Archive for the ‘Green Economy’ Category
April 15th, 2009
Do Your Mutual Funds Have A High Carbon Footprint?
Stumble it!
It’s mid-late 2009, Friday afternoon. The Dow has crept above 9,000 for the first time in months, businesses are beginning to hire, and consumers are starting to consume again (we hope without using too much credit). On Monday morning, President Obama holds a press conference and announces a nationwide cap-and-trade system. Market panic! The Dow drops 500 points and Fox News launches into a 24 hour-a-day war room broadcast, spittle flying against camera lenses throughout. We sit back and smile … finally! Long-term, this is what we need to kick-start the next great American growth industry. If only I’d known what carbon-efficient companies or funds to invest in several months earlier …
Lucky for us, the folks at UK financial data firm Trucost have just released a study (free registration required) that estimates the carbon footprints of 91 large US mutual funds. What is the carbon footprint of a mutual fund, you might ask? It’s basically a sum of the carbon footprints of the individual companies that comprise the mutual fund (per million dollars of revenue), weighted by the fund’s holding in that company. There aren’t that many companies out there that report their carbon footprints yet, so Trucost has developed a sophisticated model (explained in the Appendix to their report) to estimate carbon footprints based on other factors.
So why should a fund’s carbon footprint matter? If you’re like me, then you might choose a fund just because it has a lower carbon fooprint (thereby rewarding the fund manager and the companies in the fund), all other performance metrics being equal. However, we’re heading into a world where there will be a cost assigned to carbon emissions. This cost will hurt companies and mutual funds with high emissions the most. According to Trucost, the portfolio companies of the top-performing fund in their survey would only see a 0.1% revenue decline in a carbon-capped world, while some of the poorer performing funds could see as high as a 3%+ revenue decline. That will definitely take a bite out of fund performance!
Although the report doesn’t display the carbon footprints of each of the 91 different funds (I suspect you have to pay big bucks for that!), there are some pretty useful stats nonetheless:
Carbon Footprint of the S&P 500: 384 tons CO2 / $ million of revenue
Five Funds With The Lowest Carbon Footprints (all in tons CO2 / $ million of revenue):
- Financial Select Sector SPDR Fund (XLF): 40
- Vanguard Health Care Fund (VGHCX): 48
- PowerShares QQQ Trust (QQQQ): 69
- Ariel Appreciation Fund (CAAPX): 98
- Oppenheimer Global Fund (OPPAX): 111
Five Funds With the Highest Carbon Footprint (all in tons CO2 / $ million revenue):
- Energy Select Sector SPDR Fund (XLE): 613
- Sentinel Sustainable Core Opportunities Fund (MYPVX): 692
- Janus Fund (JANSX): 744
- Fidelity Capital Appreciation Fund (FDCAX): 758
- iShares FTSE/Xinhua China 25 Index Fund (FXI): 1,549
Trucost also does an interesting job of calling out sector-specific performance across funds. Socially responsible funds (SRI funds) had the lowest aggregate carbon footprint (226 tons / $ million revenue), while country-specific / regional funds had the highest (460 tons / $ million revenue).
Even within a sector, though, performance can vary greatly. Take the SRI category, for example. Of the 16 SRI funds reviewed, the lowest-carbon fund is the Ariel Appreciation Fund, clocking in at 98 tons CO2 / $ million revenue, while the Sentinel Sustainable Core Opportunities Fund produces a whopping 692 tons CO2 / $ million revenue! Why the difference? According to Trucost, the Sentinel Fund is invested in some high-carbon utility and and industrial stocks (ConocoPhillips and Devon Energy among them, according to Sentinel’s latest annual report). The fund’s holdings must be sustainable in other ways, but certainly not in relation to climate change!
So how can you use this information to aid in your investment decisions? Right now, you can invest in (or not) the funds specifically called out in the report. However, a number of fund managers are likely to launch carbon-related investment products in the US. Standard and Poor’s now publishes the US Carbon Efficient Index, which attempts to mimic the returns of the S&P 500 via a basket of low-carbon companies. The aggregate carbon footprint of the companies in the index is about 50% of that in the broader S&P 500. It shouldn’t be long before mutual funds based on the new index appear in the market. That is, if there’s a market left to appear in!
Popularity: 3% [?]
