How Exactly Do Green Investments Pay Off?

Nobody needs to argue the need for further green investments. Environmental reports have made us aware of pollution levels and ecological degradations around us. In the UK, London’s long history of air pollution, that started with the Industrial Revolution, has been linked to cardiorespiratory conditions and premature death. Mortality rates, linked to air pollution, peaked between 1840 and 1890. It’s no surprise that during that time, London was often referred to as the Big Smoke, one of the worst polluted cities in the world in the late 19th century. You will be pleased to know that early green investments have helped curb out the air pollution, bringing levels of small particles in the air lower than during the Industrial Revolution. When it affects our health, investments that reduce pressure on the environment make sense. 

But as a financially-savvy individual or business owner, green investments can come at a high cost. In financial terms, the investment is designed to generate a measurable and quantifiable profit. Do environmental investments have a high return for the household and a small business? Indeed, while we understand that preserving and protecting the future of the planet is essential. But how does it affect the future of your finances?  

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A future-facing e-car

Electric cars have a reputation for being a lot more expensive than fuel-powered vehicles. But, financing options, deals, and offer packages are making alternative fuel models available to a variety of budgets. Additionally, it’s fair to mention that new KIA cars with electric processes come at a similar price as more traditional models. The bottom line: electric cars are not a novelty anymore, and the price reflects the tech progress. 

For drivers, it makes sense to consider investing in a non-fuel vehicle that is better for the environment. From a financial perspective, the cost differences are as good as gone. Road taxes for electric cars are non-existent., which can save you money every year. We can also expect future air pollution taxes and policies from governmental agencies as manufacturers stop producing fuel-powered vehicles. Switching now will avoid further costs too. 

Sustainable bonds are a thing

Amateur and experienced investors are the first to have spotted emerging green opportunities in the stock exchange market. One of the most significant challenges of bonds is the constantly fluctuating price. When you build an investment portfolio with bonds, you know that you can’t afford to miss industry news that can affect the value of your portfolio. While green bonds do follow similar principles, the trend for environmentally-friendly investments is here to stay. The impact of green initiatives is growing, which makes fixed-income green bonds a safer alternative to other stock exchange markets. Another advantage for investors with a limited budget is that most green bonds come with a tax incentive, making them a profitable choice. 

Some key figures to know about green stock exchange markets: The first green bond was issued in 2009. Ten years later, around $157 billion worth of green bonds were issued in 2019. Converted, it reaches around £124 billion. The trend is growing every year and showing no sign of slowing down. 

Green mortgages are cheaper

If you are in the process of buying your first home, finding the right mortgage deal for your financial situation can be tricky. Depending on how much you can afford, you may have limited options available. Interest rates can be high, which makes it hard for homeowners to manage mortgage repayments along with living costs and house maintenance. Homebuyers are aware that the choice of property will affect their mortgage/ Ultimately, if you opt for more expensive property, your mortgage repayments could be a drain to your budget. However, what many newcomers to the real estate market don’t realise is that green mortgages could present an advantageous solution. 

Indeed, a green mortgage allows you to borrow money for a property with low energy consumption. They are designed to take energy savings into account so that you can repay them more easily. As such, the interest rate is lower than for traditional mortgages. What’s more interesting for homeowners; the value of a high energy performance property is likely to increase over time. 

Going green at home saves money

Green investments inside your household can be challenging to introduce. They require a change of lifestyle, products and services, which not many households are willing to embrace. However, failure to embrace those changes is precisely what makes a green investment at home feel a lot more costly than it is. Imagine that you decide to buy a reusable beeswax wrapping film, rather than the more common cling film. Beeswax films are reusable and biodegradable, making them a safe environmental choice. However, if you continue to use cling film because you dislike the eco-friendly alternative, your investment is a waste of money. If, on the other hand, you decide to embrace the change, you will soon notice that green investments can save you a tonne of money at home. From saving energy to reducing unnecessary purchases, you can recoup your investment in a short time.  

Ethical fashion for the environment

The fashion industry has been criticised for its fast and unsustainable commercial approach. More and more fashion designers and brands are choosing a sustainable alternative. However, if you’ve tried to buy ethically produced garments that respect the environment, you’ve probably noticed a big difference: the price. Eco-friendly and eco-safe clothes come at a high cost that many fashion enthusiasts may not be ready to pay right now. 

The price is, however, justifiable. A fair remuneration system needs to be established for all garment production. This will increase the cost of a single item dramatically. Additionally, sourcing eco-friendly materials and developing green production methods can increase production time while decreasing its volume. Commercially, we understand why sustainable fashion costs more. Investing in a durable piece pays off for the planet. But, it isn’t something that you may notice immediately at an individual level. 

Environmentally-friendly work practices

If you’ve tried arguing for more flexible work arrangements before the COVID-19 pandemic, you have probably found it hard to convince your manager. The coronavirus has forced companies to shut their offices and embrace remote working options. The impact on the environment was significant. Pollution levels dropped everywhere. Working from home does, indeed, make a difference. 

But, companies also realised that their remote teams were just as productive, if not more, than in the office. Studies show that working from home can boost productivity levels, meaning that employees can achieve more at the same time. Additionally, from a business perspective, remote teams can save money on equipment and rent. The real question businesses need to ask is how can they encourage remote work. Indeed, across a whole year, remote workers work 16.8 days more than office-based employees. They produce the same quality of work and save costs for the business. In other words, it’s a green decision that is beneficial for all. 

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Maximising green spaces in town

Towns and urban communities are investing in parks and green spaces, paid by inhabitants taxes and members’ contributions. Now, the most important question that you want to ask is whether your money is spent wisely. How does a park make a profitable green investment?

There are several answers to that question. Firstly, a park provides cleaner air for the population. It is an area without traffic pollution. Studies have demonstrated that a walk in a park can boost your happiness and creativity almost as much as if you lived in the countryside. Spending time in a green environment has a relaxing quality. But don’t be fooled into thinking that these advantages are not quantifiable. Indeed, decreased stress and pollution levels can improve your overall health. The bottom line: When the town pays to maintain parks, the green investment reduces your medical costs. 

Green beauty industry

For investors who wish to invest in business brands and business models, one sector that is booming right now is the beauty industry. In essence, the beauty industry makes pharmaceutical and chemical knowledge accessible to a broad audience group. Unlike the medicated sector that typically needs a prescription, everybody can buy beauty products, which makes it a profitable investment in its own right. Ethical and environmentally-friendly beauty brands are transforming the market and driving revenues. Clean beauty is a growing sector that attracts both customers and investors.  

Boost customer purchases

Last but not least, businesses that support green investments can be slow to notice financial advantages. Saving production costs through reduced energy consumption, for instance, could also reduce your production volume. Yet, there is a significant benefit for a green company. Green makes money because it is compelling to a broad audience. More and more customers seek ethical and eco-friendly companies. Being in a position to display decreased wastes and increased green initiatives drives sales. 

Green initiatives and businesses will become the new normal. While we are still in the process of learning the pros and cons of green investments in the long term, short-term profits can help make up your mind. For individual households, going green can save costs if you are willing to adjust your lifestyle. For businesses and investors, the growing green trend can drive additional value. Going green is the new way to get rich.

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