“Green Investing” is the phrase I use to describe the process of aligning your investments with your values, social as well as environmental. Many people don’t know that they own companies in their mutual funds and retirement plans that conflict with their beliefs.
Financial advisors who specialize in this area use different terms to describe what we do: socially responsible investing, ethical investing, sustainable investing and many more. Whatever term we use, most of us would agree there are three key components of green investing: social screening, shareholder activism and community loans.
• Social Screening involves the active avoidance or screening out of companies whose products (such as tobacco) or business conduct (such as major pollution issues) that are contrary to the investor’s ethical beliefs. This process also involves selecting companies that make a favorable contribution to society and the Earth. Some of these are alternative energy, natural foods and environmental clean-up products.
• Shareholder activism involves taking an active role in the management of a company you own. Most commonly, proxy voting is used to bring resolutions to a vote of all the stockholders in hopes of changing objectionable corporate policies.
• Community loan funds provide economic incentives and low-cost loans through progressive banks and credit unions.