Green Stocks in Smart Companies

What companies are leading the pack in doing their part to make the planet a better place to live? Which ones make environmental and social concerns a top priority? Which companies are the ones you should be looking at closer in order to invest in green stocks? If green and sustainable investing has become a priority of yours, then these are the companies that you should look at first when it comes to investing in green stock:

Kyocera Corp (KYO) - This is a Japanese company that manufactures mobile phones and photocopiers. They are also the second largest company in the world to produce photovoltaic cells. This company is a smart pick for green stocks.

Ormat Technologies (ora) – Ormat technologies in Nevada has been in business since 1965. The company builds and operates geothermal power plants in no less than 13 countries. This company is at the forefront of green investing. In the past year alone the stock for Ormat Technologies has doubled.

Suntech Power Holdings Co. Ltd. (STP) – Located in China, Suntech is the largest producer of photovoltaic cells and has been described as being a “major market for emerging energy technologies”.  Green investing is big at Suntech.

United Natural Foods Inc. (unfI) – The United Natural Foods Company is to be found in Connecticut. This company embraces green investing and is a good choice for green stocks. It is the biggest publicly traded distributor of both natural as well as organic foods throughout the United States. They continue to look for ways to add more green to their company. Recently they have started to use biodiesel in their trucks.

Whole Foods Market (WFMI) - Based in Austin, Texas, Whole Foods is setting precedence in terms of green investing. The company has singlehandedly changed the natural-grocery sector for the better. In January 2006 the American company bought enough wind-power credits to offset all of the energy it routinely uses.

Traditionally the goal of mutual funds is to maximize the amount of money that each investor earns. Those who choose to go green with their investment choices can help to bring about positive social and environmental changes. More and more people want their investments to bring good to the world and that is why they choose green mutual funds.

When considering green mutual funds it is important to consider the investing record of a company as well as what social and environmental causes the company supports and is presently invested in.

The green guidelines you go by before you invest in green mutual funds are important too. Does the prospective company you are considering use negative or positive screening? This is something that you must know before a decision can be made.

Managers of green mutual funds are given the privilege of voting on issues that are important to stakeholders. Find out if their record of voting as well as their portfolio carefully mirrors what they deem as their environmental and social concerns. Everything should correspond before you invest in green mutual funds with the company.

Green Mutual Funds to Consider

What companies should you go green with? Let us take a look.

1.    Calvert Large Cap- The Calvert Large Cap Growth Fund (CLGAX) has a good solid reputation for being socially conscious about the environment. There is lots of diversity and they have produced solid returns year after year.

2.    Spectra Green- The Spectra Green Fund (SPEGX) is very diversified and their average returns in the past five years have equalled 17 percent.

3.    Guinness Atkinson Alternative Energy- Although the Guinness Atkinson Alternative Energy Fund (GAAEX) just got its start in March 2006, it is growing strong and is very socially conscious.

4.    New Alternatives- The New Alternatives Fund (NALFX) has an excellent track record and has been around for the better part of two decades. Green mutual funds and diversification go hand in hand here.

Select a Green Investing Sector
Green investing encompasses a variety of sections such as natural and organic foods, environmental cleanup, renewable energy and pollution controls. These sectors are then broken down further into subgroups and in some cases, sub-subgroups. Let your social, personal and environmental interests help you zero in on which green investing sector is most suitable for you. Once you decide this, then you need to find out how much financial growth potential the sector has.

Green Investing Screening
Screen each green investment prospect by creating specific guidelines and boundaries for what is most important to you. If you decide to invest in mutual funds as a form of green investing for example, figure out if you wish to use a positive screen or a negative screen in relation to the companies you are considering.

Greenwashing
When it comes to perusing green investing opportunities, greenwashing must be kept in mind. You must do your homework to guarantee that a company’s claim that it is green is able to be easily verified.  Greenwashing involves making sure that what a company claims to be true is really true. Find out what technology the company uses and if what they do supports your own values and beliefs. Ask yourself this pertinent question- “What really makes a product or service green?” Greenwashing is when a company makes something appear to be green when really it is something else. Steer clear of these so-called green investing opportunities as they are bad news.

Green Investment Strategy
Green investing can be as tricky and as problematic as any other type of investing and that is why you need a plan. Create a strategy for your green investment that will help provide you with the information you need to make a wise and informed decision that is in line with your belief system and will be also prove to be financially lucrative.

