What is Green Investing?

The term “green investing” refers to trading which involves the usual types of investment products, like stocks, mutual funds, and exchange-traded funds – but the businesses involved are, by definition, occupied with operations that are involved with somehow making the environment better. There can be a wide variety of “green” companies, from those that are actively developing technologies involved in the creation of alternate energy sources, to those that consistently implement top-notch environmental practices in another area of business entirely.

For those involved in the stock market, a variety of cutting edge green companies are currently traded on all of the significant stock exchanges. Some of these companies are new groups researching the development or refinement of biofuels and solar panels. Other companies are some of the international giants that are taking a lead in the active expansion of research and product lines to create a variety of environmentally friendly products. Some of these will include the development of sea- or wind-powered electric generators, as well as other considerations.

The green investing effort can also be realized with exchange-traded funds (also known as ETFs), which tend to copy the stock indexes that are constituted of green companies. Another way to manage green investing is through mutual funds, when the designated portfolio manager is in charge of making the green asset decisions in accordance with the fund’s prospectus.

However, investors should be aware that there can be some disagreement about what defines a “green investment,” and this variance can lead to some significant grey areas in what different investors will consider environmentally friendly.

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