Just as it’s tricky to find the best ways to reduce your carbon footprint by changing your consumption habits – it’s equally as tricky to find out where and how to start investing sustainably.
That’s not made easier by the fact that there are many “green investment funds” out there all claiming to be truly committed to sustainability and meeting the Paris climate goals. So which sources can you trust when you want to start your sustainable investment journey? We put together a little guide with the most important ones you should know.
Depending on which country you live in, there are different options. One place to start in the US is the U.S. Forum for Sustainable Investing (USSIF). With the chart they offer, you can compare cost, financial performance, screens and voting records of competing sustainable investment funds. However, some of the funds have very high minimum investments ($1 million).
In Germany, a similar platform is the Forum für nachhaltige Geldanlage (FNG), which awards transparency logos for sustainable funds and publishes the FNG Sustainability Profile. The FNG Sustainability Profile (FNG-Nachhaltigkeitsprofil) serves as a guide for the selection of sustainable mutual funds and provides investors with an overview of the sustainability criteria used and other key data on the funds.
In the UK, a great place to start is the platform Clim8, which provides a simple way to invest into a targeted portfolio of publicly listed companies that are already making an impact in tackling climate change. Sectors covered by Clim8 include clean energy, clean technology, sustainable food, smart mobility and recycling. In Germany, for instance, Cooler Future allows anyone to invest in companies supporting transition to net-zero. Their green, climate-friendly portfolio includes companies like Orsted, for example, a former fossil fuel giant turned green energy provider.
If you decide you might want to invest directly in stocks, aside from investing in sustainable funds, a good and simple way to find out about the top green investment opportunities is this guide to social responsible investing by Investopedia. It lists 11 top growing green investment areas, such as wind power, water, solar power and waste reduction, with specific stock recommendations for each area.
Besides this, socially responsible investment platforms like ecoligo.investments that enable you to invest your money directly into renewable energy and other sustainable projects around the world, with investment opportunities starting from just 100 Euros.
There are other niches, too, like female empowerment. Ellevest was built by women for women and offers the only investment algorithm that considers the unique realities of women’s lives, including pay gaps and longer lifespans.
With the help of this guide on how to build a sustainable portfolio, you now have the knowledge to take control of your money and start voting for the planet with your investments!
However, remember the golden rule of investing: never invest more than you can afford to lose. If you’re at the beginning of your financial journey, the 50/30/20 rule can help you to find the right balance – 50% of your income should be spent on essentials like rent and food, 30% on entertainment and leisure, and the remaining 20% should be saved – or even better, invested sustainably.
This article was written by Cooler Future, a fintech startup offering transparent and effective impact investment solutions for the climate-conscious generation. Their mission is to create positive climate impact by investing in assets from companies that are actively reducing their carbon footprint. With Cooler Future’s intuitive, easy-to-use mobile app, anyone can track the footprint of their investments, while generating financial returns at the same time.