Are there any investment funds (ETFs or mutual funds) which exclusively purchase municipal bonds in “green” cities?
Most mutual funds seem to profit from unethical companies. Genocide (Lockheed, Google), Climate Catastrophe (BP, ExxonMobil), Slavery (Verizon, Walmart). Murder (UnitedHealth, Dow Chemical).
It seems like municipal bonds might be one of the more ethical ways to invest money.
Specifically, I’m looking to invest in cities that are building-out infrastructure that will lead to an elimination on their dependence on fossil fuels. For example:
- Closing roads and building bicycle lanes.
- Building electrified trains and dedicated bus lanes.
- Passing laws to establish a maximum number of parking spots per person.
- Mixed Zoning (walkable cities)
- Banning fossil fuel power plants while building hydro/solar/wind/geothermal
- Passing laws to heavily tax carbon emissions
- And, of course, cities that invest in education usually get a great ROI.
Cities that come to mind include Paris and New York.
I could try to do all the research myself, and find a bunch of other cities that are on the right path – but that seems like a full-time job, and it’s probably better to just have a fund manager do this research for us.
Are there already any funds that invest in municipal bonds exclusively in “green” cities?
I wish you luck but I’m not hopeful. I’ve gone through a similar exercise of attempting ethical investing, and found the same shortcomings you are.
The problem is that each of us has a different litmus test as to what is ethical or not. As an example, I may want to invest in companies increasing nutrition to nations that are lacking it. Yet because of climate change, it may end up that GMO crops are the only thing that can feed a local population, and there are many that would believe GMO crops are unethical.
I could try to do all the research myself, and find a bunch of other cities that are on the right path – but that seems like a full-time job, and it’s probably better to just have a fund manager do this research for us.
Nearly all the “green” funds I’ve seen have at least one component I ethically disagree with. On top of that, because we are both shopping for such a bespoke product, the expense ratios or management fees will be sky high.
If you do find an answer, please post it. I’ll be watching the thread.
The closet thing I’ve discovered is a bond on the Australian stock exchange, titled ASX:AEBD
It’s invested in the Australian federal government, several provinces of Canada (Ontario, BC, and Quebec), and a few other places I don’t recognize:
The fund manager (Betashares) describes the fund as follows:
AEBD aims to track the Bloomberg Australian Enhanced Yield Ethically Screened Composite Bond Index (Index), before fees and expenses. Bonds in the Index are screened to exclude exposure to activities associated with significant negative environmental, social and governance (ESG) factors
Though not municipal, this same company also manages another fund (GBND), whose description says
GBND aims to track the performance of an index (before fees and expenses) that comprises a portfolio of global green bonds (using the definition applied by the Climate Bonds Initiative), issued specifically to finance environmentally friendly projects
The GBND fund appears to only include the EU and European countries (namely France, Italy, and Germany), but the mention of Climate Bonds Initiative might be key to discovering similar funds that invest in actual green cities’ bonds