"From solar to electric cars, from geothermal to reconfiguring the grid, the scale of investment needed in green technologies in order to meet whatever agreements on emissions reductions are finally agreed will be immense."

Noreena Hertz, Author

What Is Green Investing?

what are green investments?

Green investing (also sometimes referred to as sustainable or ethical investing) can be defined as an investment strategy that not only strives for profit maximization, but also takes into account the environmental and social consequences of these investments.

 

Therefore, a green investment strategy should prefer socially responsible investments over investments which may hurt our planet or our society.

 

In this article, all you need to know about green investing is shown in detail.

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Why are Eco-friendly & Ethical Investments important?

  1. Transition from fossil to sustainable energies
  2. Development assistance for poor countries
  3. Global technological progress
  4. Mitigation of the effects of global warming
  5. Livable future for the next generations
  6. Responsibility of the rich to protect our environment

Transition from fossil to sustainable energies

In order to slow down global warming and to make our energy mix more sustainable, it is crucial to transit from fossil to renewable energy sources. In order to achieve this transition as soon as possible, companies all over the world have to invest large amounts of money into research.

 

Therefore, you can make your contribution by supporting those companies so that they have more funds for research and development purposes and you may also be able to make a decent amount of money from your investments.

 

Development assistance for poor countries

Sustainable investing also includes to help our poor third world countries with their development so they can grow from a developing in a developed country in a rather short period of time.

 

For achieving this goal, significant amounts of money have to be invested in those countries, so that the tax revenue increases and the government can spend more money on public infrastructure and other things that improve the overall living conditions of the local population as well as the economic development.

 

Global technological progress

It is also crucial that governments and researchers all over the world work together since sharing the latest research findings is crucial to accelerate the technological progress which in turn is crucial to make our energy supply fully sustainable and green. Therefore, by investing in green energies, you can contribute to an acceleration of global technological progress, which in turn will help to solve our energy crisis.

 

Reduction in global inequality

Global inequality, poverty and hunger are still big problems in our current age. Therefore, governments, especially in our rich Western world, should feel the obligation to support those poor countries in order to improve the living conditions of the local population. However, still not enough financial measures are provided to be able to eradicate hunger from our planet.

 

Thus, you can support those poor people by investing in financial instruments that aim to support companies or farmers in poor developing countries so that they can invest in better equipment and can increase their yields due to that, which may in turn increase the income level and mitigate poverty to a certain extent.

 

Livable future for the next generations

Green investing is considered a way to combine the goal of returns on investments with achieving environmental and social goals. In this context, we should also talk about the quality of life for future generations. If we continue our consumption and energy production like we did over the past decades, chances are that the next generations will face huge environmental problems.

 

Therefore, the transition to renewable and sustainable energies is crucial to ensure a livable future for the next generations. You can make your contribution by investing in green energies rather than in companies which rely on fossil fuels as their primary source of income.

 

Responsibility of the rich to protect our environment

On our planet, we have a huge imbalance regarding the political power distribution. Almost all political power is in the hands of the rich Western world, while most poor countries have very little influence on what’s happening on our planet on a global scale. Therefore, rich countries and also companies who have the power also have great responsibility to protect our planet.

 

If you live in one of our rich Western countries or if you are one of those lucky rich guys in poor countries, you can make your contribution to protect people all over the world from the adverse effects of pollution and climate change by investing in green energies and other alternative investments.

Types of Green Investments

  1. Solar power investments
  2. Investments related to water scarcity
  3. Wind energy investing
  4. Geothermal investments
  5. Ocean energy
  6. Hydroelectricity
  7. Wave energy
  8. Biofuels
  9. Hydrogen power
  10. Sustainable fishing investments
  11. Population control
  12. Pollution reduction
  13. Waste reduction
  14. Green commuting and transportation
  15. Organic investments

Solar power investments

Solar power is a quite interesting source of energy since it is considered a renewable energy and also will become even stronger in the future due to climate change and the ozone depletion issue.

