You drink out of a reusable coffee cup every morning, shun plastic straws and know that wear-once, chuck-away clothes aren’t worth the Friday night party. But have you ever thought about making eco-friendly choices when it comes to your savings?
Enter green investing: making your money work for you, as well as the planet. Recent research by asset manager Liontrust found that 74% of private investors cite sustainability as important in their everyday lives, but only 43% of those people are currently investing sustainably.
That suggests there’s some serious room for growth in the sector.
So, what actually is green investing?
“Green investing is putting your money where your mouth is,” says Holly Mackay, founder and CEO of financial advice website, Boring Money. “We can invest in companies which champion clean energy, have strong carbon neutral targets and follow sustainable practices.”
“We so often don’t think about who is holding our money and what they’re doing with it,” says Alice Ross, Financial Times journalist and author of Investing To Save The Planet: How Your Money Can Make a Difference.
“People who care about the environment are familiar with recycling, buying less plastic and flying less, but they don’t think about the fact that their pensions or savings might be invested in an oil company that is harming the environment.”
Why should I be bothered?
Turning the tide on environmental damage relies on each of us making small life changes: if all of us refused a plastic straw with our drinks, it would make a huge difference. It’s the same when it comes to investments. “If we only back those companies which align with our priorities, we can collectively starve the bad guys of cash,’ Holly points out. ‘And money talks!”
Alice agrees: “If we all only invest our money in companies that are trying to reduce carbon emissions, then that will send a message to all companies that they need to raise their game when it comes to climate change.” We all need to start somewhere, after all.
What if I’m not savvy when it comes to investments?
“Don’t think you’re not an investor! If you have a workplace pension, you are!” says Holly. Alice advises you start by checking where it’s invested. “It should have the option of a green fund,” she says. “Even if you’re only saving a small amount of money, you could check what your bank’s ethical policies are. Do they fund oil projects in the Arctic, for example? It’s possible to make green choices, however small your spare income.”
Holly also recommends you check out Boring Money for advice. “We can open sustainable investment ISAs,” she says. “Moneybox, Nutmeg and Wealthify are three easy starting options which do all the investment heavy-lifting for you – but allow you to invest in line with your broader priorities. They’re well rated by our readers and great for beginners. We also have a #SustainableSavers tribe where you can find out more in jargon-free plain-talking English.”
How else can I get started?
“The personal finance sections of newspapers are all over the ESG trend – that’s environmental, social and governance investments, of which climate change investments are a part,” says Alice. “Then you could also try investment platforms that offer a wide range of funds from different fund managers.
Interactive Investor, for example, has created a list of 40 funds that it reckons are properly ethical and, importantly, aren’t engaged in greenwashing – fooling consumers into thinking they’re more green than they are. Of course, you could also pick up my book, which covers the basics like the difference between equities and bonds.”
Really not sure about investing and want to start gradually? The Tickr app lets you put spare change into comprehensive portfolios that tackle everything from climate change to social inequality, while growing your money long-term at a level of risk that suits you. The app explains everything clearly and you’ll be able to see in real time how much you’re making, as well as where your cash is going.
Putting the spare change from your latte into saving the planet? Sounds like a no-brainer to us.