Green investing has gained traction in recent years amidst growing public concern about climate change and its effects. Championed by environmentalists, the idea of sustainable investments uses the power of the capital markets to encourage the shift to more sustainable business practices. Such investments are geared towards helping to address global climate change objectives and can play an important role in promoting the shift needed to build a green economy.

Green investments generally reflect two main strategies. The first is called values-based investing, which is all about investing in companies that promote sustainable activities, are socially responsible and meet certain ethical criteria. It enables investors to put their values into action while investing in companies they believe in. The second is called impact investing – that is, investing in green companies or products to generate both financial returns and positive environmental outcomes. Both strategies seek to align investment returns with environmental sustainability objectives, such as the reduction of carbon emissions, water usage reduction, or energy efficiency.

Green investing covers a wide range of sectors, including renewable energy, energy efficiency, clean transportation, green building, sustainable agriculture and land conservation. Investors can choose from a variety of products, including public equities, private equity, and mutual funds.

One example of a green investing product is green exchange-traded funds (ETFs), which enable investors to buy a portfolio of green stocks in a single transaction and in a single fund. Most green ETFs invest in renewable energy, energy efficiency, or clean technology companies. But they may also invest in companies that provide products and services to reduce energy consumption, increase energy efficiency, or reduce greenhouse gas emissions.

Another product popular for green investing is green bonds, which are debt instruments that allow investors to finance projects with environmental benefits, such as renewable energy and low-carbon transport. Green bonds can offer competitive returns and stable payouts, as well as the peace of mind associated with knowing that their investments are making a positive contribution to the environment.

Green investing is expected to continue to grow in popularity, especially as the awareness of climate change increases and the public demands more transparency from companies about their environmental practices. Although green investments are not without risk, there is evidence that green investments can have returns comparable to more traditional assets. As such, green investing is a viable way to allocate capital in an environmentally sustainable way while achieving financial gains.