March 24th, 2009
Eco-home Makeovers: Green Irene on the Scene
Well thank goodness someone has seized upon this huge market opportunity! Here are Low Impact Living we’ve been talking for years about the need for a national, high-quality service that provides in-home green auditing and consulting services. And we’re thrilled now that Green Irene is on the scene.
Green Irene was started in New York but they now have over 300 independent green consultants all over the United States. A consultant will come to your home, and advise you on how to save energy, cut your water use, save money and live a healthier life as well. The home makeover costs $99 and takes about 60-90 minutes. At the end of their review of your home they will give you a Green Home Makeover Report and a Family Action Plan– so that you can jump into making positive changes right away.
Green Irene is doubly brilliant because they also offer Green Office Makeovers. We hear from people all the time who want to know how they can go green at the office– and now they can have a Green Irene specialist visit their office and help them make smart changes.
We are contacted all the time here by people who want to become green consultants and they don’t know where to start– well now we can direct them to Green Irene. The company provides extensive training for its consultants, so that anyone can become a green home expert. To learn more about becoming a green consultant with Green Irene, click here.
Popularity: 3% [?]
March 20th, 2009
10 Myths About Sustainability
In a recent article for the Scientific American, Michael Lemonic wrote about the Top 10 Myths About Sustainability. The article is a great reminder that we still have a ways to go - not only in our understanding of what sustainability is, but in how to live a more sustainable life. The following is a summary of Lemonic’s Top 10 Myths. (more…)
Popularity: 6% [?]
March 9th, 2009
State of Green Business 2009: Your Eco-biz and the Environment
Got a green business — or thinking about starting one — in this crazy economy? Then you’re likely busy doing a whole bunch of research on green businesses and the green market — and you’ll be happy to know that State of Green Business 2009, a FREE 62-page report, came out just last month!
Published by green business guru Joel Mackower and the editors of GreenBiz.com, State of Green Business 2009 lets you in on the 10 trends of 2008 — and the 20 indicators that “in aggregate, provide a picture of U.S. companies’ environmental achievements,” according to the authors.
The details are eye-opening — though if you’re looking for specific how-tos on making your green business successful, you’ll be disappointed. State of Green Business 2009 is less about how you can make your green business succeed and more about how green business is (or isn’t) helping the environment. The report’s muted vibe is this: “Ask not what your green business can do for you, but your green biz can do for the environment.”
That’s not to say that the report won’t be helpful at all for your green biz endeavors. After all, we need to take a good solid look at what’s happened to get a glimpse at what may be ahead. This studying the past aspect is where the report’s most helpful. State of Green Business labels each of its indicators with swim, tread, or sink icons, letting us know at a glance what’s going well and what isn’t.
What’s hot? In 2008, clean tech investments got twice the investments they did in 2007, among other good news. What’s not? Greenhouse gas emissions are still going up, though Obama might turn this sad trend around in the coming years.
But if you’re a green business owner or owner-to-be, what you’re interested in is probably less what happened last year as what will happen this year and the next. Unfortunately, the report’s rather low on conclusions. Makower takes the easy way out, ending his introduction to the report with a serious of yes-no questions:
“Are we moving far enough, fast enough? Does the ever-growing green activity in the business world represent a true transformation, one capable of adequately addressing pressing issues like climate change, air quality, the loss of species, and the looming water crisis? Or is it merely nibbling at the edges of the problems?”
These pressing questions are answered only with a vague statement: “Reasonable minds can justifiably argue both sides. The coming year will be a critical one for the future of green business and, by extension, the future of the planet.” Makower’s bloggy summary of the report’s highlights offers an even vaguer “We find ourselves in uncharted waters” — though Makower does say he fears “Optimistic as I am most days, I fear that the answer tends more toward the latter” of the options in his series of questions.
Read the full report to find out how the State of Green Business is today, on everything from employee telecommuting to packaging intensity. If that’s not enough, watch the videos from the State of Green Business Forum, an event held in conjunction with the debut of the report, to hear green business experts elaborate on these pressing eco issues. Best of luck with your eco-entrepreneurial endeavors!
Popularity: 2% [?]
February 26th, 2009
Buy Green: Vote with Your Dollars
Considering our country’s current economic woes, it stands to reason that most of us are cutting back on our discretionary spending - in layman’s terms, we’re buying less stuff. And though we’ve been told that buying more stuff supports our economy, it doesn’t necessarily support our environment.
