Green Investing is a commonly used term to describe an investment that seeks to maximize return on capital AND replace a traditional source of energy. It is often used interchangeably with Sustainable Investment and Socially Responsible Investment but there are slight nuances between the different phrases.

An investor can invest in any company or project where he believes that his capital will be returned with growth and minimal risk. A green investment is an investment made into a company that seeks to support or replace a traditional energy source with a renewable energy source.

Traditional energy sources like coal, natural gas, & oil pose problems for society in many different ways. There is a limited amount of these resources inside the earth’s crust. There have been many debates over the past decades about ‘peak oil’ and when we will have exhausted most of our planet’s oil supply but everyone agrees that some day it will run out. The same is true for coal & natural gas.

Burning coal, crude oil, and natural gas is a dirty way to generate power. Whether it’s a cloud of smog floating over a city, or an oil rig pumping millions of gallons of oil into the ocean, these fuel sources create waste that damages our atmosphere, water, and soil.

These natural materials can also be dangerous for companies and workers to collect. Hundreds of coal miners die each year while digging coal underground due to cave-ins. There are also tragic long-term health effects of inhaling coal dust & exposure to burning fuel. Many workers die or are permanently maimed on oil rigs every year. Dangerous work environments and chemical hazards are two of the most common culprits in these accidents.

The reason the world still relies on dirty energy is that it is very inexpensive to create power from these three sources. Coal is the most efficient way to provide power to cities and homes around the world. Gas powered engines are financially efficient and low maintenance, and natural gas is an inexpensive way to provide heat in our homes.

The goal of a green investment is to replace a ‘dirty’ energy source, with a clean energy source that does not cost more money to the consumer.

There are three common forms of ‘green energy’ investments, energy that is not dirty and is not limited in supply.

Wind Power

Wind is used to turn turbines on a windmill which in turn transfers that energy into an electric grid used for powering homes or cities. Since wind is an infinite resource, (it can not be used up) and does not pollute the earth it is a ‘green energy’ source.

Solar Panels

Solar power uses the warmth of sunlight to create power using solar panels. By absorbing a large amount of sunlight and focusing it into a small beam, that energy is used to power everything from traffic lights to power plants. It is currently an expensive technology, and less than .02% of the world's energy comes from solar.


Hydroelectricity uses the gravitational force of falling or flowing water to spin turbines, that in turn generate electricity that is transferred to a grid. Hydroelectric power plants are commonly located inside dams, along rivers, on coasts with heavy tides, and even in underground streams or rivers. Hydroelectricity accounts for about 20% of ' output.

If you’re a ‘green investor’ you’re trying to make a profit on your investment and supporting companies that create clean, sustainable energy.