As concerns about the environment and the impacts of climate change have increased in recent years, so has the interest in so-called “green stocks”. Green stocks are stocks in environmentally friendly companies, but what makes a company environmentally friendly is open to debate.
When considering investments in green projects, a good place to start is to learn more about a certain green industry and then narrow the search down to individual products and solutions that you find promising and feasible. You will then be left with a few companies that you can scrutinise in detail.
What is a green company?
Some investors will see investments in renewable energy projects like a large scale hydro-power business as environmentally friendly since it reduces our reliance on fossil fuels.
The same large scale green project may cause other investors to steer clear of such green stocks through concerns about the ecosystem disturbances such huge infrastructure projects can bring.
Much like blue-chip stocks, there is no legally binding definition for what makes green stocks, well, green. To be considered a green stock company, it must as a rule of thumb be active in an environmentally-friendly industry or be a company that pursues a product or service that is seen as beneficial for the environment.
In many situations, a product inflicting less harm to the environment than its competitors will be enough to hail its producer as green, even if the product isn’t exactly environmentally friendly.
There are investors that invest in green stocks purely for financial reasons, but there are also many investors that put their money into green stock companies not just to make money but also because they want to help make the world a better place.
Regardless of where you find yourself on the scale from hard-core money maker to hard-core idealist, it is important to do your own research before investing in green stocks so that you may select green stocks that align with your own financial and environmental goals.
This is where utilising the services of an Investment Specialist like Redwood can be highly beneficial.
Types of green companies
There are multiple examples of businesses out there claiming to be green companies. However, investors need to be clear about which ones are actually committed to and have a proven record of delivering against environmental and social responsibility commitments and those that are just ‘greenwashing’.
Greenwashing is a practice where a business claims to be more environmentally friendly than it actually is.
For example, they may have a “corporate social responsibility statement” or a “sustainability policy” that is in effect a bunch of words without any real substance or deliverable actions and measures by which to judge them.
Other businesses around the world spend huge amounts of money every year on projects and advertising intending to shift the focus from the environmentally unfriendly acts carried out by the corporation to a few environmentally friendly projects sponsored by that same corporation.
Finding the companies that are actually making a difference and where the management and staff are genuinely devoted to green issues can be time consuming and complex.
Even if you are only investing in green stocks to make a profit and environmental issues are way down your priority list, knowing how to identify a business that uses greenwashing practices is vital, as it can have a massive impact on the value of your investment in the future.
We have all seen press articles about businesses that have been caught failing in their self-proclaimed green credentials, and the significant impact that can then have on their brand loyalty among consumers.
Our recommendations are threefold:
Always pay more attention to what a supposedly green company actually does than what it says, approach every investment opportunity with a healthy dose of scepticism, and always seek professional advice and guidance before parting with your hard-earned cash.
Renewable energy investment opportunities
Renewable energy generation projects have ensured that renewable energy investment opportunities are amongst the most well known and prolific clean energy and green energy initiatives to put your investments into.
Here are just a few of the bigger opportunities in this sector:
Solar Power has grown to become a huge global business, creating thousands of jobs in the manufacturing industry as the demand for solar panels increases exponentially each year.
Wind energy is seeing a similar massive growth spurt, particularly here in the UK, where on-shore and off-shore wind turbines have already started to make a significant contribution to the clean energy we are now using.
Most of us have seen a wind farm somewhere not far from where we live by now and the growth of wind farms is set to continue at pace in the coming years. The UK Government certainly see wind power as a key renewable energy source of the future.
Ground and & Air Heat Source Pumps are seen as the way forward by the UK Government and are expected to fast become an economical replacement option for gas boilers which are being phased out by 2030.
This source of renewable energy is seen as an excellent investment opportunity for the future, as businesses providing the technology, the installation services and the ongoing supply and maintenance of these goods and services as rapid growth investment prospects.
Energy Efficiency projects are also investment opportunities. While renewable energy projects seek to create new and innovative products and technologies to replace existing energy sources, energy efficiency projects tend to be more focused on making what we have now, deliver even better efficiency in the future.
