1. Introduction
Brief description of the unit: In this unit, you will learn the concept of green investments, understand their benefits and learn how to become financially informed. We will discuss the importance of environmental insurance and health issues. By the end, you will appreciate the role of green investments in promoting sustainability.
Competence statement:
After completing this module, you will have the competence to make informed decisions about green investments and their role in promoting sustainability.
Learning outcomes:
- Understand the idea of green investing for a sustainable environment.
- Explore and understand important guidelines on green investing, especially for retirement plans.
- Learn how to make green investments, evaluate their financial aspects and align your personal finances with sustainable practices for a better future.
Keywords: Green investments; Sustainability; Financial literacy; Risk assessment; Sustainable future; Insurance; Autonomy.
Expected time: 6 hours.
2. Introduction to Green Investments
Green investments are financial investing activities that support environmentally sustainable projects, companies or initiatives. These investments aim to have a positive environmental impact, such as reducing carbon emissions, promoting renewable energy and encouraging practices that contribute to environmental conservation and sustainability.
Benefits of Green Investments
Green investments play a crucial role in promoting environmentally friendly initiatives aimed at reducing pollution and protecting the planet. By choosing to invest in green sectors, you are not only contributing to a positive impact on the environment, but also unlocking various financial benefits. Below are the key benefits that green investments bring to your financial strategy:
- Environmental impact
- Potential return on investment
- Long-term sustainability
- Tax advantages
- Ethical investing
Some examples of Green investments are:
Green savings accounts: Consider opening a green savings account at a local bank or credit union. With these accounts, your savings are allocated to environmentally friendly projects and businesses. This way you can grow your money and support the environment at the same time.
Invest in solar panels: Invest in solar panels for your home. Solar energy is not only environmentally friendly, but can also save you money on electricity bills. Many governments offer incentives and programmes to make this investment more affordable.
Community projects: Get involved in local community projects that promote sustainability. This may mean investing more time and energy than money. Joining a community garden or supporting environmentally friendly local initiatives can have a positive impact.
Green electricity/gas companies: Some electricity and gas companies operate as cooperatives. You pay a small fee to join to support the company, but they are competitively priced, use renewable energy, and share profits among members at the end of the year.
Practical material
Activity 1 “Green Investment Reflection Cards”
Activity 2 “Eco-Investment Treasure Hunt”
Presentation
Activities for reflection
How do you think green investments fit with your values and goals, especially as an older adult?
Has the information provided in this unit changed your perspective on investing for sustainability? If so, how?
3. Policies and Regulations
To fully understand Green Investments, we need to take a look at the policies and regulations. Understanding policies and regulations helps us make informed and responsible investment decisions. By supporting these policies, we safeguard our financial well-being and have a positive impact on the environment. Let’s start by defining these two concepts:
- Policies: Think of policies as rules or guidelines established by governments or organisations. These policies are used to create a structured and responsible way of doing things. These guidelines encourage us to make responsible decisions when it comes to our investments, especially in projects and initiatives that have a positive impact on the environment.
- Regulations: Think of the rules as instructions for policies. They tell us how to follow the rules and offer rewards or penalties. They are like a guide to make sure our choices benefit us and the environment. Knowing these rules is important for making environmentally friendly investments, protecting our interests and building a greener future.
Practical material
Activity 3 “Green Investment Explorer”
Board game
Activities for reflection
How important do you think it is for older adults to know about global green investment policies?
As an older adult, what role do you see in advocating for policies that promote green investment?
4. Understanding Risk and Returns
Risks: the imponderables or potential losses that can occur in an investment. This is similar to understanding the unpredictability of a journey you might take. For example, an investment in a start-up company (a new company that focuses on bringing innovative products or services to the market.) working on renewable energy technologies may carry higher risks than an investment in an established solar energy company. It is important to realise that not all investments are equally safe, and understanding these risks helps us protect our financial resources.
