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GREEN FUNDING

By : SHRIJIT NAIR WATCHASPATI ALOK PANDEY TANMOY AICH ROY

Definition :
A mutual fund or other investment vehicle that will only invest in companies that are deemed socially conscious in their business dealings or directly promote environmental responsibility. A green fund can come in the form of a focused investment vehicle for companies engaged in environmentally supportive businesses, such as alternative energy, green transport, water and waste management, and sustainable living.

There's so much pollution in the air now that if it weren't for our lungs there'd be no place to put it all. -Robert Orben

Go Green With Socially Responsible Investing


Socially responsible investing (SRI), also known as valuesbased or ethical investing, is an investment process that considers social and environmental factors, both positive and negative, within the context of securities and investment analysis. Social investment managers often use social and environmental analysis in conjunction with traditional quantitative securities analysis to make their investment decisions

Evaluating Green Equity Investments


Mutual funds provide an easy way to go "green". From socially responsible funds that include green companies in their portfolios to funds that exclusively focus on green companies, there are many possibilities to consider. Some funds focus on large cap companies, while others stick with small caps

STOCKS If you prefer to build your portfolio one company at a time, individual stocks provide plenty of opportunities to choose from. Small cap companies provide pure-play opportunities in the form of opportunities to invest in companies that engage in eco-friendly efforts as part of their primary business. The development of a host of new technologies in everything from waste management to energy efficiency is being pioneered by small cap companies

Exchange-traded funds (ETFs) provide another way to go green. Unlike mutual funds, in which actively managed portfolios provide an opportunity for investment managers to implement their best ideas and change the portfolio as necessary, ETFs are passively managed investments that often track benchmark indexes. In the green space, there are ETFs that track indexes related to producing green and renewable energy, the transition from old to new technologies, nuclear power, technological innovation and more. Numerous choices are currently available and more are in the works

What is Green Investment????


Green investments are traditional investment vehicles (such as stocks, exchangetraded funds and mutual funds) in which the underlying business are somehow involved in operations aimed at improving the environment. This can range from companies that are developing alternative energy technology to companies that have the best environmental practices.

Is there a difference between socially responsible investing (SRI) and green investing???
Green Investing
Green investing is mainly focused on investing in companies and technologies that are deemed to be good for the environment. This includes individual companies that have a solid track record of reducing the environmental impact of their operations, as well as companies that offer alternative energy technologies such as solar and wind power. Green investors will also avoid investing in companies that have a negative impact on the environment, such as companies with poor emissions standards.

Socially responsible investing


Socially responsible investing is broader in its focus in that it considers companies that create a social and environmental benefit, and avoids companies that have a negative effect on society. Companies with a strong record of charitable contributions, that provide a fair and diverse workplace, and/or that have a minimal impact on the environment are just a few examples of social responsibility. A major part of socially responsible investing is the exclusion of certain industries that are deemed to have a negative impact on society, including those involved in alcohol, tobacco and defense

Green Economics
A methodology of economics that supports the harmonious interaction between humans and nature and attempts to meet the needs of both simultaneously. The green economic theories encompass a wide range of ideas all dealing with the interconnected relationship between people and the environment. Green economists assert that the basis for all economic decisions should be in some way tied to the ecosystem

Does investing in sustainable or "green" companies provide lower returns?


The green industry is comprised of companies whose products or services directly benefit the environment..
As environmental consciousness has moved to the forefront of our culture over the last few decades, the green industry is a sector that may be poised for substantial growth. On the flip side, the effects that green policies have on stocks in conventional industries also must be taken into consideration. While companies in the green industry are poised for growth, their profits will come at the expense of the established companies they serve.

"Going green" may be the right thing to do for many companies and sectors, but doing so doesn't necessarily come cheap. Whether the goal is to clean up a factory or to switch to alternative fuels for delivery vehicles, the cost of environmental responsibility can reduce a company's profits and slow the growth of its stock. Investors should take note of the current and potential costs of going green for any company they consider adding to their portfolios.

Top 10 Green Industries


Wind Windmill farms are sprouting up around the world. Australia, Europe and the United States are all investing in wind as a leading source of renewable energy. The business of wind not only includes the generation and sale of power, but also the design and construction of wind turbines. Few countries rely on wind for more than a tiny fraction of their power generation needs, but many countries are interested in the possibility.

