Your money may not buy you sympathy when you hear about the environmental and social crisis facing the planet, but, provided you set up the appropriate accounts and are ready to pay regular rates of interest, it’s possible to grow your money and make a real difference. Experts say we need to be a little selfish and make private investments for the planet. They add that making your savings work for you is one of the key ways. The new tax law introduced in April last year allows citizens to set up their own investment accounts where they can save for long-term investment with private firms, philanthropic organisations and governments. Many people who benefit from “green taxes” like stamp duty and business rates are also very reluctant to pay for services that are claimed by the government, so they can opt for private private investment firms where they can get the best return and avoid the expenses associated with the government. “It is personal and it is private,” says Kelly Nieuwenhuizen, head of sustainable investing at Aberdeen Asset Management. She suggests there are good investment opportunities in the UK, with companies like Amazon, BAE Systems and GDF Suez all raising money through those private investment plans. “Of course, they all need the government to keep the market going and it may never happen, but they all have very good prospects and investors who have faith in them will do quite well,” she says. It is also quite possible to invest in a diversified portfolio of sustainable companies, which blend sustainable technology and investments and guard against environmental risk. Websites like pension trackers, which tie into pension schemes, and products like development bonds, that provide investment opportunities for the government where direct loans are issued to companies with projects deemed crucial for tackling climate change, can help you build a diversified portfolio in a way that works for you.
Tom FitzGerald, a senior consultant at Hurwitz Associates and who previously worked for the World Bank in Geneva says it is important to first understand the management procedures of the private investment companies and how your money will be protected against environmental and social risks as it moves towards greater responsibilities for dealing with future economic problems. “The sites we used to have back in the Bank of England and the World Bank about climate risk are more relevant now than ever. “There are possibilities as well as challenges for investors.” You can either take a wholly private money that you invested in the corporate sector and invest it into other companies and infrastructure projects, or simply invest in all the different types of debt and equity holdings that the private investment companies have available. In the case of government bonds, you have the right to support or reject them as they are directly linked to government borrowing requirements and how they are distributed among various ministries of government. However, while government bonds can provide good returns, in many cases you may not be happy with the asset allocation that the private investment companies offer you.
If you don’t want to be tied up with debt, you may want to look at certain kinds of projects that are funded by private investment companies and alternative finance. They can either sit alongside conventional credit, or can be a complementary proposition and provide an attractive option. Where you invest might also have an influence on the destination of your investments in the long run, with some countries having ambitious plans to reduce energy use and help tackle climate change. You could also make your investments in other areas like renewable energy sources and the eco-friendly carbon footprint of various products. But as the Guardian said recently, not everyone thinks that private wealth is a way to solve the problems of climate change.
This story was produced by the BBC with funding from Carbon Tracker.