Environmentally safe investing or “green” investing refers to someone buying shares in companies that are environmentally friendly or support social causes. An individual may not only want to invest in companies that are actively working to solve the most urgent environmental problems with issues like air pollution control and prevention or recycling, but also in companies that have a proven record of positive environmental performance.

Ron Wiser, Certified Financial Planner and Owner of R.B. Wiser Associates Financial Planning, says there are a number of mutual fund companies that have some socially conscious funds where the company’s environmental record is strongly scrutinized.

The problem today, according to Wiser, is that the company an individual might initially invest in may change because of a buy-out or merger. “We’ve had clients in the past who have wanted to do environmentally safe investing and they bought stock in companies that at the time were environmentally safe, but it got bought out by somebody,” Wiser says. “So all of a sudden you go from what might be considered a very socially acceptable company to one that isn’t.”

That having been said, Wiser pointed out there are mutual fund companies out there who assure their clients that they’re constantly monitoring and will remove a stock from the portfolio if they think the company has gone over the line, environmentally speaking.

But it isn’t always a black and white issue, according to Wiser. A company that was completely environmentally friendly may inadvertently have had an accident such as a spill or a pipe springing a leak or some equipment breaking. The dilemma then, he comments, is do you remove them from the portfolio or don’t you?

Finding an environmentally friendly company to invest in may not be as straightforward as it sounds. “Today there is so much pressure on all companies to be environmentally friendly that they’re touting themselves as such,” Wiser explains.

“Now I may say I’m the most environmentally friendly power company in the world...but are you or aren’t you?” That’s one reason it’s vital to conduct thorough research ahead of time. You need to make sure you understand investment objectives and prior performance before you invest.

Discover for your own peace of mind that a company isn’t just saying it’s environmentally friendly, but that it’s practicing it in every possible way.

Some examples of socially responsible green funds are Portfolio 21 as well as Winslow Green Growth Fund and Winslow Green Century Balance fund. Wiser said they are run by the same company but with different objectives. New Alternatives and Sierra Club Stock Fund are additional examples. Wiser pointed out that Sierra Club is one of the originals and has credibility in the field. Wiser himself has used Sierra Club Stock for clients in the past. There are also a number of green funds out of Canada, Wiser explained, and they are regulated the same way as U.S. green funds.

The track record isn’t the strongest on green funds, Wiser said, because if you run a screen to filter out funds that aren’t acceptable you may go from 500 stocks in the SP 500, for example, and end up with only 50 stocks you can buy. “Now of the 50, half of them could be losing money,” he says. “Just because they’re green doesn’t mean they’re making money,” he adds. “So you’re really getting down to a very, very small pool of stocks you might be able to really invest into. Which means you would have a tendency to be more volatile because typically a mutual fund would have 100 stocks in it, a green fund might only have 20 or 25, and none of them are very big as far as assets go.”

So although your green investments may not bring you unheard of riches or save the world outright, you will be investing in companies whose products or services contribute to a safer, healthier environment. And that’s a very good thing for everybody.