When it comes to green investments there is a problem with defining what is green. Green investors invest in green companies but how would we define a green company? When trying to answer this question, you find yourself at a dilemma as the criteria for deciding what a green company is doesn’t seem clear enough.
From the point of an investor, ethical practices and the use of green material may be the right way to go. But before investing into such business, the primary preoccupation will be whether there will be profits. Any smart investor will assess a company on its performance and not on whether they carry a green label.
Recently, some smart companies have gotten the trend the world wants to follow and they are doing all they can to let all who cares to know that they have the best ethical standards and maintain only activity that ensures no harm to the environment. Yet it is still hard to say with confidence if this should be the right definition for a green company. If it is, then it means it is possible for any company out there to be called green.
Naturally, it would be better to say that companies that are considered green are those that are taking the necessary precautions to ensure that their activities produce minimal harmful effects to the environment as well as the human resources. Since fitting the definition can be controversial, it is better for potential green investors to put their own guidelines that will help them determine what a green company is. As it is, there are conflicts of interest that could arise. For example although companies are expected to release their carbon footprints, very few are open to give out this information.
It could be nice for green investors to also consider things like a company’s fairness policy, salaries of employees, supplier relations and corporate social responsibility. Growth in the green industry is very variable with industries that are doing quite well and those that are barely surviving. The investment climate in the industry is looking bright. If governments and the civil society will put more pressure on companies to adopt cleaner energies and be open to disclosure then it is the only hope that the growth continues. At the end of the say it is still difficult to answer the question, how green is green?