Water To investors this has created a clear opportunity to invest in companies that collect, clean and distribute water. The largest water utility company in the U.S. is Aqua America, which supplies water to nearly 3 million people. Another company in the industry, on the purification side, is ITT Industries, which produces water purification systems that help to make drinkable water.

Solar Energy Solar energy is powering homes, buildings and a variety of other items from lights to radios. As the cost of fossil fuels continues to rise and their availability continues to decline, the future looks bright for solar energy. If you think the sun is just starting to rise on this industry the companies to look at are those that produce solar energy panels, which will benefit if homeowners and businesses adopt solar technology. Two of the leading producers of solar panals are Evergreen Solar and Sunpower Corp, which both develop, manufacture and sell panels and components and will directly benefit from the increased adoption of solar power.

Fuel Cells On a smaller scale, researchers are working with fuel cell technology to develop an alternative method of powering automobiles. The U.S. government hopes that hydrogen powered cars will be commonplace by 2020. If this technology works, there are millions of cars - and millions of consumers - waiting for it.

If you think this is the type of energy is the wave of the future there are a few companies that operate in the space and and develop fuel cell technology. For example, some of the largest producers include Ballard Power Systems , which produces cells that can be used in from cars to power plants, and Fuel Cell Energy, which focuses on providing power options to commercial and industrial facilities.

Efficiency Just about every aspect of efficiency is good for the environment. Energy efficient construction and appliances reduce home energy use and energy efficient cars reduce our dependence on oil. From efficient lighting to creating the paperless office, innovative companies are developing innovative products that maximize the benefit that we get from the resources that we use. Efficiency is the watchword of the day and a developing field that will create the technologies that we will use tomorrow. This area is a little more difficult to invest in as there are no real pure play companies dealing strictly in efficiency. However, there are some companies that have done a great job at leveraging efficiency such as General Electric with its Ecomagination business unit.

Pollution Controls Reduction is the key term here. From reducing green house gas emissions on industrial power plants to minimizing the emissions that come out of the tailpipe of your car, the pollution control industry is on the rise. Every time legislation mandates an improvement in the amount of some harmful chemical that can be released into the environment, the pollution control industry responds. If this is something you are concerned about, look for companies that develop pollution control technologies such as Fuel-Tech and Versar.

Waste Reduction Recycling has become a standard practice for many people in recent decades. The stuff that was formerly thrown away and trucked off to the landfill is now turned into useful products. Most people are aware that household products such as paper, metal and glass are reprocessed and reused, but they never stop to consider the business behind these endeavors. Of course, these aren't the only items that are reused; waste oil, vegetable oil, batteries, cell phones, computers and even parts from cars can have a second life. Recycling these items involves a business enterprise humming along in the background. In terms of your portfolio, waste management companies with a large base of recycling facilities may be of interest including companies such as Allied Waste Industries and Waste Management .

Organics Organic farms eschew the use of pesticides, engage in sustainable farming practices and sell products that are often healthier to eat than the stuff composed of three-syllable words that you can't pronounce and a shelf-life measured in decades. They also engage in animal management practices that avoid the use of hormones and antibiotics, keeping those chemicals out of the food chain and out of the ground and water surrounding the farms. It's good food and good business. With U.S. organic food sales reaching $17 billion in 2006, there is a huge market for organic food producers and grocery stores. Some of the biggest organic food companies include Whole Foods Markets , United Natural Foods and among others.

Best In Class For many companies, the urge to go green is a relatively recent phenomenon. Like change everywhere, some firms adapt and some don't. Investment managers in the "green" space have begun to categorize firms by the place they hold along the "green" spectrum. Take oil companies for example. One would be hard pressed to think of these firms as green, and for the most part, they aren't. But if you take a closer look at their business models, it is easy to see that some are greener than others. Choosing the firms with the best environmental records and practices is another way of looking at "green".

How to Grow a Green Portfolio If a "green" investment catches your eye, there are plenty of ways to find a place for it in your portfolio. Mutual funds, exchange-traded funds, stocks, bonds and even money market funds that focus on the environment are all available.

The problem is no longer that with every pair of hands that comes into the world there comes a hungry stomach. Rather it is that, attached to those hands are sharp elbows. Paul A. Samuelson

I would feel more optimistic about a bright future for man if he spent less time proving that he can outwit Nature and more time tasting her sweetness and respecting her seniority. -Elwyn Brooks White