 

Solar power can be regarded as the conversion of sunlight into electricity that can be in turn used for several purposes. For the production of solar power, photovoltaic systems are used to store the sun energy and convert it into electricity.

 

The first conventional solar power plants have been invented around 1980. Since then, the technology behind solar energy has been developed further and be made more efficient. Solar energy can be regarded as one of the most promising energy sources when it comes to future worldwide energy supply.

 

Here are some solar power investment opportunities (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Investments related to water scarcity

Since water is a quite scarce resource which will become even scarcer due to the effects of global warming, especially in many poor countries in the Southern hemisphere of our planet, it may be quite profitable to invest in companies which aim to ensure the local water supply.

 

However, it should be assured that those companies do not exploit locals and offer water for a fair price instead. Therefore, investing in companies that ensure the local water supply in poor countries could be quite attractive, both from an economic as well as from a social perspective.

 

Here are some investment opportunities for this respective green investment category (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Wind energy investing

Over the past decades, wind energy has become quite popular and is considered to be a promising future energy source since wind energy cannot be depleted. Through mechanical power, wind is used to propel wind turbines which turn electric generators in order to produce energy.

 

The first windmill for electric power generation was built quite a long time ago in 1887 in Scotland. Since then, there had been extensive research on the topic of wind energy.

 

Windmills are currently regarded as a main pillar of future energy production since they can produce significant amounts of energy and have not too many downsides.

 

Here are some wind energy investment opportunities (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Geothermal investments

Geothermal energy is a quite common power generation method which uses the thermal energy that is stored inside the earth. Although the use of geothermal energy had been quite popular throughout the history of mankind and has been used even millions of years ago, it has not been used for commercial purposes until the year 1892.

 

Due to plenty of research, the technology behind geothermal energy became quite advanced and effective. Since geothermal energy only implies the emission of low amounts of greenhouse gases and cannot be depleted, it might be a promising alternative industry source regarding the energy transition process.

 

Here are some geothermal energy investment opportunities (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Ocean energy

Ocean energy is energy that can be produced with the use of ocean temperature differences and tides.

 

Even though in theory, there may be a significant potential of ocean energy due to the large amounts of energy that are stored in the ocean water, our technologies might not be advanced enough to make use of this energy in a cost-efficient manner.

 

Therefore, plenty of research might be necessary to make ocean energy a valid and reliable future energy source.

 

Here are some investment opportunities for this respective green investment category (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Hydroelectricity

Hydroelectric energy is a quite common power source that uses the power of water to create electricity. In terms of electricity amounts produced, it can be considered as one of the most important renewable electricity sources worldwide.

 

The largest hydroelectric power plants are even able to produce significantly more energy than the largest nuclear power plants on our planet.

 

Hydroelectric power has many advantages since power can be produced at a relatively low cost and it can also significantly reduce carbon dioxide emissions compared to conventional energy sources.

 

Here are some hydropower investment opportunities (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Wave energy

Wave energy is the capture of energy of wind waves in order to produce energy. Since only a quite small fraction of our total energy demand is met by the production of wave energy, this technology is not well known by the general public. Even though some research has been done on wave energy, researchers estimate that the share of wave energy compared to other green energies will be quite low in the long run.

 

Here are some investment opportunities for this respective green investment category (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Biofuels

Biofuels are produced by using biomass of many different sorts. Depending on the generation of biofuels, they can be a quite effective measure for the transition process from conventional to renewable energies.

 

However, biofuels are often criticized since they also have severe downsides and many people claim that the resources that are used for the production of biofuels should be used to provide food for the local population instead.

 

Here are some biofuel investment opportunities (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Hydrogen power

Hydrogen energy is often used in fuel cells or internal combustion engines. Since hydrogen fuel can be produced through the hydrolysis of water, it has significant potential to become a quite important energy source in the future since it can be regarded to be one of the greenest and most sustainable ways to produce energy. Imagine a world where all of our energy could be produced just out of water without any emissions. Wouldn’t that be great?!