That’s why it’s more important than ever to make those purchases count. Not all companies are created equal when it comes to sustainable business practices, and many people underestimate the power that they have as consumers. And, though November’s elections were certainly historic, your right to vote didn’t end there. Vote with your dollars! Supporting companies that are doing the right thing by adopting eco-friendly practices, or “buycotting”, will help ensure that those companies make it through these tough economic times.
So how do you determine which companies deserve your hard-earned dollars? How do you spot those greenwashers? It’s not always easy, but fortunately there are some resources that can help.
Turn to the Experts
Recently, a couple of studies have been released that identify specific companies as tops in their class when it comes to sustainable practices.
First up, The Global 100 Most Sustainable Companies in the World, a list of publicly-traded companies that best manage the environmental, social and governance risk associated with sustainability. Brought to us by Corporate Knights: The Canadian Magazine for Responsible Business and Innovest Strategic Value Advisors the fifth annual list includes familiar American companies like Amazon.com, Coca Cola, Dell, Nike, and Walt Disney. (Note that these are all large, international, publicly-traded companies – no Tom’s of Maine here!)
Having a bit of info regarding these large companies’ efforts in sustainability can, and should, influence your buying decisions. Drop your laptop in the bathtub? Think Dell. Desperate for a carbonated caffeine jolt? Consider Coke.
But, when you make these purchasing decisions, just make sure that you keep the bigger picture in mind – do you really need a new computer? Updating your old one is a greener option, as is bringing water in a reusable container, washing those old sneaks, or borrowing books from the library – regardless of the sustainability efforts of Dell, Coke, Nike or Amazon. Vote with your dollars when it’s appropriate to do so, remembering that even the “greenest” of products do not actually help the environment – they just hurt it less.
Look for Green Brands
That said, you’re probably thinking, “When I think of a green beverage company, I don’t think Coca Cola, I think of Green Mountain Coffee.” Did I read your mind? Cool, huh? Actually, my source is a recent Earthsense report that takes another angle, examining consumer perceptions of popular brands.
Of 350 companies studied, 35 were singled out by consumers as tops in four categories:
- Sustainable business practices
- Product impact
- Investment likelihood, and
- Recommendation likelihood
The resulting list reads like a who’s who of companies for whom green is a big part of who they are. Topping the list were grocers Whole Foods and Trader Joe’s, both of which achieved high marks on all four measures. Other familiar brands listed as “standouts” include Earthbound Farms, Tom’s of Maine, Burt’s Bees, Kashi, and Fresh & Easy. Google and Yahoo also made the list. You can download the entire report from GreenBiz.com.
On the flip side, check out Climate Watch’s list of “Climate Laggards” – those who are behind the curve on corporate responsibility and the environment. Who’s on it? Exxon Mobile (no surprise there), General Motors, and home-builder Standard Pacific.
Though some carbon-intensive industries are over-represented on the list, some companies (like GM) were singled out due to their total inaction, as they lag behind their competitors, are unresponsive to investor concerns, and fail to report their environmental impact to the public. Sounds like the trifecta of unsustainable business practices.
Take Stock
According to many analysts, the hard-hit stock market is a great place to pick up some investments on the cheap. If you’re trying to live a green lifestyle, don’t you want your investments to reflect your values? Research continues to show that companies that are strong on sustainability outperform their counterparts financially.
If you’re looking to buy stock, or just want to find out more about a particular company’s environmental performance, check out the Interfaith Center on Corporate Responsibility’s “climate risk profiles”. Covering more than 150 companies, the profiles are particularly useful because they compare companies within a sector. For more on green investing, check out last year’s post on the topic.
Buy Used Stuff
Supporting companies that get it is important when you need something new. But what if you need something that’s just “new to you”? I’m a big proponent of thrift stores, garage sales, antique stores, libraries, Craigslist, borrowing, lending and dumpster diving (OK, so I’m not quite that hard core). If there’s a way to get it used, do it. Not only will reusing or recycling something keep it out of the landfill, but it will avoid the environmental damage done by a new product, from raw material extraction to manufacturing to shipping and finally, disposal. Plus, it’ll be easier on your wallet.
However you choose to go about finding the things that you need to get through life, just keep in mind that you have a lot of power in your bank account, even if your balance doesn’t make you feel so powerful.
Popularity: 4% [?]
