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Why Your Portfolio Needs to Go Green


There’s a lot of good and bad advice out there, but the need to diversify your portfolio is non-negotiable. However, it’s not as simple these days to simply look at major markets and dip into them; the advent of technology and rising focus on environmentalism offers a challenge to those looking to make a wise investment.

Scepticism remains, however, with personal and political doubts over climate change and faith in “classic” industries. This article will help you to get a handle on green financing.

The Context

The Paris agreement of 2016 has been the turning point for the world’s market. The demands of the agreement of $100bn of green finance investment, rising to at least $1tn by 2030, has created a gigantic market.

The Facts

With the advent of huge Chinese manpower being pushed into environmentally friendly technologies, the pressure is on in the USA to be seen to match that and lead the way. To that end, the global finance industry is moving its focus, with trillion-dollar institutions investing in green.

There is now an opportunity for everyone to get involved with the green industry, with the proliferation of green bonds, too, giving smaller investors the opportunity to get involved. Interest rates as high as 12 percent have been touted as the overhead costs of green tech plummet.

The Wider Affair

A side note and nod to classic industries; the shift away from classic industries has also opened a niche in the market for smaller lenders to get ahead—spurring on innovation and the concept of holistic loans, which focus on more than just credit rating for those aiming to get personal loans with good credit. A mindful investor could find excellent opportunities in the personal finance industry whilst new industries take the center stage.

Peer-to-peer lending, the vanguard of newer, ethically-minded lending, is going from strength to strength, although Bloomberg has reported a plateau. Still, the business is there and going strong.

Green Influence on Old Industry

With most people accepting, if not keen, about the facts and impacts of climate change, there remains a reticence to change day-to-day lives entirely. As such, the old finance industries—such as automotive, real estate development and so on—are forced to innovate. The automotive industry alone has seen a 42 percent increase in eco-car sales and most lines now boast at least one electric or hybrid vehicle.

If you are unsure about investing your hard earned money into speculative markets, or those described in terms unfamiliar to you, there is still plenty of potential to put money into proven markets in an environmentally mindful way, which is slowly becoming the norm.

The Benefits

Given the early stage of the environmentally-aware finance industry, returns on investment aren’t yet well defined. However, you can consider the benefits in terms of mitigated costs. The greater the level of green investment, the more high-carbon investments lose value.

The fact is that the world is turning its head towards green investment, and big institutions along with it. Incentivization is being offered increasingly to green schemes, and the global economy is shunning carbon fuels. Only look at the drop in oil prices (a complex, geo-political subject, but certainly affected by climate change politics).