Returns: Returns, on the other hand, are the financial gains or rewards that result from an investment. Think of it as the profit you make on your investment you choose. For example, if you invest in a green bond, the return often consists of the interest that the issuer pays over time.
Balancing risk and return is key to making sound investment decisions. It is about finding the right balance between protecting your financial resources and contributing to a more sustainable future. By understanding the relationship between risk and return, we are better able to make investment decisions that are consistent with our financial goals and ethical values.
Understanding risk and return is important to making informed investment decisions, especially as an older adult. Your risk tolerance, i.e. how well you can withstand potential investment losses, is the basis for making decisions that are aligned with your well-being and long-term goals. Diversification, i.e. spreading your investments across different assets, helps to minimise risk as you do not have to rely on the success of a single investment. Consider your time horizon – how long you want to invest before you need your money – as this will affect your ability to weather market fluctuations and benefit from compound interest. Longer investment periods may allow for a higher risk tolerance. Also pay attention to inflation, i.e. the general rise in prices over time, as it can affect your purchasing power and the real return on your investments.
Practical material
Activity 4 “Green Investment Pitch”
Activities for reflection
How important do you think it is to know about global green investment policies?
What role do you see in advocating for policies that promote green investment?
Do green investments have long or short term benefits?
5. Unit in a nutshell
6. Quizzes
7. Further reading
- Maher, Gemma. 5 Best investment platforms for sustainable investments. Compare Investments.
https://compareandinvest.co.uk/5-best-investment-platforms-for-sustainable-investments/
- Stein, Z. (2023, September 29). Green Investments. Carbon Collective.
https://www.carboncollective.co/sustainable-investing/page/23
- Chen, J. (2022, November 1). Guide to Green Investing. Investopedia.
https://www.investopedia.com/terms/g/green-investing.asp
- Invest your values. Five steps to a sustainable retirement plan.
https://investyourvalues.org/action-center/employees
- Smith, K. A. (2021, August 25). Socially Responsible Investing For Retirement. Forbes ADVISOR.
https://www.forbes.com/advisor/retirement/socially-responsible-investing-sri/
- Wallstreetmojo Team. Sustainable Investing.
https://www.wallstreetmojo.com/sustainable-investing/
- Sustainable investing strategies: What are the differences? Logo Triodos Investment Management
https://www.triodos-im.com/knowledge-centre/sustainable-investing-strategies
8. References
Spinaci, S. (2021, February). Green and Sustainable Finance. Members’ Research Service. PE 679.081.
Policy note on Green Investment. (2016, March 7). COP21 Paris Agreement: Business Perspectives on Energy Markets and Green Investment.
UN Environment Programme. Facilitating Green Investment and Financing.
European Commission. Investing in a Green Future. Retrieved from https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/finance-and-green-deal_en#:~:text=Investing%20in%20a%20green%20future,-To%20achieve%20the&text=EU%20countries%20must%20devote%20at,reforms%20that%20support%20climate%20objectives
Inderst, G., Kaminker, Ch., Stewart, F. (2012). Defining and Measuring Green Investments: Implications for Institutional Investors’ Asset Allocations. OECD Working Papers on Finance, Insurance and Private Pensions, No.24, OECD Publishing.
Shuwaikh, F., Benkraiem, R. & Dubocage, E. (2023). Investment in Green Innovation: How does It Contribute to Environmental and Financial Performance? Journal of Innovation Economics & Management, 41, 107-149. DOI: https://doi.org/10.3917/jie.pr1.0137
Corfee-Morlot, J., et al. (2012). Towards a Green Investment Policy Framework: The Case of Low-Carbon, Climate-Resilient Infrastructure. OECD Environment Working Papers, No. 48, OECD Publishing, Paris. DOI: https://doi.org/10.1787/5k8zth7s6s6d-en
Bakken, R. (2021, August 9). What Is Sustainable Finance and Why Is It Important? Harvard Extension School.
