Green Investing – Can it really be successful?

It is sometimes curious to read some experts’ opinions about green investing as some marginal area which is significantly limited as compared to the rest of "the investable universe", i.e. all the companies whose stocks are traded on the financial markets.

The main implication here is that if environmentally-friendly companies would spend more money on "green" activities, this increased spending would bring general costs up and put more pressure on investors’ returns.

And therefore, from an investor’s point of view, such companies would ultimately be worse off than their "traditional" competitors.

In a way, it is understandable where such opinions are coming from. The less costs you incur, the more profits will be left for shareholder distributions.

On the other hand, such an approach is short-sighted on several other fronts.

As an example, one very obvious benefit of investing in green companies is that, by definition, they may be more efficient users of natural resources which, in turn, will save them money.

Use of alternative sources of energy by green companies may also liberate them from the harmful dependence on oil and its ever unpredictable, climbing prices.

Moreover, it is obvious that many of us are now more aware of the environmental problems than ever before.

We know far too well that the way we treat the nature does not only affect the state of the nature itself, but it also seriously affects our own health, directly or indirectly.

Following this logic, it is reasonable to assume that more people will be spending more money on products and services of green companies and thus generating more revenue for the green industry.

Also, green investors may be interested in considering not only "pure play" green companies but other "mixed" ones which are genuinely trying to improve their environmental practices.

However, apply caution here: "green washing" is everywhere!

Another important point to mention is changing attitudes of the governments towards the environment and global warming and their final realization of the sheer scope of the problem.

In Europe, some governments (i.e. the German government) are already investing large amounts of money into the alternative energy sector and thus stimulating the growth of other satellite industries.

In another example, the Norwegian government pension fund has become famous for investing in ethical industries and companies.

In US, California and its government are also well-known for leading the fight against global warming.

Of course, due to the very nature of this nascent industry, there will be many young and unstable companies that will present a high risk to potential investors.

It should be expected, and investors should be very careful in choosing their targets.

Green investing is here, it is real and is developing at a fast pace.

Everyone now has a chance to "vote with their money" and make a difference to the global environment.

Make sure you check out our detailed green investing guide which analyzes the potential and highlights some interesting green industries.