Find the True Meaning of Green

How to investigate the Earth-friendly claims of companies before you invest

Your first step in investigating a company’s green claims should be to review SEC filings (available at www.sec.gov/edgar.shtml). When reading the SEC reports, pay close attention to how long the company has been in business, whether it’s generating revenues, and if its energy-saving concept has been tested and put into production. Avoid companies that look like they’re just spouting green rhetoric, and focus on those that have put their plans into action.

Investors looking to infuse their portfolios with socially conscious stocks, bonds, or mutual funds, should work with a financial professional who specializes in the arena, suggests James Ma, assistant professor of finance at Oklahoma City University. For the do-it-yourself types, Ma suggests resources such as Business Ethics magazine (www.business-ethics.com) and Corporate Responsibility Officer (www.thecro.com), both of which cover corporate responsibility and social investing. The latter ranks the top 100 companies for social performance in eight business categories, including green initiatives. “Look at the firms that have the best green score,” says Ma, “and use the list to create your own portfolio.”

This article originally appeared in the April 2010 issue of Black Enterprise magazine.

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