Your green investment strategy should include:

·    Asking  a lot of relevant questions
·    Looking over Sustainability Indexes
·    Reading Annual Reports as well as CSR Reports
·    Talking with a Green Investment Analyst

Socially responsible investors get involved with ventures that will earn them money while also working for the betterment of society in one way or another. Socially responsible investors seek out investment opportunities that promote such things as human rights, the protection of the environment, diversity and consumer protection. Most investors of this kind shy away from anything dealing with alcohol, gambling, the military, pornography, abortion, tobacco and weapons of any kind. Any investment that has a moral connotation that is questionable is one that a socially responsible investor will not agree to be a part of.

History of Socially Responsible Investing

Socially responsible investing is not a new concept. In the United States it dates back to the 1750s and the Religious Society of Friends known as the Quakers. Started in Philadelphia, the Quakers prohibited all of their members from being a part of the slave trade and the buying and selling of human beings.

Socially responsible investing became very popular in the 1970s in order for disapproval to be shown to such practices as South African apartheid and pollution. Approximately $2 trillion is invested into SRI Socially responsible investing ventures in the present day

Approaches to Socially Responsible Investing

There are three approaches that are taken to socially responsible investing. These include portfolio screening, shareholder activism and cause-based investing. Portfolio screening is the most commonly used of the three options, however sometimes more than one approach is put to use at once.

Approach One- Portfolio Screening

Portfolio screening can be subdivided into three categories- negative screening, positive screening and best-of-sector.

Negative Screening- This is what most people think of when they think about socially responsible investing. Investors exclude bonds or stocks that are based on a company being connected with such activities as nuclear power, alcohol, pornography, tobacco or weapons. Often investors will also not invest in what is sometimes referred to as “dirty industries” such as forestry or mining.

Positive Screening- Investors look for companies that are involved in activities that work for the betterment of humankind, such as businesses that provide social or environmental benefits. Companies that promote health care, education or alternative energy would fit into this category. Companies that take a progressive approach that is beyond their regular operations, such as those that seek to further human rights initiatives or those that have recycling programs in their workplaces, comprise what investors in this group are looking for.

Best-of-Sector- Investors look for businesses that may not fit comfortably into the negative or positive screening but instead straddle the middle line. These companies may seek to promote environmental and social concerns even though they may be deemed a “dirty industry”, such as mining or oil and gas. Investors are willing to look at these companies because they are setting a good precedence which can serve as a lesson for other companies to follow.

Some of the practices that an investor is likely to screen before making the decision to invest in a company include but are not limited to:

-Human rights
-Animal testing
-Product safety and worker safety
-Diversity in the workplace
-Environmental practices
-Labor relations
-Gambling, weapons or mining (industry focus)
-Alcohol, tobacco (product focus)
-Nuclear power

Approach Two- Shareholder Activism

Shareholder activism is when a shareholder is able to use his influence and clout in order to encourage the management of a company to put ethical policies and processes into play. The shareholder not only wants to see profit from his position but he wants to bring about positive changes that can benefit everyone involved. This helps attract socially responsible investors and encourages them to get onboard. A shareholder in a corporation is entitled to be a part of all proxy votes. This person can also propose resolutions. If the resolutions garner enough support from other shareholders then the company will have no choice but to implement the changes.

Some examples of companies involved in shareholder activism include Ethical Funds, Real Assets, KAIROS, Meritas and the Investor Responsibility Research Center.

Approach Number Three- Cause-Based Investing

This type of investing focuses on a specific social issue. Not all socially responsible investors are passionate about the same causes. For example some look to help social projects and those living in lower income communities. Often referred to as community investing, the goal is to zero in on investments that can help to create jobs, improve the condition of schools, provide affordable housing, provide low-interest inner-city loans for those interested in starting businesses, and overall community development.

Some examples of cause-based investing groups include the Acre Fund, VanCity Credit Union, and Working Opportunity Fund.

Is it possible for an investor to bring good to the world by SRI but also to make money in the process? Some socially responsible investors choose their investment projects wisely and do very well while others do not. The success of the investor has to do with both current economic trends as well as the type of investments that are chosen.

Always research any potential investment thoroughly before you commit your money or your time to the venture. Emotions play a role in ethical investing and this is good but you must choose your investments with more than just your passion and your heart. Logic and common sense are important here too. Always lead with both your head AND your heart when it comes to socially responsible investing.