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Social Investing

Strategies for socially and environmentally responsible investing


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7 Ways Your Investments
Can Fight Climate Change

Climate Change ImageTo change course and turn back the climate crisis, we can all use our investor power to advance clean energy, and to push polluters to clean up their acts.

You can make a difference whether your investments are large or small — even by using your checking or savings account. Our list below tells you how.

When you invest, remember to do your research, read all the materials, and consider consulting a financial advisor. (As they say, past performance does not guarantee future results.) We know we need to change corporate past performance on climate change — using your clout as an investor is a powerful way to do just that.

1. Choose a mutual fund that invests in clean energy — You can find green mutual funds in the financial section of our National Green Pages™. These funds invest in clean energy companies, as well as innovators in other fields that are advancing clean energy through their operations. The examples are many, and include Green Century Balanced Fund, Portfolio 21, Sierra Club Mutual Funds, the Winslow Green Growth Fund, and the New Alternatives Fund.

For example: The Winslow Green Growth Fund reported having almost 30 percent of its holdings in green energy companies as of December 31, 2006. Other holdings in the Green Growth Fund included companies committed to sustainability in their fields, such as a Fair Trade coffee company that uses renewable energy, and a carpet manufacturer that has been a leader in sustainable technologies.

NEXT STEP: Our National Green Pages™ and Guide to Socially Responsible Investing (free when you join Green America) offer directories of socially responsible mutual funds. Find a green mutual fund today.

2. Choose an energy-focused community investment — Community investments help direct capital toward communities that are underserved by traditional financial institutions. Community development loan funds can go to many different kinds of recipients; you can find funds that specifically direct capital toward energy investments in inner-city or developing world communities. (You can also open checking or savings accounts with community development banks or credit unions to make a difference for climate change while building sustainable communities.)

For example: E + Company is a community development loan fund with the mission of empowering locally based, sustainable modern energy businesses. With a presence in Latin America, Africa, and Asia, E + Co.'s investments provide renewable energy services to households, businesses, and communities helping to meet the growing demand for energy services in the developing world. (Shorebank Pacific offers checking accounts, lending money from their "EcoDeposits" program to businesses and non-profits that are committed to improving their environmental footprint.)

NEXT STEP: Search the Community Investing Center, our joint project with the Social Investment Forum, for environmentally focused community investments. (Click "advanced search" and then choose the "environmental" sector under "social impact.")

3. Vote your proxies — If you own stock in businesses connected to the climate crisis, such as coal companies, oil and gas companies, automobile companies, and electric power companies, concerned shareholders like you may have already filed resolutions to urge them to take action. Review your proxy ballot when you receive it by mail, and be sure to cast your vote in favor of progress on climate issues.

For example: Shareholders have withdrawn 13 resolutions this season already, because companies have shown signs of progress on climate change. However, 21 resolutions remain, asking for companies to set goals to reduce their greenhouse gas emissions for their products (cars) or their operations (coal plants), or to report on their energy efficiency, in the case of big-box stores.

NEXT STEP: Check out our 2007 proxy chart, presented in partnership with Ceres, which shows you the companies that have climate resolutions outstanding.

4. Choose a mutual fund that pushes for change — Socially responsible mutual funds often incorporate conventional companies into their holdings so they can hold companies accountable for their business practices and push for greater environmental responsibility. Mutual fund companies, just like individual shareholders, are part-owners of the companies in which they invest, and can use that status to arrange dialogues with company management, or force votes on company policies at annual shareholders' meetings.

For example: Walden Asset Management, which hosts a family of mutual funds, has long been pushing for change on climate issues. Walden includes global warming skeptic ExxonMobil in its mix of investments, and has been active with shareholder coalitions in pushing the oil-and-gas giant to explain and defend its position on climate change. This spring, Walden has been meeting with top management of an other holding, the Chubb Corporation (a security systems company), which resulted in Chubb's agreement to develop a sustainability report discussing its climate change policies.

NEXT STEP: Our National Green Pages™ and Guide to Socially Responsible Investing (free when you join Green America) offer directories of socially responsible mutual funds. Find a mutual fund that holds corporations accountable today.

5. Choose a clean-energy ETF — ETFs (exchange traded funds), are funds that track an "index," but can be traded like a stock. An index is essentially a list of stocks assembled to track the performance of a particular market segment, so that when an ETF is attached to an index of, say, clean technology companies or renewable energy companies, you can feel secure that your investment is helping to curb climate change.

For example: The PowerShares WilderHill Clean Energy Fund was launched in 2005, as one of the first socially responsible ETFs. This ETF mirrors the performance of the WilderHill Clean Energy Index, which tracks companies involved in wind energy, solar energy, and hydrogen fuel cells. Last year, PowerShares launched two more clean energy ETFs, the PowerSharesCleantech Portfolio, and the PowerShares Progressive Energy Portfolio.

NEXT STEP: Learn more about how ETFs work in our Real Money newsletter article, which goes into greater depth, and points you toward how to start investing.

6. Work with a green financial planner — A financial planner can help walk you through all of the above strategies and help you decide what type of responsible investment might be right for you and your financial situation. (Green America does not recommend any specific investments and strongly encourages consulting a financial planner.) Tell your planner that you're greatly concerned about climate change and emphasize that you want your investments to reflect your values, and she or he should be able to steer you toward investments that bring a positive return for people and the planet.

For example: Light Green Advisors is a financial planning company serving the Seattle area. Light Green tells potential clients that it "believes companies that demonstrate effective environmental leadership have a competitive advantage that will result in sustained top-tier financial performance." Their services include directing your investments toward their list of "top tier" clean companies, and offering their own ETF tied to their clean energy index.

NEXT STEP: Find a financial planner in your area in the National Green Pages.

7. Raise your voice — Join Green America's action campaigns to convince investors and financiers to say "no" to coal and dirty energy and "yes" to a renewable energy future. As an investor and a consumer, you have a powerful say in how companies conduct their business.

For example: Green America members, in partnership with a coalition of environmental action groups, recently demanded that Merrill Lynch and Citigroup stop funding the TXU Corporation's plans for 11 new coal plants in Texas. Our members contributed a powerful voice, and TXU's new investors agreed to cancel 8 of the 11 plants.

NEXT STEP: Join our actions! With more than 150 new coal plants planned nationwide, we're telling investors to say "no" to coal. We're also working to convince conventional mutual funds to join responsible mutual funds in voting their proxies against climate change.



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