 

Here are some investment opportunities for this respective green investment category (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Sustainable fishing investments

Since our global fish population rapidly decreased over the past decades due to excessive fishing, it is crucial to make our global fishing behavior more sustainable in order to ensure the food supply for future generations.

 

Thus, it might be a good opportunity to invest in companies which comply with sustainable fishing and are also certified for it.

 

By investing in these companies, you might be able to have quite decent financial returns and could also contribute to a more sustainable use of our natural resources.

 

Here are some investment opportunities for this respective green investment category (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Population control

Our global population increased rapidly over the past decades and continues to do so. However, an increasing world population also implies an increase in overall consumption levels, which in turn leads to several kinds of pollution, contributes to global warming and also to excessive waste production.

 

Therefore, it is crucial to take measures to slow down population growth in order to fight our global problems. There are several different approaches to population growth which all have upsides and downsides. For each approach, there are different companies in which you can invest in to reduce the population growth issue.

 

Here are some investment opportunities for this respective green investment category (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Pollution reduction

In order to ensure sustainability and a livable future for the next generations, it is also crucial that we reduce our pollution levels on a global scale. Since consumption levels skyrocketed, so did the level of pollution over the past decades.

 

Therefore, it is crucial to support companies which strive to develop new technologies that will help to reduce our overall global pollution.

 

You can make your contribution by investing in companies which strive to develop these kinds of technologies instead of investing in companies which rather contribute to the pollution problem.

 

Here are some investment opportunities for this respective green investment category (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Waste reduction

Since our waste is either burned or disposed into landfills, waste production causes air pollution, contributes to global warming and may also lead to significant soil pollution. It is therefore crucial to reduce the overall amount of waste we as humanity produce on a global scale in our daily life. We could significantly reduce our waste production by buying things that are not excessively packaged or wrapped in plastic.

 

This is true for groceries but also for several other material things. Thus, investing in companies that try to develop organic packaging material or to avoid conventional waste using a different approach may significantly lower our global waste production and could mitigate many of our environmental problems.

 

Here are some investment opportunities for this respective green investment category (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Green commuting and transportation

Our commuting behavior plays an important role in the emission of greenhouse gases and air pollution since most of our cars are still run by fossil fuels. Therefore, in the future, it will be crucial to rely on green energies rather than on fossil fuels regarding the use of cars.

 

The most promising alternative energy source in our current technological state regarding transportation is electricity.

 

Therefore, investing in leading companies in this sector could make you high profits and you can also make your investment behavior greener at the same time.

 

Here are some investment opportunities for this respective green investment category (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Organic investments

Conventional agriculture often involves the use of excessive amounts of fertilizers and pesticides. However, this leads to several environmental issues, including soil pollution and ozone layer depletion. Therefore, it is crucial to rely on organic methods rather than on chemicals to protect our crop yields.

 

Moreover, cattle that is raised in an organic manner often has a much better life compared to cattle that is raised in a conventional manner. Therefore, by investing in companies that produce organic food may significantly improve your overall stock portfolio in an eco-friendly manner.

 

Here are some investment opportunities for this respective green investment category (just for a first impression, additional research on your part is needed to identify an investment strategy that is in line with your individual risk-return profile).

Original Source: Bloomberg

Conclusion

Due to the easy access to financial markets in our current age, there are plenty of green investment opportunities out there. Please not that this article is not an investment advice at all, it should just give you an idea how you can improve your investment strategy in a greener direction.

 

By investing in those kinds of sustainable investments, you can contribute your part to improve the living conditions of millions of people and to ensure a livable future for the next generations.

Sources

About the author

 

My name is Andreas and my mission is to educate people of all ages about our environmental problems and how everyone can make a contribution to mitigate these issues.

 

As I went to university and got my Master's degree in Economics, I did plenty of research in the field of Development Economics.

 

After finishing university, I traveled around the world. From this time on, I wanted to make a contribution to ensure a livable future for the next generations in every part of our beautiful planet.

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