BEYOND GREEN

In the 1990s, the majority of the world’s computers were not programmed to understand any date past 1999. In the ensuing decade, government and corporate officials realized that shortsighted programming could cause a worldwide computer failure and disrupt civilization at the stroke of midnight on January 1, 2000. Financial institutions, airplane guidance systems, electrical grids, security systems, personal computers—nearly all of our computer-based technology was at risk.

Fortunately, the developed world banded together to fix the problem. A massive industry sprouted to address the impending threat. Programmers were recruited from colleges—not only computer science and technical majors, but English and history majors as well.

One by one, computer applications were reprogrammed to understand 21st century dates. The result was twofold: a global disaster was averted, and the economy experienced stellar growth and prosperity as the job market expanded.

Now it’s happening again. This time we’re not working to avoid a computer crisis, but rather, to reverse a climate shift; a much larger industry is emerging to combat a much larger threat.

The budding “green collar” professionals are at the forefront of human ingenuity as they create profitable solutions to the global pollution and climate problems. The green industry is building sustainable offices and homes, developing clean energy sources, reducing the carbon footprint of the human population, and making many other contributions to sustainability—all while jump-starting the job market.

The rise of any industry presents investment opportunities. The green industry in particular offers a double incentive; not only can you expand your portfolio and build wealth, but you can also fuel the restoration of our planet.

While the new green-collar sector is growing exponentially, traditional businesses are reducing their footprint as well. The result is a rapidly expanding classification of investment known as Socially Responsible Investments (SRI).

Forbes Magazine reports that the days of lagging returns on SRI are over. Such investments have kept up with—or outpaced—the broader funds in recent years. Not only are green companies seen as sustainable long-term investments, but advocates argue that management teams who care about the environment are more likely to adhere to solid management practices.

The research on the performance of SRI funds is extensive. The Center for Responsible Business at U.C. Berkeley has compiled an online collection of such studies. One such paper investigates the link between a company’s financial performance and its corporate social performance. In the paper, Marc Orlitzky and his colleagues analyzed 52 studies and found that socially responsible companies tend to outperform their less responsible counterparts.

Where profits go, investments follow. According to Social Investment Forum, the total amount of SRI investments in 2007 was somewhere between $2.7 trillion and $25 trillion. The lower number represents a stringent definition of SRI, while the higher number represents a more inclusive definition. By any reasonable criteria, SRI is at an all-time high and continues to climb.

For people who are interested in socially conscious investment opportunities, the biggest challenge can be deciding which companies are truly working toward sustainable goals and which companies are using empty slogans to deceive investors and customers. In addition, individual investors have varying definitions of SRI, so a detailed understanding of companies’ business practices is needed. Fortunately, there are several sources of information on SRI opportunities.

For instance, Social Investment Forum screens mutual funds by evaluating the companies in which the funds invest. The criteria include community investment, environmental impact, human rights, and labor relations, among others. The organization also flags companies that make harmful products such as alcohol and tobacco.

Another source of information is SocialFunds. The SocialFunds homepage includes current news items relating to SRI. It also shows the performance of SRI indexes, including the Calvert Social Index (ticker: Calvin). The site is easy to navigate and its information is accessible to people of all knowledge levels.

For investors who seek guidance in laying their money on the line, KLD Research & Analytics offers consulting services. For instance, KLD will audit your portfolio and report on the social and environmental impact of your investments. Specialized research is also available. As an example, for investors who are specifically concerned about animal welfare, KLD provides a report on animal-friendly investments. The site also provides research on funds that are screened for faith-based criteria.

As the world wakes up to the necessity of social and environmental consciousness, the traditional rift between SRI and financial performance has vanished. Environmental and human rights concerns have proven ever-more profitable, particularly in light of long-term pollution and climate forecasts. The human population is banding together like never before to rebuild our civilization as a sustainable organism. As a result, SRI is here to stay.

http://www.sristudies.org
http://www.socialinvest.org
http://www.socialfunds.com
http://www.kld.com

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