Green investment

Green investment aims to grow your wealth in ways that align with your stance on the environment. With more than 20 years' experience managing tailored ethical portfolios, we have the experience to help you make a positive impact with your money.

Content last reveiwed 20/06/2024

Enquire

Tailored portfolios that reflect your values and support your goals

Award-winning investment management service

Access your portfolio 24/7 via a secure online portal

What is green investing?

Broadly speaking, green investing is the practice of considering the impact on the natural environment while selecting investments. It's also sometimes referred to as environmental, environmentally friendly, environmentally conscious or eco investing.

Green investing is often misidentified with environmental, social, and governance (ESG) investing and impact investing. but is distinct in that it focuses on the environmental impact of investments.

Green investments are traditional instruments with underlying assets that align with a given set of environmental criteria. This includes companies and ventures that adhere to environmentally responsible practices, as well as  new technologies to help the world transition to net zero.

There is no universal definition of a 'green investment' in the financial services industry, making environmentally friendly investing a complex landscape for individual investors to navigate. It requires significant expertise to find investments that align with your environmental values, while also effectively supporting your financial goals.

Enquire now for tailored portfolios that reflect your values and support your goals

Let's talk
Types of green investments

Types of green investments

hands touching glass
Pros and cons of green investing

Pros and cons of green investing

Like other types of assets, green investments offer you both advantages and disadvantages. Understanding each will help you know whether green investing is the right strategy for you.

leaf

Special considerations of green investing

Green investment performance

Investment returns aren't the only goal of environmental investing, yet financial growth is still an important part of the equation. Since green investments are a relatively new type of financial instrument, there's limited historical information compared to traditional assets, making it difficult to assess their ability to deliver strong results.

There are, however, some indicators that eco-friendly investments don't have to mean lower returns. A 2021 study from Morningstar Inc. found that most sustainable funds delivered stronger total and risk-adjusted returns than their respective Morningstar Category indices. Environmental factors are also one of the facets of ESG criteria and some studies suggest that better ESG scorings could indicate greater-than-average long-term performance. Please bear in mind, though, that the past performance of any investment doesn't guarantee future results.

Despite the absence of decisive historical evidence, many investors believe environmentally conscious investing offers them the best chance of long-term profits in the future. With the impact of human influence on climate change becoming increasingly apparent, there's a growing demand that companies take ownership of and be transparent about their impact on the environment.

As the world moves in this new direction, companies and organisations that employ outdated and unsustainable practices will likely face higher costs and regulatory barriers, potentially limiting their ability to deliver returns to investors. Conversely, companies and organisations that successfully implement sustainability measures and drive change may prosper.

Subjectivity in green investing

The definition of what makes an investment 'green' or 'environmentally friendly' can vary from one investor to another. For example, some investors might see nuclear energy as a viable substitute for fossil fuels and therefore consider investments in this space as environmentally friendly. Yet considering the damage that nuclear accidents can wreak on the environment, other investors might not want to include investments from this industry in their portfolios.

Moreover, there are various definitions of 'green investing' used in the financial industry. Due to the lack of consensus and the complex nature of investment funds, investors might unwittingly invest in companies or projects that don't align with their positions on the environment. For these reasons, investors must carefully research their investments to ensure they meet their personal definition of 'green'.

Green investing vs greenwashing

Greenwashing refers to the practice of spreading misleading or false information about the environmental impact of a company. It's typically done to capitalise on the growing demand for sustainability or downplay the company's involvement in environmentally damaging practices.

The concept of greenwashing is usually used in the context of companies marketing their products and services. Yet it also exists in the investing world, in which the sustainability of investments is exaggerated. Since branding alone isn't enough to gauge commitment to sustainability, investors must conduct thorough research to ensure the assets they invest in genuinely align with their values.

Challenges with ESG investing

We've been constructing and managing environmentally friendly investment portfolios for more than two decades. Our extensive experience allows us to design tailored strategies for our Bespoke service that effectively integrate your values and financial goals. Our approach consists of the following three phases.

1. Understanding your needs

For our Bespoke service, you will have direct contact with an investment manager, who will form a close working relationship with you and establish your personal circumstances. We may ask you to complete an ethical questionnaire to give us a clear understanding of your values. We will also ask you about your investing goals, risk appetite and other financial considerations.

2. Constructing your portfolio

When we have a comprehensive understanding of your situation, we'll begin the process of constructing a bespoke portfolio that aligns with your values and aims to meet your financial requirements. Our investment process involves determining the right combination of assets for your objectives, guided by our sustainable investment framework.

3. Managing and reviewing performance

We will actively manage your portfolio to ensure that it matches your needs, whether in response to changing market conditions or if your circumstances change. Your portfolio will be monitored by our investment risk team and be subject to ongoing ethical and sustainability screening. We provide you with regular portfolio valuations, which can also be accessed through our online portal and app.

Green investment FAQs

“Greenbank were selected as they demonstrated the strongest ability to deliver sustainable returns, combining strong financial analysis with ethical, sustainable and impact principles, all of which can help us to better align with our own principles and strategic priorities.”

Peter Fotheringham

Director of Finance, University of Dundee

Enquire now

Why choose Greenbank for green investing?

  • Actively managed portfolios: We understand that every investor has different priorities. We'll develop a close relationship with you and work to understand your environmental values, risk appetite and financial circumstances – then put together a portfolio that's in alignment with them.
  • Transparent frameworks: Each green investment we make is required to meet a minimum sustainability threshold, based on our framework of eight sustainable development themes we've developed that align with the United Nations Sustainable Development Goals (SDGs).
  • Robust standards: Your portfolio will be monitored by our investment risk team, and subject to ongoing ethical and sustainability screening. 
  • Prompt reporting: We provide you with timely information. In addition to receiving regular portfolio valuations, you can request up-to-date valuations or access your portfolio through a secure online portal 24/7.
  • Award-winning approach: Our investment management service has earned us a wide range of awards and recognition, including the 'Best Sustainable Investment Wealth Manager/DFM (Discretionary Fund Manager) Group' award at the Investment Week Sustainable Investment Awards 2023.
  • Dedicated to change: We recognise the role we can play in accelerating the transition towards net zero. For this reason, we're committed to becoming a net zero business by 2040, as well as amplifying our positive impact through our partnerships with other members of the responsible investment community.

With Greenbank, you can make your investments work for what you believe in. After understanding what matters most to you, we'll construct a portfolio that matches your values and can help you reach your financial objectives.

Ready to speak with our experts about green investing? Simply fill in our enquiry form and we'll get in touch as soon as we can.

Enquire now