Green investment is defined as an investment that takes into account not only yield criteria but also ethical and ecological requirements of the investor. After all, many people do not want to work for companies that exploit the environment, have children work, produce armaments or use nuclear power. In normal investment, however, a large part of the money flows directly into the bosom of such companies.
Green investment is defined as an investment that takes into account
With different approaches you can make the investment but green.
1.) Black List: It invests in all companies and states, except those that are on the Black List. There are generally excluded whole industries such as nuclear energy, oil industry or automotive.
2.) White List: It is specifically invested in companies and states that stand out through environmental protection, human rights, clean energy, living and working standards, etc.
3.) Best-in-class: All companies are divided into sectors, so-called “Classes”. Each company has a total of 10 companies in a class.
Each method has advantages and disadvantages
Each method has advantages and disadvantages. For example, critics of the best-in-class method argue that investments in non-sustainable industries such as automobiles or oil are also made there. For best-in-class, it speaks to encourage leading companies in non-sustainable industries to do better. It also covers an even broader investment market.
In practice, therefore, a combination is usually chosen – for example, the best-in-class approach combined with a black list.
Which approach suits which investor and, above all, which type of investment (bond funds, equity funds, pension insurance, savings), must also be consultants specializing in green investments.
Investment projects in which the investor invests directly in the construction of forests or in the operation of solar plants. The green investment in pure form and has the highest transparency – the investor knows exactly what his money is doing there.
In addition to ethical benefits, the green investment also offers financial benefits. While in the early years of green investments in the 1980s and 1990s, in some cases, a return was recorded, green investments currently achieve rather higher returns. In the study “Alpha through Sustainability”, the renowned investment consultancy SAM has demonstrated that from 2001 to 2008 sustainable companies performed better than less sustainable ones. The difference is 1.48 percent per year.
Invested the same amount in the natural stock index
Anyone who has invested 10,000 euros in the German Stock Index DAX in June 2000 has 10 years later only about 8,000.00 euros in the custody account. Who invested the same amount in the natural stock index in the same time, receives 30,000.00 euros. Of course these are past considerations that may not be updated into the future – but as long as the trend towards more ecology continues, investors can also expect attractive returns.