Be cautious about greenwashing - As an investor, you might think of investing in hydro or solar energy because you feel it will reduce your carbon footprint and enable you to contribute to the environment. Don’t just focus on the organization’s name. By the name of ABC Green Funds, the company may be investing in the oil and gas sector. Conduct research on the fund’s holdings and management to learn more about its mission, vision, and objectives.
Government policies may affect the outcomes - The government policies and regulations in the renewable energy sector are different from other industries. Global climate change, global warming, regulations, subsidies are some factors that affect returns on investment for solar energy and related sectors. Increased demand, commercial financing, and private capital have led to a decline in government subsidies; hence investors no longer find it profitable. However, through ETF, one can get maximum exposure and reduce the risks of investing in a single stock.
Diversify with ETFs and mutual funds - Investing in the retail sector is more feasible for investors due to increased ETFs and mutual funds. If you decide to invest in new energy generation techniques, you’re taking an enormous risk, and it can cause problems for long-term returns. Investing in renewable energy, ETF or mutual funds can help you to diversify your portfolio with a higher risk of investments.
Skip fossil fuels - Before investing in an ETF or a particular company, make sure you conduct proper research. Certain funds might include nuclear energy, but you might want to stay away from it as a socially responsible citizen. Green bonds are a much better alternative because they show your commitment to sustainability, plus you are guaranteed to get returns.
