Monday, June 9, 2008

Returns on Green Investing

Investing in companies with positive environmental policies makes sense on many levels. A growing number of consumers and portfolio managers are coming to appreciate the value of Green investments. There are more than 170 US mutual funds which focus on companies demonstrating environmental responsibility. A June 09, 2008 Ad Age Article by Kate Fitzgerald profiles Portfolio 21, a leading firm in environmental investing. With $290 million in assets, the Portfolio 21 mutual fund is invested in approximately 115 companies all of which meet stringent criteria. These criteria cover everything from manufacturing to packaging and recycling.

Portfolio 21 functions under the premise that "companies applying higher environmental standards ultimately gain a competitive advantage," says Portfolio 21's founder and CEO, he continues "Companies that began lowering their dependence on fossil fuels 10 years ago are in better shape today, and this is true for many environmental issues." The logic of this premise is hard to refute and it is further supported by the fact that Portfolio 21's mutual fund regularly outperforms the S&P 500 and other major stock indexes. Without much advertising Portfolio 21 has received considerable media attention.

Portfolio 21's founder and CEO says "We don't see a difference between risk as defined by the economy and environmental risk." Environmental risks are synonymous with economic risks. Managing environmental risks provides above average returns and uses the investment process to influence corporate behavior.

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