"GREEN" is everywhere these days, and its message of eco-sustainability, a cleaner environment and healthier living is permeating the country from Main Street to Wall Street to Madison Avenue. It's seeping into our pop culture-Al Gore wins an Oscar for a dire film on global warming, while Willie Nelson gets plenty of ink (ideally soy-based) for fueling his tour bus with kitchen grease-based biofuels.

And it's increasingly part of our consumer culture, with a myriad of products and services ranging from organic baby wipes to so-called green mortgages aimed solely at green-certified homes, not to mention busy checkout lines at Whole Foods and solar panels sprouting up on rooftops.

Whether you pooh-pooh the science behind global warming or embrace the message and want to do your bit to help the environment, green consciousness is the global movement of the early 21st century. The ramifications from investment and philanthropic perspectives are profound, and high-net-worth individuals are uniquely endowed with the resources to make a big difference in the movement both from planetary and pocketbook perspectives.

"Ultra-high-net-worth people can see the power of their philanthropic dollars to do things that wouldn't get funded otherwise or to do something that's innovative and moves the needle of change," says Elizabeth Snyder, the philanthropic director at GenSpring Family Offices, a multifamily office with locations mainly along the East Coast.

On the investment side, opportunities abound with the proliferation of public- and private-equity offerings in such areas as renewable energy, clean tech and resource management. "A lot of our advisors have likened this green phenomenon to the beginning of the tech boom," says Alex Null, vice president, mutual funds and annuities at SunTrust Investment Services. "We're trying to get in on the ground floor and add value through allocations."

Give A Little Bit

Snyder says many families she works with at GenSpring are "entrepreneurial-sourced" families who relate to the idea of using philanthropy as an extension of their other ventures and investments. "One of the things I hear from clients is that they're businesspeople, but they believe that economic development and environmental protection aren't mutually exclusive," she says. For some, that could mean including green space and green building techniques in a development project.

Snyder, who works in Atlanta, cites one client in Georgia who recently built a vacation home with solar panels and a specially designed ground cover that recycles and retains ground water-an important feature given the Southeast's recent severe drought conditions.

Part of Snyder's job is to help clients find the best way to realize their green ambitions, whether it's through advocacy, land donations to a land trust, education or whatever. "It's about connecting them to the best partners so they can be the most efficient," she says.

Snyder says that land trusts and conservation easements generate lots of interest among GenSpring's clients. They want to protect a particular region where they live or take vacations, or they want to benefit a particular region of the country. Of course, the state and federal tax benefits of easements can make them a good option, too.
Another popular green option for wealthy families is a public-private partnership. "A lot of our clients support green-space projects by partnering with government entities," Snyder says. "I think there's a trend among the ultra-high-net-worth to fully utilize public money to realize the leveraged power of their money to help further a particular project."

An example is the Beltline project in Atlanta, a huge redevelopment plan that combines green space, trails, transit and new development along a 22-mile stretch of railroad encircling the city's urban core. The project is expected to cost $2.8 billion over 25 years, and is being funded through a combination of federal, state and local money, along with private philanthropic contributions.

Not all of GenSpring's clients are gung-ho about the environment, but many are. "The environmental movement within philanthropy is definitely a growing trend," Snyder says.

Give Even More

A little green can sometimes spice up traditional philanthropy. "I'd say any nonprofit paying attention to environmental issues is getting an extra look from clients," says Page Snow, senior vice president of foundation services at Foundation Source, a Fairfield, Conn.-based provider of outsourced support services for private foundations. "It adds cachet to even ordinary funding opportunities."

Snow describes one client who was asked to provide a standard capital grant to a local YMCA. The client wasn't interested, but said she'd help build a new children's center at the Y on the condition it be built with environmentally friendly features. The woman personally got involved in choosing the paint, carpet and air ventilation system, as well as the recycled gear for the playground. Ultimately, the woman provided more money to the Y than the original capital request.

"It's a great example of how letting funders do something environmentally friendly can take a traditional grant that might be uninteresting and make it something very enticing," Snow says.

Another way to put large sums of money to work into charitable endeavors is through program-related investments (PRIs). These are a hybrid of investing and philanthropy where foundations can help a particular organization while potentially realizing capital returns. PRI financing methods can include loans, loan guarantees, linked deposits or equity investments in charitable organizations or in commercial ventures for charitable purposes.

One Foundation Source client was interested in a new start-up venture in San Francisco called City CarShare, a nonprofit organization that aims to reduce car ownership and its attendant problems, such as congestion and costs, by providing short-term rentals for as little as $5 an hour, plus 40 cents a mile. Snow said the client liked the concept for environmental and philosophical reasons, but he also saw a business opportunity. The organization needed seed money, so the client's foundation made a PRI where he gave them start-up funding and they paid it back with a low-interest loan. (PRIs aren't intended to be a way for donors to make a financial killing-they must abide by tax laws regarding charitable intent and the relationship to a foundation's program.)

Another charitable tool for foundations is mission-related investing, which is a way to invest money for both social and financial returns. By law, foundations each year must spend 5% of the value of their net investment assets on grant-making for charitable purposes; the other 95% can be invested in various investment options that typically run a wide gamut and don't need to be charity-related.

