How to make green investments today.
The revolution has developed over many years, but the term was coined in 2007. Since then, companies are taking social stances on important issues, bringing in more investors, increasing return on investment, and, more importantly, making a change. Now, making a change in the world and benefitting from solid returns are no longer mutually exclusive. Over the past ten years, impact investing has emerged from investors wanting to not only benefit monetarily from their investments but also make a positive mark on our community, society, and planet. The investment can be made in both emerging and developed markets.
A variety of sectors, which you can read more about below, are being impacted by people who are hoping to make a change with their investment. There are diverse markets to choose from when you select impact investing, which are viable and find social and environmental solutions to problems that you care about. There is also a variety of issues that are addressed by socially-minded companies. This includes, but is not limited to, community development, small business finance, health and wellness, education, sustainability, renewable energy, climate change, natural resources, conservation, and more.
Many of the more traditional sectors, like community development, are well established that have millions of dollars already invested and have proven to be a profitable choice. Other, more progressive issues, like fair trade, are still emerging but can also have a positive impact on your wallet, as well as the world.
More specifically, one sector of impact investing that is gaining even more traction is eco-friendly impact investing, or green investing. Green investment is a type of investment that is generally good for the environment, whether it be directly or indirectly. Companies that are considered a green investment are often dedicated to the conservation of natural resources.
So, while green investments do fall under the umbrella of socially responsible investing, it much more specific. Typical green investments work to raise money for the following causes.
- Renewable power/power generation
- Waste-water management
- Energy recovery
- Smart grid
- Power management
- Green technology
- Energy storage
- Emissions trading
Popular options for green investing include securities, mutual funds, ETFs, and bonds.
IMPACT INVESTMENT OPTIONS
There are several different options for impact investments today. A green bond is a fixed-income vehicle that raises capital used towards programs that benefit the environment. The market for green bonds has also recently opened up to other issues such as social and sustainability bonds that would benefit issues such as affordable housing and the growth of small businesses. The popularity of green bonds has grown significantly over the years. In 2017, green bond issuance was $155 billion, which raised $250 billion just a year later!
Not only do green bonds benefit the environment, but it is also a way for investors to earn tax-exempt income and the satisfaction of making a positive impact on the world. Issuers of green bonds also benefit from this kind of investment because it attracts the subset of investors, typically young investors, who are environmentally-minded.
Did you know that an impact investment could lead to residency in some places? Panama’s reforestation program is a perfect example of that. Through this Panama’s Reforestation Investor Visa program, investors can obtain permanent residency, and eventually, full citizenship. The reforestation visa requires individuals to invest a minimum of $80,000 to buy at least 5 hectares of titled land that is part of a government-certified reforestation project.
Young people looking to give back to society, and are looking to encourage a new form of capitalism, are specifically known to enjoy green investing. As younger individuals enter the investment world, we can easily predict this type of investment will be reaching more popularity and attention. As companies see this trend strengthening, more will begin taking a social stance, increasing investors’ willingness to have a stake in the company because they support the company’s mission.
Impact Investing with Alpen Partners
Millennials are not the only demographic looking to make an impact on their investment decisions. Family offices use impact investing as a way to diversify their portfolio while getting future generations involved in a social or environmental movement. Foundations, like the Bill and Melinda Gates Foundation, will seek impact investments as a way to align their endowment with the mission of their organization.
Other demographics include ultra-high net worth individuals who would like to use their wealth in a way that works congruently with their values and sustainability goals and pensions that are upholding their fiduciary duty by balancing the risk/reward of their investments. With the challenges we face in mind, Alpen Partners is launching a practice focusing on impact investing. Sustainable investments have become a major theme for global investors, and our firm wants to be at the forefront of creating alternatives for our clients to have their investments reflect their values.
Partnering with a leading specialist in the sustainable investment space, Alpen Partners will start offering portfolios that are focused on the best long-term sustainable investments that are equally dedicated to seeking solutions to some of the issues we face today. While maintaining our focus on balance sheet quality and capital efficiency, the portfolios will consist of companies and organizations that have the intent to generate a measurable, beneficial, social, and environmental impact alongside their strong financial return. Through impact investing, with the help of Alpen Partners, you can make the change you want to see in the world while also increasing the money in your pocket.
Alpen Partners Opinion
Impact Investing is emerging as one of the most important investment factors for our new clients. The days of an investor merely making investments based on financial statements, are dwindling. Investors want to use their wealth to make change in the world. What’s great about modern investing is the number of options available to make a profit, but also have other tangible and intangible impacts on the world. Eco-Friendly impact investments are one of the fastest growing areas of interest for investors. When we work with our clients, we review what the client’s goals are, which are not always monetary. This is where impact investing comes into play.