Investing in a greener planet

Gayle B. Ronan • E-mail

Trey Nichols, literary director at the Moving Arts Theater in Los Angeles, has a truly global view of his finances.

"I do not expect so much as hope my investments will make the world a better place while making money for me," Nichols says. While he says would like his investments to have a positive impact on the environment, right now he is like most people — just focusing on getting the best return he can on the money he sets aside.

Nichols adds that while his retirement account currently doesn't have green-investment options, "I would like to think we are approaching a time where a true balance can be achieved in terms of profits and long-term [environmental] sustainability."

Green is fast becoming the shade of the times.  From environmentally sensitive family entertainment to house paint, every aspect of our daily lives suddenly seems destined to come in an earth-friendly tone. 

Even Wall Street recognizes the potential for green, as evidenced by the stock prices of newly public solar-power companies, which are rising faster than the cost of crude oil.

Lloyd Kurtz, a portfolio manager with Nelson Capital Management in Palo Alto, Calif., whose job involves aligning clients’ social ideology with their portfolios, warns against confusing dreams for a greener tomorrow with economic realities.  Although they may offer upsides for the environment, a sharp drop in oil prices could quickly dampen the earnings prospects for many of these newly created green energy companies.

Kurtz also warns about pinning too many hopes and dollars on any one company’s prospects. "Remember all the [once-hot software companies] of 1985?  Basically only Microsoft is left today.  Don’t buy only one wind company, or one solar company.  Buy them in bundles either through mutual funds or ETFs.  Otherwise, there is just too much risk in the game," says Kurtz.

While the term "green investing" is today mostly associated with buying stocks of companies with  cleaner ways of extracting and producing energy, it has existed for some time with a much broader definition as a subset of socially responsible investing.

“We have focused on green investing for over 25 years,” says Lily Donge, a senior social research analyst with Bethesda, Md.-based Calvert, which manages a family of socially responsible mutual funds, which offer greater diversification along with more than a hint of "green." 

While she looks for investment prospects among companies involved in emerging green technologies, at Calvert being green requires her to look at how a company’s current and past operations impact (and impacted) the environment.  She also analyzes social responsibility more broadly, including labor practices, community impact and corporate governance.  Even then, no matter how clean the operation, any involvement with tobacco, guns or alcohol is strictly forbidden.

MORE FROM PERSONAL FINANCE

Personal finance Section Front

10 Tips: Furniture shopping on the cheap Social Security unveils new earnings calculator Answer Desk: How safe are banks? Senate panel hears about European tax havens Ugly economic times can lead to ugly divorces 10 Tips: Watch out for TV pitchmen Workers raiding retirement piggy bank Answer Desk: Time to tap U.S. oil reserves? What if your bank fails? 10 Tips: Stay cool and save money Personal finance Section Front   Add Personal finance headlines to your news reader: