How To Put The Green Back In Your Greenbacks

Updated June 2005

A reader asks The Green Guide:

Can you tell me if any of the credit unions or banks are environmentally friendly? If so, who are they?

The Green Guide responds:

There are lots of opportunities to become involved in Socially Responsible Investing (SRI). "Green banking," in which community investing dollars from banks, credit unions, and other organizations are directed to support environmentally beneficial businesses is an increasingly popular way to lend support. "We are definitely seeing an increase in assets going into community development banks and credit unions over the past few years, and a sharp increase in the past two years" according to Todd Larsen, a spokesman for Social Investment Forum, a non-profit that provides research on socially responsible investing. In 2003 assets in community development banks and credit unions totaled $9.9 billion compared with $4.8 billion in 2001.

There are hundreds of Community Development Banks and Credit Unions that lend money to worthwhile projects. The majority of the money they have is invested in low income communities, but increasingly an environmental focus is being added, says Larsen, who also points out that it is safe to put your money into these institutions and that you get market rates. There may not be one in your town, but there should be one in your state.

The following Banks and Credit Unions do have an environmental focus:

Chittenden Bank, Brattleboro VT, www.chittenden.com, 800-545-2236. Invests in local communities supporting conservation and agriculture, affordable housing, business and economic development, community building, and education. (www.chittenden.com/socially-responsible.html)

Self-Help Credit Union, Durham, NC, 800-476-742, www.self-help.org. The community development lender provides financing to home buyers, small businesses, and non-profits. Self-Help says it reaches people who are underserved by conventional lenders--particularly minorities, women, rural residents, and low wealth families.

ShoreBank Pacific, Ilwaco, WA, 877-326-4326, www.eco-bank.com. FDI insured bank committed to environmentally sustainable community development through its lending programs. It supports community efforts to bring together conservation and economic development.

Wainwright Bank of Boston, 888-428-BANK, www.wainwrightbank.com. Bank provides financing for research into the health consequences of environmental toxins and the preservation of wilderness areas. "Green Loan" offers discounted fixed rate home equity loans that reduces energy consumption and helps the environment. Has developed relationships with a number of nonprofits including Earthwatch Institute, Silent Spring Institute, and Union of Concerned Scientists. It uses energy efficient lighting in its corporate headquarters, uses recycled paper, and provides a public transportation subsidy for employees to reduce the use of automobiles. (www.wainwrightbank.com/site/m1C.asp).

Go to www.community.invest.org for extensive lists of "Green" banks and credit unions.

There are also increasing options for investors who want to invest in socially responsible mutual funds. At the end of last year there were 200 mutual funds that were screened for various social issues, compared to about 55 options in 1995, according to Social Investment Forum. What's more, many of these funds are performing well compared to funds that are not screened. "Real World Data and academic studies show that socially responsible funds perform competitively with their unscreened counterparts," says Larsen, who points to a recent study conducted by The Social Investment Forum. According to the report, 71% of the largest socially and environmentally responsible mutual funds in the United States earned the highest possible ratings through the end of 2003 from Morningstar and Lipper.

"Green" Mutual Funds and Index funds:

Domini Social Equity Fund, Domini Social Investments, 1-800-582-6757, www.domini.com. It's the nation's oldest and largest socially and environmentally screened index fund. The Domini 400 Social Index (DSI 400) gained 28.47% in 2003 versus a rise of 28.66% for the S&P 500. On its web site you can search for short social profiles on each of the 400 companies in the Domini 400 Social index.

Green Century Balanced Fund (GCBLX), Green Century Funds, 1-800-93-GREEN, www.greencentury.com. Balanced Fund invests in companies that are environmentally pro-active, responsible or benign. Total returns for last year were 63.5% versus 19.1% for all 537 Balanced funds ranked by Lipper Balance Fund Index.

Winslow Green Growth Fund (WGGFX), Winslow Management Company, www.winslowgreen.com, 866-804-5414. Fund invests in small and mid-sized U.S. stocks. Last year it posted a 91.74% return.

If you want to invest in individual stocks, you should consider contacting a financial planner who specialized in socially responsible investing. You can search for money managers by state in the Financial Services Directory on Social Investment Forum's website, www.socialinvest.org. If you have a specific company you want to research try going to www.domini.com for social profiles of the 400 companies in its index. Remember to do additional research to determine market performance.

Additional Resources:

Co-op America, is a non-profit that educates individuals on socially responsible purchasing and investing. You can purchase a "Financial Planning Handbook" for $9 including shipping by calling 1-800-58GREEN or visiting www.coopamerica.org.

GreenMoney Journal, articles about social investing and links to articles on other major Web Sites, www.greenmoneyjournal.com

Investing For the Earth, www.emagazine.com

SocialFunds.com, a personal finance site that covers socially responsible investing, www.socialfunds.com

Social Investment Forum, provides extensive information on socially responsible financial institutions. Site has mutual fund performance chart and directory of financial services, 202-872-5319, www.socialinvest.org,