Investing can be complex—there are so many choices, risks to weigh and rewards to measure. Wanting to be ethical and environmentally friendly can add a whole other level of confusion, but you can ensure that your investments go to supporting eco-friendly, ethical companies that make the earth a better, kinder place.
Ethical investing is a growing trend. Around $1.5-trillion CAD in assets are bound by environmental or social considerations, rather than financial goals. According to the Responsible Investment Association’s 2016 trend report, ethical investing represents about 38% of the Canadian investment industry.
There are generally 3 different types of ethical investments:
Impact investing, which is where you invest based on directly making an impact on the environment for the better. This tends to involve projects such as providing affordable house or renewable energy.
Socially responsible investing (SRI), is a strategy which tends towards investing in companies that practice good social/environmental practices and screen out things such as heavy polluters. Recent years have shown an increase in impact investment platforms such as Swell Investing, which allows individuals to invest ethically in the focus of their choice, whether it be clean water, clean energy, poverty alleviation.
ESG is investing based on environmental, social and corporate governance concerns. This strategy is similar to SRI, in that they both invest with companies who practice ethical policies. The difference is ESG investors in the mainstream might still hold on to assets that are not ethical, but simply invest less money into them.
While all of these investments are possible, some of them are more geared towards corporations instead of the private investor. Impact investing in particular has been the domain of businesses until recently. Financial co-ops are allowing the public to buy shares in corporate projects that help benefit the environment.
CoPower, a Montreal-based company, funds loans for clean energy projects, and ordinary investors can buy bonds. SolarShare, a company in Toronto, allows investors to purchase bonds to help finance solar-power projects across Ontario.
The risks and returns can vary, as with any investment. Prospective investors should consult investment specialists before entering into any long-term spending. However, with the variety of companies becoming environmentally friendly, and the number of different types of investing, it has become easier than ever to invest ethically.
Find a financial consultant or bank that can help you choose the investments that best reflect your principles and values. You don’t have to fund unethical or polluting corporations to ensure you have a pension fund. Your investments can actually work to make protect our environment and the rights of workers.