One of the most well known sectors is home insulation products and services.
Renewable energy companies providing goods and services in this rapidly expanding market are also growing in abundance, and many are seen by analysts as excellent green investments opportunities.
Electric vehicles are becoming a normal sight on our roads here in the UK. All of the major manufacturers have models available and in development.
The growth in demand for new battery technologies, which are at the heart of a drive towards the removal of fossil fuel powered transport as part of a low carbon economy by 2035, has opened a whole new investment sector.
Vehicle manufacturers and businesses in their supply chain are also opportunities to invest in greener and renewable energy projects.
How can I invest in green companies?
The safest way is to engage with a Financial Planner. Redwood Family Wealth & Estate Planners Ltd. are a Chartered Financial Planning practice with over two decades of experience in helping people to grow, protect and enjoy their wealth through our Estate Planning and Wealth Management services.
Our expertise in Investment Advice will provide you with professional recommendations and guidance designed to help you make an informed decision about what is the best particular investment product or series of products to meet your goals and needs.
And because we are not tied to any particular investment provider or institution, we can help you find the very best investment funds, that are right for you and the level of risk you are comfortable taking with your Investments.
We work with Investment Platform providers who can offer a broad range of investment opportunities including renewable energy sector businesses.
Are there any green stocks?
Yes, there are! Green stocks are shares of companies whose primary business is beneficial to the environment. These environmentally friendly stocks are likely to be concentrated in alternative energy, pollution control, carbon abatement, and recycling.
Essentially, eco-friendly or green stocks mostly attract significant interest from investors who care about environmentally-friendly market leaders.
However, almost all green stocks rely heavily on government subsidies and tax incentives. These subsidies may suffer as governments grapple with the economic slowdowns, and as the cost of conventional energy sources, like oil and natural gas, stays low.
Why Green investing is important?
The world is changing.
Newer, eco-friendly businesses have sprouted up, and mindful investors seek more sustainable and environmentally aware companies for investing opportunities.
Many sustainable and environmentally friendly stocks were made available for investors in conjunction with the effort.
This is the result of the rapid escalation of the climate crisis, and as debates intensify, progress isn’t just around the corner – it’s already here.
Companies worldwide are starting to turn over a new, greener leaf from vehicle manufacturing and power generation to waste management.
How can I invest in green technology?
Speak to Redwood. Our Investment Advisors are Certified Financial Planners who are qualified to provide investment advice and can recommend a wide range of retail investment products that could meet your Financial Planning needs and objectives.
Our qualified Investment Advisors are able to advise on products that are not available from the traditional high street banks and building societies, which means we can help long term investors invest in the stock market to maximise their growth opportunities from their investments, whilst also advising you on how to improve the taxation and charges in your Investment Portfolio.
What is an SRI fund?
SRI stands for Socially Responsible Investment. It is an option designed for someone who wants to focus their investments on ethical investing.
This investment fund invests in shares of companies and countries around the world which meet a variety of environmental, social and governance criteria.
The Fund does not invest in companies that do not meet the agreed guidelines. It will invest in the shares of many companies at the same time. This helps to even out the effect of any changes in share prices, making an investment in the fund less risky than investing in any individual company’s shares.
However, the value of any investment can fall as well as rise and you may not get back the same amount that you initially invested. The investment manager uses their expertise to minimise the costs associated with buying and selling shares.
About Redwood Financial
At Redwood Financial, we believe in treating Clients as people, not just as a number. This “family” philosophy makes our company unique amongst many other financial advisers and is something we are very proud of.
What makes us different is that we prefer to work with families as we believe helping families is the most important and rewarding thing we can do.
We are so confident that you will love the advice, service and value for money we give you, that we are proud to offer a 100% Satisfaction Guarantee ‘no-quibble’ refund policy.
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The Authority does this by protecting consumers, protecting the financial markets, and promoting competition. The FCA falls under the purview of the U.K.’s Treasury and Parliament.
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