The question Singapore investors want to know is, are ‘green’ funds really good business or is it simply investing in peace of mind?
Absolutely it’s good for business. Socially responsible investing (SRI) excludes less desirable industries. Those which are harmful or just irresponsible. These industries bear a higher risk to investors because they are more susceptible to lawsuits and fines which can reduce performance. SRI’s don’t make more or less than ‘ordinary’ funds, they make the same. SRI is investing, just like any other type of investing. It is within the big pool of investments. The only difference is that SRI has other criteria, which are ethical criteria.
What are the ‘less desirable’ industries?
By this I mean both harmful industries like weapons and tobacco and irresponsible industries, for example, those who do not dispose of toxic waste properly.
What type of green funds are available?
They are evolving. Let’s take the Living Planet Fund as an example. This is the mechanism through which WWF International invests. It uses ‘compartments’ giving a range of investing options. So one compartment would contain say car industries which are consciously ‘green’ and another wouldn’t contain any cars or airplane industries. In the near future more specialized funds will develop such as an energy fund, water fund etc
Is green investing particularly important in our Asian region?
This is a region going through a period of rapid economic growth so the impact of swapping to SRI will be greater. When more SRI’s are made, automatically there will be less made in less desirable industries. Green investments are key in Asia and globally because they positively impact the environment and contribute to the sustainability of the planet.
Anything else to consider when making a ‘green’ investment?
To make it a responsible investment, it should not just be ‘green’ but ethical. To ensure investments are responsible think critically about your investment and who it might be affecting positively and negatively. The problem is often that really well intended people put their savings in a bank and the bank will buy shares for them to grow their money. The bank however may invest in all types of industries, including responsible as well as harmful industries.
Click here for more on the Living Planet Fund.
