There are plenty of opportunities for you to invest in eco-friendly ways. What you choose to do will depend on how much time you have for research, the risk you are willing to take and your own beliefs about what is and is not eco-friendly.
Eco Investment Funds
If you have a lot of time then you can do a detailed analysis of each investment or individual company. You can weigh up the extent to which they offer eco-friendly products and less environmentally friendly alternatives. You could look into their historical track records, their energy usage, check for pollution incidents and attempt to assess the degree to which they minimise waste and recycle.
If you don’t have time to look at each company individually then you should probably identify a well known and trusted eco investment fund. You are trusting the fund managers to make ethical investment decisions but the profile of these funds means they are unlikely to invest in companies that do not genuinely have high-quality ecological credentials.
Hand Pick Company Shares
If you do have some time spare then you might want to invest in one or a few individual companies that you are particularly excited about or that you believe in.
Companies that hit the headlines can experience rapid growth in their share prices. However, sometimes the rise reflects their short period of being in the press rather than their value and rapid declines can follow.
Innovative startups can be exciting but they represent high-risk investments. A company developing solar power from algae in a jar sounds fantastic but what happens to your investment if they run out of money or another company beats them to a commercially viable technology?
Vegan and meat replacement companies are experiencing rapid growth and plenty of headlines. Brands like Beyond Meat, Follow Your Heart, Tyson Foods, Impossible Foods, Quorn and Linda McCartney are all benefitting from this trend. However, share prices can vary – see below for Beyond Meats share price fluctuation during 2019.
Other agricultural-related companies are also worth considering. Frieghtfarms convert shipping containers into hydroponic farms. Holganix sells lawn food based on microorganisms that can reduce the use of fertilizers by as much as 90%.
Eco Industries
Some industries lend themselves to eco investments better than others. Forestry is a great industry to look into. Shares in companies of FSC managed forests (Tilhill) and products are a great idea. But you can also directly invest in your own FSC managed woodland. How exciting would it be to buy and own a piece of beautiful woodland, full of plants, animals and fungi? Use a forestry management company and they can manage your woodland so you can grow and harvest FSC timber whilst still maintaining a healthy habitat and make a profit. Wood is being rediscovered as a building material. due to its vastly superior carbon credentials over alternatives such as Aluminum and concrete. This is driving demand for FSC wood supplies as well as ecologically treated and modified softwoods which have superior durability and strength.
The waste management sector makes a good investment target and there are some large companies that specialise in this area – but, waste management companies are not eco-friendly by default. Waste management companies run landfill sites and ship waste to the third world. Recycling companies and innovators are however usually a safer bet. Suez, Loop Industries and Veolia specialise in collecting waste plastic and recycling it into new plastic products like shampoo bottles and clothes. Tomra is a company that distributes reverse vending machines – people deposit waste which is sorted and recycled. Leanpath develops technology to help restaurants reduce or eliminate food waste. TerraCycle specialises in collecting unrecyclable waste and finding innovative ways to recycle and reuse. Bio-bean collect used coffee grounds and convert it into fuel.
Bio-Couture, fungal packaging material (Ecovative Design), renewable building materials, bacterial CO2 scrubbers, and the collection, cleaning and re-supply of water are other hot growth areas to consider.
Parents and History
Startups or brand new companies like Beyond Meat are not part of larger groups and don’t have any negative history. This can make investing in them a simpler decision. Other eco brands or divisions may be fantastic when judged alone however if they are owned by large corporations your decision-making process is more complex. The key difference is that the new companies are often set up and driven by an individual or small group who are passionate about the environment. Larger corporations tend to be passionate only about the bottom line and buy or create a few brands for a market segment without any genuine commitment to environmental practices.
For example, Nestle is set to be a major investor in vegan foods and meat substitutes which would make them a target for investment. However, you may feel that the other activities they undertake (they are one of the worlds largest suppliers of water in plastic bottles), as well as their historical track record (unethically marketing baby formula in the third world, child labour), make them unsuitable for eco-minded investments.
Quorn was launched in 1985 and it was the original meat substitute. However, it was originally a joint venture between Rank Hovis McDougall (RHM) and Imperial Chemical Industries (ICI) and it is now owned by Monde Nissin Corporation which has no particularly strong environmental credentials.
Tyson Foods are the largest food company in the USA. You will read a great deal about them making inroads into the meat-free food industry. However, they are still one of the USA’s biggest meat producers and its worse water polluter via agricultural runoff.
Even though Linda McCartney Foods was established by vegetarian Linda McCartney it was then sold to United Biscuits, then Heinz and finally to the Hain Celestial Group.
What Do You Beleive?
You would think that there would be a pretty clear consensus on which technologies and companies are environmentally friendly and which are not. However, it isn’t that simple. We still do not have a consistent way that companies or products can be assessed to provide us with a simple measure of eco-friendliness. There are some good assessment methods, but they are complicated and costly and therefore only the truly committed businesses use them. Even the renewable energy sector is complicated!
Hydroelectric power is a fantastic source of renewable energy but each project floods huge swathes of (usually) wildland and causes huge disruption to the entire water system they are built on.
Wind turbines are another source of renewable energy but some believe they ruin landscapes and kill birds.
Aquaculture, or fish farming, has the potential to relieve the enormous pressure we place on the oceans. However, these fish farms can cause contamination of natural water systems and they often require chemical and antibiotic treatments due to the high concentration of fish.
So we have to rely on our own judgement about how important certain things are to overall environmental friendliness. It is probably best to choose a tracker fund or invest in one or more companies that you believe are genuinely committed to the environment or that are working in an area you are particularly passionate about. No company will get everything right or be 100% sustainable but investing in those that are making genuine efforts to contribute to a sustainable economy are worth your time and money.
