Most of our 401(k)s and IRAs aren’t inspiring confidence we’ll be retiring to the Bahamas anytime soon. Are sustainability-focused investments an unaffordable luxury in these gloomy economic times? Turns out Socially Responsible Investing (SRI) is actually on the rise since the recession hit, growing about 12% annually since 2007, to $3.07 trillion in 2010. That’s because many (but not all) SRI funds have actually outperformed or done just as well as the rest of the market, according to not just green money managers but also award-winning academic publications.
So how can you hop aboard the SRI express? A great place to start is the Forum for Sustainable and Responsible Investment (formerly known as the Social Investment Forum, or SIF), which publishes Bloomberg performance data for over 100 SRI funds and benchmarks, allowing you to screen investments based on 14 social and environmental criteria.
Of course you could also strike out on your own and buy stock in companies striving to grow a greener world. Though it’s a high-risk (and potentially higher reward) strategy, since your Tesla could turn into a Solyndra overnight, particularly in immature industries navigating rapid developments in both technology and supporting policies. Or you could just avoid investing in specific sectors (like coal and tobacco), an approach taken by many SRI funds. Here are a few more tips to ensure your portfolio yields net good for both you and your planet.
Stay tuned for more tools from Oroeco to help quantify the impacts of your investments. After all, what good is a giant nest egg if the tree is burning down?