Going Green: Investing in Renewable Energy Companies

Everywhere we go, there’s talk of being "green," from organic foods and recycling, to conservation and renewable energy sources, like solar power. We are in a time of amazing innovation. People are looking to make a difference, whether in their community or world–wide. Everywhere, there is a growing focus on sustainability.

Sustainability can be measured by energy consumption on a global level, but also, air and water quality, recycling, waste, local foods, land devoted to parks, alternative fuels, transportation, city and state initiatives and green building. When businesses focus on their workplace, the environment, human rights, and the community, they are promoting responsible business practices. We’ve learned that how a company deals with environmental and social issues often contributes to the value of its brand.

A study by the United Nations Global Compact shows that over 90% of corporate CEOs believe that sustainability will be critical to the future success of their business. Many are making sustainability and energy efficiency part of their corporate culture, while talented employees are also drawn to green companies that share their values. The U.S. Bureau of Labor Statistics expects green jobs and industries to outpace job growth in the overall economy.

As the wife of a planner, I began to ask my husband questions about matching investing objectives with companies that share a passion for sustainable and responsible business practices. I leave complex investing decisions to the Certified Financial Planner™ professionals, but, if you are interested in Sustainable and Responsible Investing (or Socially Responsible Investing), here are some questions worth asking:

1. How does SRI impact diversification? Do you remove non–SRI stocks from the portfolio?

2. SRI investments can have higher internal expenses due to research and paying for fund managers to choose stocks. What are the internal expenses?

3. Is there an option that keeps the number of stocks in the portfolio high for diversification, but gives additional weight to companies that share your passion?

Keeping these questions in mind when you speak with you planner allows you to invest in your passions wisely.