All members of the human race – from the primitive tribal living in some shadowy Amazonian forest to the savvy Wall Street banker – have known for some time that all is not well with the world. The initial unease of the early 1980s is fast transforming to global panic, as typhoons, heat-waves, epidemics and alternating cycles of drought and floods blight lives across continents.
Individuals and industries are waking up to the fact that something needs to be done and done quickly, to avoid disaster that stares us in the face. In a world driven by capitalist forces, changes are begat through commerce and industry. Anxiety regarding climate change coupled with profit-seeking has created a breed of environmentally conscious investors who are making socially responsible investments in areas such as alternative energy, green transport, water and waste management etc. in an effort to mitigate the ill-effects of green-house gases, responsible for much of the misery, we see around us.
It is not yet clear whether socially responsible investing in the form of Green Funds can consistently create better return for investors, but these environmentally conscious persons appear willing to settle for lower returns and are compensated by the sense of having made an ethical choice.
“The customer is willing to give up yield,” says Christof Lützel, spokesman for the German GLS Bank, But this is often not necessary. According to the Center for European Economic Research funds have sustained since the financial crisis in 2007, just done well as conventional systems.
The German nuclear debate, in the wake of the Fukushima tragedy has created an increased demand for green investments in Europe. According to Schroeder of Sylke Bank, one-third of all customers who justify their move from conventional investment avenues to environmentally friendly funds and instruments refer to the nuclear disaster in Japan
“Just as people buy in health food store and pay attention to environmental aspects, they want to regulate their financial affairs according to environmental, ethical and social aspects,” says Ulrich Hoyer, a partner at the consulting firm ZEB. One in four investor in interested in environmental investments, according to a survey by the DZ Bank.
Despite this growing public sentiment, there is no clear list of companies which make purely ethical and environment friendly investments. Investors are cautioned not to rely solely on name. Asset manager Andreas Kalm & Pruschke of Kalm comment that “customers are very receptive to the topic, but it’s not always easy to draw a dividing line for or against an investment.”
Exclusion criteria are often applied for vetting funds. Defense funds, oil companies, companies involved in alcohol and gambling, genetically engineered foods, pharmaceutical and cosmetic companies conducting animal tests are clearly not green. However problems arise when a company is found investing in funds from the exclusionist category, as well as green area such as wind or solar power.
