Green and Eco-Investing: How to be more Socially Responsible with your Investments

We are all aware of how human impact has greatly affected our planet; the erratic changes made to climate change, carbon emissions have risen, natural disasters are imminent, and other natural environments have sustained irreparable damage.

Climate change has become a hot topic for many as new groups such as the Extinction Rebellion and Insulate Britain have emerged with goals of pressuring the UK government to act. 

With that being said, we can do more to create a better environment by adopting a more eco-conscious mindset. 

Being socially responsible with your investments can be the first step in contributing more positively to the environment we live in.

What does Green Investing mean?
Green investing or eco-investing refers to investments made by companies that promote or provide environmentally friendly products and activities. For example, the Green Investment Group was first established in 2012 by the UK Government with the aim of providing more eco-friendly solutions for investors. 

The Green Investment Group has made significant achievements for the environment and has shown many investors and companies that changing business infrastructures or incorporating one can yield positive results in terms of investment returns and a better impact on the natural environment. 

Within their long list of eco-friendly achievements, the Green Investment Group has committed more than £25 billion for their projects and investments, and they have also removed 2.5 million cars thus decreasing the amount of CO2 emissions emitted from vehicles.

What are the challenges in transitioning to a 'greener business'?
Making the transition into a greener company may prove to be difficult for smaller businesses as many do not have the same access to an abundance of resources or money like the Green Investment Group. 

One of the main concerns of becoming a greener company is directly related to the expenses. It is a costly transition even for major corporations.

Small businesses may be deterred from fully transitioning despite the benefits of doing so as they simply cannot maintain the costs which includes; using solar panels and switching to wind-electricity power which can incur premium prices for these green sources. 

There is some good news for smaller businesses who wish to ‘go green’, as Funding Options announced earlier this year with the aim of providing substantial funding for small businesses.

Funding Options will launch the UK's first green finance marketplace for small firms, which will assist them in financing investments in "green assets" such as solar panels and other eco-friendly sources. 

Swishfund and Cambridge & Counties Bank are also among the lenders who have joined Funding Option’s green lending panel to help firms make green investments.

Turning to green investments is not easy, as Tariq Fancy, former chief investment officer, stated,

“This is definitely not going to work.”

His bleak outlook stems from the fact that many senior executives do not see how turning their corporations ‘green’ can promise better investment returns. In other words, it simply does not guarantee that they will see more profits hence their reluctance to fully transition to a more eco-friendly business.

What are the main advantages of my business 'going green'?
Just like other business ventures and investments, there are risks to ‘going green’. These may seem disadvantageous for your company but there are still major advantages of making that full transition, and that includes:

  • Forming a better public image;
  • Increasing employee morale;
  • A chance of obtaining stronger investment returns;
  • Making a better impact on our environment.

How can my company become more ‘Green’?:
There are numerous methods for your company to become more socially responsible through its operations and investments. We have provided the best tips to get your business started:

  • If you're going to stick with cash, put your money with a bank or provider that focuses on environmental issues

  • take advantage of tax-free savings accounts like ISAs, but retain a buffer - money you can get to quickly if you need it;

  • choose the environmental or ethical options on internet platforms to find a 'climate-friendly' investment fund that meets your goals;

  • consider investing in a fund that actively seeks out assets that encourage decarbonization, such as renewable energy, or one that fights to change polluting sectors;

  • be wary of trendy tips and ideas on social media if you wish to pick your own stocks. Like any other investment, sustainable stocks come with hazards and risks;

  • examine where your pensions are currently invested;

  • consider employing an independent financial counsellor if you have significant money to invest.

Climate change is affecting all of us, and so we encourage all businesses to reassess their structure and investments in order to see if they can, within their capacity, to make more socially responsible choices for our natural environment.

For more information on green investments or for other business and accounting queries, please contact Persona Finance at [].
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