We all want to do better to help our environment. Most of us know about small changes we can make, such as driving less or recycling more, to reduce the threat of climate change. But what if you want to do more? What if you could use your investment dollars to help fight climate change’s impact on the world?
You can do this. Impact investing, which yields both a financial and social return, is increasing in popularity. Once considered an investment option only for people with significant financial means, impact investing is becoming more accessible to middle income earners. Here are five options that are worthy of your consideration if you want to take care of your own finances and the planet. (See also: A Simple Guide to Socially Responsible Investing)
1. Motif Investing’s Climate Change Index Fund
Motif’s Climate Change Index Fund is comprised of 25 stocks that include companies in clean energy, energy management, agriculture, clean water distribution, carbon emissions reduction, and waste management. Over the past year, the fund has had a return rate of 31.5 percent. In addition to the Climate Change investment option, Motif also has investment options that focus on fair labor practices and ethical corporate behavior.
2. Etho Climate Leadership Index
Etho Climate Leadership is the first index of its kind to be fully divested from fossil fuels. It selects the most carbon efficient companies across a wide variety of industries. In addition to eliminating fossil fuels, it has also eliminated investments from tobacco, weapons, and gambling. The index undergoes a rigorous screening process of its investments that is based on ESG (environment, social, and governance) performance data and incorporates expertise from global NGO (nongovernmental organization) partners.
3. Fidelity’s U.S. Sustainability Index Fund
Fidelity created the U.S. Sustainability Index Fund to give its investors access to domestic companies that have strong sustainability profiles. Currently, the fund’s top holdings include Microsoft, Johnson & Johnson, and Alphabet (Google). This fund has low expenses and a medium risk rating. Because it’s new this year, this fund doesn’t have deep historical performance data. However, it has provided an 11.70 percent lifetime return since its inception in May 2017.
4. Vanguard’s FTSE Social Index Fund
Vanguard offers a host of socially responsible investment funds. Over the past decade, its FTSE Social Index Fund has seen peaks and troughs in its performance — though this year it has provided the best return in its history at 20.41 percent.
5. Wunder Solar Funds
Wunder Capital is a different breed of investment vehicle than the others mentioned above. For a minimum $1,000 investment, any investor can contribute to Wunder’s efforts to loan money to small- and medium-sized businesses that want to install solar energy systems. The return has varied between 6 percent and 8.5 percent, depending upon the fund the Wunder investor chooses. This year alone, Wunder has financed 50 installations. Those 50 installations have yielded 15.2 megawatts of solar energy. What kind of impact does this change have on the environment? This carbon offset in this year alone is equivalent to:
14,248,648 pounds of burned coal.
1,502,503 gallons of gasoline consumed.
8,476,000 pounds of waste.
12,640 acres of U.S. forests.
2,821 cars driven.
These are just a handful of ways that you can use your investment dollars to provide you with a financial return while helping to fight climate change at the same time. As always, before investing it’s wise to consult an investment professional so that you understand the risk/reward ratios of different options and to receive comprehensive advice on all of the investment options available to you.