As the world increasingly comes to terms with global warming becoming a reality, investors are scurrying to catch the green wave by buying shares in companies with a strong environmental commitment.
This is great news.. or is it? It depends.
Being in the tech industry for some years now, I’ve watched many IPO’s come and go and never participated, even though I knew that there was a great deal of money to be made. For example, Google shares – that was a slam dunk. Google released shares at $85 each under 3 years ago. Those shares are now worth $458 at the time of writing.
So why didn’t I take the plunge?
Shareholders, generally speaking, don’t give a damn about a company or its ethics, only the bottom line. Shareholders expect their share portfolios and dividends to increase in value each year. If one year their shares or dividend increase in value by 10%, then more than 10% is expected the next year. Much of this unreasonable expectation of unsustainable returns has its roots in the Internet, where garage operations shot to stardom sometimes literally overnight.
With the unreasonable expectations in place, companies are pressured to implement shortcuts at times and resort to aggressive tactics in order to increase profits, perhaps trimming what they term “fat” from one area in order to continually and increasingly feed the belly of its shareholders. Sometimes this “fat” can be humans.. or the environment.
Satiating shareholders can be rather like feeding goldfish, who will eat themselves to death if given the opportunity.
It’s the way it has always been.
While it’s wonderful to see investors getting into green companies, the question needs to be asked.. how many of these people care about what the company is doing, or are they just in it for the money? If it’s mainly the latter, then the company is in trouble; particularly if the board doesn’t have the intestinal fortitude to maintain ethics and environmental concerns over the quick buck.
This green investment rush will be the basis of a major surge in greenwashing incidents in the years ahead; the practice by which companies promote a green message to the public, while engaging in environmentally unsound practices and abusing human resources.
I’m certainly not trying to turn anyone off from buying shares in green companies or labeling all shareholders as being sharks, but it’s something to bear in mind when choosing a green investment portfolio you’re considering keeping for the long term – don’t just look at the company and its products, but the board of directors and major shareholders… and continue to monitor.