GREENBACKS CAN BACK GREENS
GREENBACKS CAN BACK GREENS
Money can be used to destroy nature - but it can also help protect it.
Even the financial world has recently begun to talk of 'sustainability'. The World Bank and commercial banking establishments are paying more attention to environmental concerns in their lending policies, and private and institutional investors are increasingly tending to consider how their money is actually being used.
Environmental, civil rights and peace groups have put forward a variety of ideas for making investments more ethically and ecologically responsible. People who took to the streets in the 1960s, 1970s or 1980s to protest against war, destruction of the environment or racial discrimination suddenly realized that their own money, held by the banks, was helping to finance just what they were fighting against. A search for alternatives was launched.
There are now green alternatives for virtually every type of financial investment option - environmental savings accounts, environmental shares, environmental bonds and even, most recently, environmental life-insurance schemes.
Alternative banks, such as Germany's Ökobank (a cooperative bank with over 20,000 members), have been set up. And more than 140 investment funds have been established worldwide, using more or less strict criteria to assess the ecological quality of their investments.
Furthermore, many projects have only been made feasible in the first place by private financing - including most of the 3,000-odd wind power plants built in Germany since 1990.
Profit or sacrifice?
Many people think that environmental investment means forgoing profits. This may be true of some of Ökobank's projects - so that loans can be made available to borrowers on more favourable terms. But where shares are concerned, an environmentally conscious investment can actually bring economic advantages. Companies who already produce emissions well below statutory levels will have an easier time when stricter limits are introduced than less progressive competitors, who will have to carry out costly investment programmes, and then there are the marketing advantages of having a green corporate image.
Political factors often have a considerable impact on a company's success. One of the best share performances during 1995 (a rise in value of 240 per cent over the year) was achieved by the Norwegian company, Tomra Systems, which develops and manufactures machines for processing returnable bottles. Its market grows with each new country which legislates for the compulsory use of returnable bottles - and so (usually) do the company's turnover and profits.
Tomra shares are among the most favoured by socially responsible and environmental investment funds. In the United States alone, these currently manage investments worth some $11 billion. Worldwide well over $1 trillion worth of investments are made according to clear-cut social and ecological criteria.
Nevertheless, eco-investors still have relatively small clout in the market as too many of them are interested only in the rate of return on their investment. At some time in the future they may start to exercise a more active influence over markets. This could be as effective as the buying or boycotting of specific goods has been.
CONTINUED ON NEXT PAGE -->Written by: Max Deml
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