The goal of mission-related investing is to invest some of the other 95% in for-profit ventures that are aligned with a foundation's overall mission. Snow says one of her clients was a $30 million foundation with a stated goal to invest in environmental causes, and when she first got involved with them it had about 12 board members giving to various environmental causes in their local area.

"These were small projects that didn't have a strong focus," Snow says. After it saw Gore's film, An Inconvenient Truth, the foundation was inspired to devote the 5% of their distribution requirement to climate change.

With that in mind, Foundation Source located an expert (a former Clinton Administration official who worked on global warming policy) to sharpen the foundation's focus in that area. He directed them to a funding opportunity in an underserved area-making utilities more efficient-where they could have a significant impact on climate change by reducing greenhouse gas emissions.

That area is now the foundation's sole grant-making focus. In addition, Snow says they've asked their investment advisor to invest some of the remaining 95% in environmentally related opportunities.

Green Investments

On the equity side, green investing is an area filled with hope and fraught with hype. "The trend is unstoppable," says Rafael Coven, managing partner at Cleantech Indices, a developer of indexes tracking green tech stocks. "The demand for clean water and energy, less pollution and more efficient agriculture won't stop given the pressures the world faces."
Green technologies is a vast sector that includes renewable energy such as wind, solar, geothermal and biofuels, along with clean technologies that help businesses boost performance more efficiently and with less environmental impact. Clean tech runs the gamut from smart meters that efficiently regulate electricity and water usage to processes that convert manure into energy.

Hilary Kramer, president of Green Tech Research, a hedge fund focused on alternative energy and clean tech investing, says her fund's investment universe comprises 515 companies with a combined market cap of $3 trillion. She sees tremendous global growth potential, and some of her favorite plays are companies that provide unsexy-yet vitally important-products and services. One example is Orion Energy Systems, a maker of lighting systems for large commercial and industrial warehouses that are 50% more efficient than standard lighting. Two other favorites include Veolia Environment, an energy, waste and water management company; as well as Metalico, whose scrap metal recycling business provides valuable raw material for the steel industry.

"We're at the very beginning of this cycle," says Kramer about green tech. "But it will be very volatile, and a lot of people are going to be knocked around by it. Some companies will go down and never get up and others will become powerful leaders."

Indeed, painful volatility recently wacked the stocks of many renewable energy companies-particularly solar stocks that soared in 2007, only to crash earlier this year before rebounding somewhat off of their gut-wrenching lows in the spring. Solar, along with wind and geothermal energy sources, relies on government subsidies to be reasonably cost-competitive with traditional energy sources such as coal or hydro. Pollution and energy security worries make renewable energy a viable long-term play, but it'll likely be an evolving space.

For example, last year she saw a glut of initial public offerings for solar companies making photovoltaic (PV) panels that use polysilicon cells to convert sunlight into electricity. Coven believes that 80% of solar PV companies will cease to exist within a decade because they're essentially pursuing the same undifferentiated business model for a commodity-type product with little pricing power.

"The key is finding differentiated products with clear competitive advantages," says Coven, whose index underlies the PowerShares Cleantech Portfolio exchange-traded fund. He's particularly skeptical about ethanol and so-called clean coal technologies due to concerns such as costs, technological feasibility and the moral dilemma of using food for fuel.
But Coven's dislike for ethanol isn't shared by the likes of Bill Gates and prominent Silicon Valley venture capitalists who have invested in the space, along with green tech in general. Coven reports that clean tech alone is now the third-largest venture capital sector, but he cautions that not all of those investments are chasing good ideas. "There are a lot of big-name VCs jumping into this space who I think are going to get burned," he says.

Coven advises potential investors in green-related projects to carefully vet the track records of the venture capitalists behind them to make sure they've made money in this sector. Better yet, he says it's a lot easier to go the private-equity route where investments are going into proven companies rather than speculative ideas.

One such private-equity vehicle is Environmental Capital Partners, which last year formed a partnership with New York Private Bank & Trust to invest $100 million in green companies ranging from renewable energy to eco-friendly furniture to hazardous waste management. One area they like is the green-built movement, which "should continue to see outsized growth despite an overall slowdown in the construction industry," says Christopher Staudt, a principal at the firm.

They also like companies focused on energy efficiency. "Alterative energy generation has received significant media attention," Staudt says, "but energy conservation is arguably more important from an environmental viewpoint and promises to be an attractive segment for investors."

A Different Shade Of Green

Joseph Janiczek, a wealth manager in Greenwood Village, Colo., sees increasing client interest in the green movement and he believes it will be a long-term trend, but he's not necessarily jumping on the bandwagon when it comes to green investing. "Socially responsible investing can be hazardous to your portfolio," he says.

Janiczek will sprinkle green-related stocks in client portfolios, but more than anything he sees some of his entrepreneurial clients more interested in incorporating green practices into their business ventures, such as a developer who specializes in green-certified buildings.

"We have a broad scope when it comes to wealth management that looks at entrepreneurial activities and business ventures," Janiczek says. "That's where we're seeing the movement toward green, not so much as a sector play. Going green is not the aim; the aim is to live richer and longer. The opportunity to go green is sometimes aligned with that, and it's a trend that's developing with more speed."