Whether you believe humans are responsible for global warming or not, it's a no-brainer that we all should avoid polluting the only Earth we have, for the sake of wildlife, the sake of our personal health and our children's future. No hype there, for sure. But when companies start selling "carbon offsets," it makes my skin crawl.
Do you really think you're saving the environment when you buy a shirt or a bra or whatever product comes out today that promises a donation to plant a tree for your purchase? If manufacturing that all-too-often overpriced item wreaks such havoc on the environment, then maybe they shouldn't be making it in the first place. And I'm pretty sure the tree that's planted, if it in fact is planted, is no where near your home. You know who it really helps? The manufacturers who are lining their pockets with your good-intentioned dollars.
Earlier this week, I wrote about botanical laundry detergent. Notice it wasn't one of those overly priced ones, and while I like the fact that it doesn't muck up the planet (which, again, we should all be consciously avoiding), I liked it mostly because it won't expose my family to chemicals, allergens and synthetic fragrances. Yuck.
Now we're seeing an uptick in investing in stocks for wind, solar and other environmentally conscious securities. All good causes, to say the least, and some of these could be great investments, but watch the fees, which can be crazy high and which are flying under the radar because, if you're not careful, they can guilt you into trust and acceptance.
"As we wring our hands over another Earth Week amidst the Gulf oil spill anniversary and the Japanese nuclear crisis, it's hard to remember that we can't buy or invest our way out of our current predicament," a Reuters report points out this morning. "I think we need a moon-program-sized clean energy and resource preservation plan, [but] it won't come by buying green products and investments." Amen to that.
The Sierra Club Green Alpha Portfolio uses emotionally charged keywords as selling points: "clean energy," "sustainable," "zero-carbon transportation" and the like. And, the Reuters article points out, it returned 6.44 percent since its Dec. 27, 2010 inception. That's better than the 5.85 percent returned from the Russell 3000 Index. But Green Alpha is charging a 2.95 percent annual minimum management fee for investments of less than $50,000 (1.79 percent if you invest $100,000 or more) and there were other transaction charges, as well, for the privilege of allowing Charles Schwab to manage the account (you don't get a choice with that.) So it's not the windfall it appears to be on the surface.
Reuters digged in, bless their hearts, and uncovered this little tidbit: "The manager stated in an email that “only our current clients have access to all of the securities in the portfolios,” although they seem accommodating in that “management fees are negotiated on a client-by-client basis.” Hmm.
There are plenty of environmentally conscious stocks that play nice, but you should be your own advocate and read all the fine print before handing over your hard-earned money and trusting blindly. Ditto with those "buy this and save the planet" products. And paying for carbon offsets? I don't think Al Gore will be solving the problem anytime soon.