Last week, Barack Obama laid out his climate change strategy. He set out plans to cut carbon emissions and to increase renewable energy projects. And he urged people to support the environment by investing and divesting appropriately.
Green investing used to be a niche activity for only the most seriously committed environmentalists. It involved excluding certain companies or entire sections of the market on the grounds that they were damaging the environment. That binary approach might have been good for the environment, but it was bad for your wealth because you would be throwing out some good investment performance with the bad companies. But just as the green movement has become mainstream, so has green investing. Many companies (the traditional “goodies” and “baddies”) have environmental policies written into their business plans. They understand that what is good for the environment is good for business. And they know that, by definition, if their business strategy is unsustainable, at some point in the future they won’t have a business to run.
It is now possible to invest sustainably without sacrificing market return. Or, putting it another way, it is possible to achieve market returns, without sacrificing your environmental principles. Whichever way you look at it, if you have the slightest interest in the future of this planet, investing sustainably now makes more sense than ever.