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."