
    Author

    Marcy Goodfleisch 5 years ago from Planet Earth

    Hi, Teaches - you are right; companies really like to emphasize their Greenness! Guess I can't blame them - and of course I'm glad they're headed that way. Thanks for reading and commenting!

  • teaches12345 profile image

    Dianna Mendez 5 years ago

    Another great hub topic on the Green company movement. I see more and more companies posting this information on job ads. It's good to know what to look for and how to research for the interview. Thanks for sharing.

  • Marcy Goodfleisch profile image
    Author

    Marcy Goodfleisch 5 years ago from Planet Earth

    Kitty - yes, by all means, you can join me and Shea in busting the violators. I'll order more hats right away!

    SummerBerrie - thanks for reading and commenting! I'm glad you like the hub!

  • profile image

    summerberrie 5 years ago

    Marcy, it is useful to know about green funds. What a nice way to encourage and support these companies.

  • kittyjj profile image

    Ann Leung 5 years ago from San Jose, California

    LOL, May I join you, Marcy? I want to sleuth around with a Green Hat too, especially in China. Your hub reminded me of the news I watched last year regarding a company in China hired experts from the US to help them build green buildings in China. A great step for China to go green. Tweeted and shared with my friends on Facebook.

  • Marcy Goodfleisch profile image
    Author

    Marcy Goodfleisch 5 years ago from Planet Earth

    LOL! Okay - I will put my Green Hat on and sleuth around, and I'll let you know if I find the violators!

  • shea duane profile image

    shea duane 5 years ago from new jersey

    AND we have to keep our eyes open... sometimes companies look good on paper, but are not as clean as they pretend. I'm now counting on you to keep them honest lol.

  • Marcy Goodfleisch profile image
    Author

    Marcy Goodfleisch 5 years ago from Planet Earth

    Hi, Shea - I feel the same way. I get so excited when I hear about companies doing the right things for the environment! Thanks for reading, and thanks for your comment!

  • shea duane profile image

    shea duane 5 years ago from new jersey

    Great hub. The more we know, the better we will do for our mother, Earth!

  • Marcy Goodfleisch profile image
    Author

    Marcy Goodfleisch 5 years ago from Planet Earth

    Hi, Margie - I'm so glad you found the hub helpful! Also, you might want to check for government grants or low-interest loans you can use if you make Green choices in those things. I'm not sure what you're purchasing, but there may be tax advantages and even funds available in some cases.

    Thanks for reading and commenting!

  • Mmargie1966 profile image

    Mmargie1966 5 years ago from Gainesville, GA

    Wow! My husband and I are in the early stages of opening a business the will require purchases for materials. This hub will be a great resource!

    Very interesting article!

    Thanks for sharing, Marcy! I voted up and awesome!

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