With the stock market down, a lot of investors are starting to eye potential companies to invest in, and you should do the same. Instead of investing your money into the unethical and environmentally destructive companies so many investors pick, you should consider investing in more sustainable companies.
Fortunately, there have been more and more companies switching to sustainable methods year after year. Investing in solely sustainable companies is no longer out of the question for a lot of people, though we recommend keeping some balance in your portfolio.
In this article, we’re going to go over how you can invest into sustainable companies. First, we’ll be covering the best methods to research which companies to invest in, and then we will go over how you should go about investing in these companies.
How To Research Sustainable Companies
To get started, you’ll want to know how to research sustainable companies. There are many tools you can use, such as looking at mutual funds and hedge funds that have publicly advertised themselves as investing in sustainable options.
This way, you’ll be able to look at sustainable companies that real venture capitalists and other institutional investors are currently investing their money in. For example, check out this investor’s profile on this sustainable investment firm’s page.
Green Century Funds
Green Century Funds has been investing in sustainable companies for over 30 years, as they first started investing with the values of the planet in mind in 1991.
This fund is different from most other sustainable funds because they use ESG rankings — Environmental, Social, and Governance factors that many investors pay close attention to — as well as values-based screenings, which act as an exclusion to types of companies that cannot be sustainable. An example of a sector that would see values-based screenings is the energy sector, as all the fossil fuel companies could not be invested in by a fund that claims to be sustainable.
Green Climate Fund
The Green Climate Fund, as the name suggests, has a focus on climate-friendly companies. They invest in over four different types of companies, including environment, human livelihood, energy, and land-use (regarding forests and ecosystems).
In addition to this, they have a four-step approach they use when it comes to investing in various different companies across the globe:
- The first is transformational planning and programming. This step integrates various strategies, such as policymaking and other planning, to get the most out of their investment.
- Second, they look to invest in newer businesses that have the newest technologies. That way, they can help catalyze climate innovation.
- Third, they analyze the risk of the investment by using various public resources available to them. This is based on the country that they are investing in, and can improve the risk-reward profile of many investments in LDCs (least-developed countries) and SIDS (small island developing states).
- Lastly, they aim to mainstream the risks to our climate and generate opportunities to make investment decisions that will both generate wealth and foster sustainable development.
How You Can Invest
Many of these funds are not available for the average investor, and so we recommend looking at the individual companies that these funds have invested in. To do this, simply look up the fund name at the SEC mutual fund and variable products filler archive. This page will allow you to search to find the exact companies all mutual funds registered with the SEC have invested in.
For example, if you searched “Green Century Funds” and clicked on the first result, you would get directed to the EDGAR search result page containing information regarding this fund. Following this, click on the Class/Contract number to be directed to their public documents that outline the businesses they have invested in.
For more information on how to use this, check out the SEC’s guide on how to use EDGAR to research investments.
Wrapping It Up
We hope this article cleared some things up regarding sustainable investments for you, and that you can begin to invest on your own knowing that you are choosing sustainable investments used by real mutual funds today.
We also recommend directly investing in sustainable funds when it best suits you, as it is a good way of balancing your portfolio while staying green.