Beware of Greenwashing

For many investors interested in socially responsible investing, the chief concern is the environmental aspect. There are a slough of different investment vehicles offering access to green stocks, and green investments. Whichever option you choose make sure you do your due diligence on the investment to make sure that you do not fall victim to a phenomenon known as “greenwashing”.

As investors have shown increasing demand for Environmentally friendly investments, fund companies have been all too happy to offer options to help them achieve that goal. "Greenwashing” is the process of those funds being portrayed as more environmentally friendly than they really are. In general it is not done with bad intentions, it simply results from a discrepancy between what the fund company defines as green, and what you as the investor define as green.

When it comes down to it. The only way for an investor to be sure they are investing in green companies is to do the due diligence to actually look into the companies they are investing in. Doing that detailed homework will help you make decisions that align with your personal ethics. Take a look in particular at the companies business practices, not just their reports. In other words, look at what they do, not just what they say.

For most, deciding to take part in green investing is a commitment. while the time and energy required to do it effectively can be intense, most find the payoff to be well worth the expense.

If you don’t have the time to dedicate to diving into the fundamentals, you should look at hiring a financial advisor that specializes in green investing. Not only will they have already done a lot of this work for you, they will also be skilled in working with you to define what you think is a green company, and help build you a portfolio that aligns with your values.