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Investing in a Sustainable Future with O1ne Mortgage

At O1ne Mortgage, we understand that many investors are looking to do more than just make money. According to a 2022 Capital Group study, over a quarter of investors worldwide consider ESG (Environmental, Social, and Governance) investing central to their investment approach. This strategy involves considering environmental, social, and corporate governance factors to guide investment choices.

ESG investing appeals to those who want to generate returns in environmentally conscious ways. The idea is to invest in eco-friendly companies or industries committed to protecting the earth. Here are some investment options to consider:

Different Ways to Invest in Sustainability

Before diving into specific investments, let’s discuss the basics of ESG investing. You might start with causes you’re passionate about. If you’re unsure where to begin, research industries advancing environmental causes, such as combating climate change. From there, select investment vehicles that allow you to invest in those industries or companies. Options include:

ESG Funds

ESG funds, including exchange-traded funds (ETFs) and mutual funds, comprise socially responsible companies. Investors can buy bundles of different securities like stocks and bonds. ESG funds can help diversify your investment portfolio and allow you to invest in environmentally conscious companies.

Eco-friendly Retirement Accounts

Some 401(k)s offer a brokerage window, a self-directed option that may let you add eco-friendly investments. You can also use an individual retirement account (IRA) to invest in ESG stocks, mutual funds, index funds, and ETFs.

Individual Stocks

Investors can buy shares of stock from companies that meet their environmental standards. Note that individual stocks are considered high-risk investments. Researching different ways to analyze stocks and performance metrics is crucial. Your risk tolerance will likely come into play, so it may be best to start small when investing in individual stocks.

Private Equity

Another option is to provide funding to environmentally friendly startups through angel investing, crowdfunding platforms, or venture capital firms. Investors typically receive equity in exchange for capital. This is considered a riskier type of investment since it’s never guaranteed that a company will take off. Evaluating the company’s business plan, revenue history, and projections can help you make an informed decision.

Environmentally Conscious Investment Options

Renewable Energy

Renewable energy can be used for electricity, transportation, heating, and more. It relies on natural resources—such as the sun, wind, or geothermal resources—instead of fossil fuels. Investing in clean energy can include installing a renewable energy system in your home, such as:

• Solar panels for electricity
• Solar water heaters
• Small wind electric systems
• Geothermal heat pumps

Some energy-efficient investments may qualify you for federal tax credits or state-level incentives. Beyond that, you can also invest in companies that make essential parts or technology that power renewable energy. Over the past decade, the iShares Global Clean Energy ETF has had an average annual return of more than 12%.

Clean Water

Nearly two-thirds of the world’s population experiences severe water scarcity for at least one month each year, according to UNICEF. Your investment portfolio can make a positive impact by focusing on companies dedicated to ending the global water crisis through clean-water technology, infrastructure solutions, or innovative water treatment approaches. Fidelity, for example, offers a water sustainability fund that invests in companies working toward a solution.

Green Transportation

Electric vehicles don’t produce tailpipe emissions, unlike cars that rely on gasoline. Transitioning to electric vehicles could eliminate over 800 million tons of carbon dioxide emissions every year by 2040, according to the Environmental Defense Fund. Investing in green transportation can include:

• Opting for an electric vehicle over a gasoline car
• Investing in companies that manufacture electric vehicles
• Supporting companies that create technology to improve the industry
• Investing in companies that make critical parts or equipment for green transportation

You can also buy into a fund that invests in such companies. The CLNR IQ Cleaner Transport ETF, offered by New York Life, is up more than 12% in 2023 as of this writing.

Ocean Conservation

The world’s oceans continue to be negatively affected by human behavior. More than 800 wildlife species have been harmed by plastic pollution, according to the Pew Charitable Trusts. Sustainable ocean investing can take many forms, including investing in companies committed to sea life conservation, businesses working to reduce or eliminate ocean pollutants, and companies focused on eco-friendly technologies like aquaculture. The Ocean Health Investment Portfolio, offered through Newday, is one example that invests in companies prioritizing ocean protection and ending lifecycle product waste.

The Bottom Line

It’s possible to use your investment portfolio to help protect the environment by investing in eco-friendly companies that share your values, whether through individual stocks or investment funds. If all goes well, you’ll net returns in the process.

At O1ne Mortgage, we are here to assist you with all your mortgage-related needs. Call us at 213-732-3074 to learn more about how we can help you invest smarter and more sustainably.

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