Environmental investment is a form of socially responsible investing (SRI) where investors focus on choosing investments in companies that support or provide environmentally friendly products or services.
An environmental investor will, therefore, evaluate investment opportunities by reference to their effect on the world’s environmental issues. This frame of reference plays a key role in informing their investment strategies. However, an environmental investor will still be interested in businesses which promises strong financial returns in addition to helping the environment.
The decision-making process for environmental investors usually involves ‘positive screening’ in that they will be looking for businesses that are actively seeking to make a positive and lasting impact on the world’s environment. This different from the ‘negative screening’ used by social investors who simply want to avoid investments that affect the world in a negative way.
Examples of environmental investments are often in the ‘CleanTech’ and ‘GreenTech’ spaces focusing on generating clean energy and reducing pollution.