208-596-6500 | In my last “ABC’s” post, I opined about what constitutes a “green” business. Now I want to start looking at “green” investing.
What is an investment? This is such a vital question. There’s a lot of fluff around this term. In the broad use of the word, an investment is anything you put out today in the hope of gaining some benefit later. For example, you might “invest” your time and money planting tomatoes today in the hopes of eating them later.
In business, the word “investment” has a precise meaning. An investment is the point where the interests of an entrepreneur intersect directly with the interests of an investor. The investor moves money (energy, status) into the account of the entrepreneur to support the entrepreneur’s leadership and goals, and to “invest”, to get something back later – not only good deeds, but more money than was provided.
The amount of money that comes back later is called the Return on Investment, or ROI. In finance terms, to be precise, money given without any hope of financial return should be called a gift.
So if you give money to a green charity, you are hoping for a return of good, but not a return of money. If you provide money to an green entrepreneur, you are hoping for both – good deeds and a good return of money. For the purposes of my ABC’s column, a green investment is something that aims to do a lot of good for the environment, like a green charity, but also holds strong potential to provide a financial ROI.
The contract that commemorates a financial investment of money in a for-profit business is called an “investment product”, or even more precisely, a “securities offering document”. These terms provide the foundational understanding of finance, the specifics of how and why a businesses might raise investment capital while complying with the laws that shape the very flow of economy.
Nice writing style. I will come back to read more posts from you.
Susan Kishner