Making environmentally conscious purchases and investments like ditching single-use plastics, investing in socially responsible funds or switching to solar can save and even earn money. You might think being green is expensive, but it can actually be cost effective.
“The good news is there are enough options so you don't have to compromise on the quality of life to save money and the environment,” said Vikram Aggarwal, CEO and founder of EnergySage, a solar energy company.
Here are three environmentally and socially conscious changes that can improve your finances.
1. Reduce daily waste
Being wasteful can cost you money. People throw away anywhere from $80–120 billion worth of single-use plastics every year according to the World Economic Forum. Single-use plastics are things like straws, plastic baggies and plastic water bottles. For context, in 2017, 1 million plastic water bottles were sold per minute and around 91% of them went unrecycled. Changing a small habit, like using reusable water bottles, will lower plastic waste and save you money over time.
One of the bigger ways to improve your daily environmental impact is changing how you commute, said Sister Pat Daly, a Dominican Sister of Caldwell, New Jersey. She helps manage her congregation’s corporate responsibility and impact investing portfolios.
Driving less can lower your carbon emissions and monthly costs, said Daly. Buying a new car can be a big financial commitment, but an electric car can be cheaper over time, despite higher upfront costs. For example, it costs about $546 per year to charge an electric car driven for 15,000 miles per year while a traditional car would guzzle around $1,255, according to AAA.
If you can ditch your car altogether, try riding a bike or walking. If you live in a city, consider a monthly train or bus pass. Your company might offer commuter benefits to offset the cost.
2. Upgrade your home
There are a number of ways you can make your home more environmentally friendly.
One of the biggest ways you can improve your home’s energy use and save on monthly bills is improving its insulation. For example, if you rely on an oil heating system it can cost thousands of dollars a year to warm your home, said Aggarwal, who recently insulated his Massachusetts home. Insulating a home will cost you upfront, but decrease your monthly bills in the long run by letting less heat escape, he said. “Our energy bills dropped about $1,000 a year.”
Another way to reduce your energy bill is using solar energy. Installing solar panels can be costly upfront, but you’ll start seeing the payoff after 18 months of use, said Aggarwal. If you don’t want to maintain your own panels, you can subscribe to a local solar farm.
As of June 2020 39 states have local community solar farms you can subscribe to. The National Renewable Energy Laboratory has a list of community solar farms you can browse through. EnergySage launched its own community solar farm marketplace that runs in nine states and uses your zip code to find farms.
You’ll still need to get some of your energy from your typical utility provider, but your monthly bill will ultimately cost less because you’re sourcing part of your electricity from a solar farm. You'll pay around 10% less on your monthly utility bills, lower your city or town’s energy consumption and qualify for tax breaks.
“Solar farms fall in the category of a low-effort change with a really good financial feeling,” said Aggarwal.
If you don’t want to commit to large upgrades, you can make smaller changes like installing a smart thermostat and energy efficient light bulbs. Smart thermostats can be particularly cost effective because you can control it from anywhere, said Aggarwal.
3. Adjust your portfolio
It’s a big misconception that socially responsible and environmentally conscious investments don’t pay out.
“That myth has to be squashed,” said Daly. “Not only is that not true, but companies that understand their climate and social risk within their supply chains are better organized companies.”
In 2015 a study published in the Harvard Business Review showed socially responsible investments outperform their competition and are more profitable in the long run. According to the study, companies that focus on doing good are rewarded over time and investors can make more money the longer they are invested in socially and environmentally responsible companies.
“It’s not just the financial performance, we also want to see the environmental and social performance,” said Daly.
Socially responsible investment strategies consider a variety of factors including a company’s ethics, sustainability and environmental impact. One way of investing responsibly is with environmental, social, and corporate governance (ESG) funds. For example, you’ll see renewable energy companies like solar or wind power instead of something like tobacco or guns.
Daly recommends researching different types of socially responsible investments and talking with a financial adviser before making moves.
“First off, don’t do it on your own. There are great resources out there today — much more than we had in the past,” she said.
You can find a mix of government organizations and religious congregations that have free resources on socially responsible investments. She suggests the Forum for Sustainable and Responsible Investments and Interfaith Center of Corporate Responsibility. Finding a financial adviser can further help you align your values with your investments.
Image: Anthony Intraversato