Bites
SUSTAINABLE INVESTING
November 25, 2021

What it means to go green

It’s becoming more and more apparent that some of our current practices might not be sustainable in the long term, both for individuals and industries alike. We know change is needed, but that’s easier said than done. 

“Going green” is a broad term that encompasses a litany of different measures and steps we’d need to take to truly achieve that vague goal, and something that will likely take decades to reach as the world slowly aligns with it. Nevertheless, the momentum is here, and it’s already changing how we invest.

What it means 

Going green simply means sustainability. Although some will argue that the changes we’re seeing in our climate and environment are part of something natural, there’s no doubt we as humans have accentuated these harmful things with some of our modern advancements. 

In order to go green, a lot of things will need to be addressed, such as renewable energy, sustainable transportation methods and less heavily “processed” items. Ultimately, all of these things contribute to greenhouse gas, or C02 emissions, which is the main driver of our problems.

A few industries under the microscope 

  • Food industry: Almost everything seems to contribute to climate change, why? Because almost everything we do depends on things like fossil fuels. While some of the food industry’s contributions come from things like deforestation and soil degradation, a lot of it can also be chalked up to just plain transportation and waste. 
  • Transportation: This is a given, energy is by far and away the biggest contributor to our emissions problems, and transportation relies heavily on non-renewable resources to power it. 
  • Fashion: It takes almost 1,000 gallons of water to make one pair of jeans, which ends up equating to, apparently, about 73 (33.4 kilograms) pounds of carbon equivalent. Needless to say, fast fashion isn’t exactly the picture of health when it comes to sustainability.

Impacts on investing

  • Future-oriented: In a way, the green evolution we’re witnessing plays right into investors’ strengths. The markets are about investing in the present for a better future, and finding sustainable companies that do this exact thing in the real world will benefit your portfolio. 
  • Ditch assumptions: It seems like a foregone conclusion that it’ll be safe to invest in a blue-chip energy giant for the next 30 years. Will it, though? The future of our traditional forms of energy is being increasingly contested⁠—both from the legislative standpoint and the market for them in the long run. Now may be a better time than ever to be unorthodox. 
  • Being impartial: Our investments don’t care about where we stand on the topic of climate change. Your beliefs don’t have to align with the movement to a tee in order for profits to be made. The bottom line is, the market moves, and we have to move with it. It makes sense to play into the hands of trends at times, while also keeping some solid footing in sectors we already know as well.

And some parting data for thought... Many investment funds with ESG or environmental, social and governance criteria outperformed the broader market (S&P 500 index) in the highly-volatile first 12-months of the pandemic, according to this S&P study.

🍃 Not sure what ESG investing means? Take our bite-sized lesson on the topic:

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