socially responsible investing

6 Good Financial Deeds that Can Backfire

Tim Lemke — Thu, 06 Jul 2017 09:00:12 +0000

The saying goes that no good deed goes unpunished. Perhaps there are actually some good deeds that don't backfire, but there are many financial good deeds that can come back to haunt a generous soul if they're not careful. These favors can cost you more money than you expected, or hurt your credit. Before you embark on an expedition of financial kindness, consider these examples of good deeds that can backfire.

1. Co-signing a lease or loan

You may hope to do a friend or family member a favor by helping them buy a new car or land a new apartment. But even if you are assisting someone you know and trust, you are putting your own finances at risk. If the other person fails to make a loan payment or doesn't pay the rent, you will be on the hook for whatever is owed. If you can't make the payments, it will show up on your credit report and hurt your credit score. Even if the other party pays on time, you are increasing your debt-to-income ratio by being a co-signer to any loans, and that can hurt your own ability to get a loan.

If you feel strongly about helping someone out with a lease or loan, it's better to protect your own credit by making them a personal loan, preferably one that won't sink you financially if they don't pay you back.

2. Adding an authorized user to your credit card

It's hard to build credit when you're first starting out. That's why some parents choose to make their child an authorized user on their credit card. This is often a great way for your teen to start building credit.

But there are right and wrong ways to do it. This strategy can backfire financially, especially if you're not keeping an eye on their spending. Missed payments and high debt levels could impact both of your credit scores.

It's best to add your child as an authorized user only if you can closely track their spending. Once they've established that they can be financially responsible, let them get their own credit card if they qualify for one.

3. Donating to a bad charity

It's unfortunate, but every once in awhile you'll hear a story about a nonprofit group that either failed to live up to its mission or was a complete scam from the start. Hopefully, if you've donated to a bad charity, you've walked away with nothing more than a few lost dollars. But in a worst-case scenario, you may have unwittingly contributed to illegal activity.

Before you donate to a charity, take some time to research the organization. Read their annual report and any public financial documents. Ask for their tax ID number and tax forms. Giving money is great, but it's worth taking the time to make sure it's going to a good and honest cause.

4. Lending money to your kids

There's nothing philosophically wrong with helping your kids out with money if you're in a position to do so. But if you're constantly giving them money or bailing them out of situations, you may be throwing good money after bad. Moreover, you're failing to teach them how to be financially responsible on their own.

Even young children should learn the basics of budgeting and saving, and the consequences that come from, say, spending all their allowance on candy and then not having enough money to go to the movies with their friends. Teens should be encouraged to get part-time jobs if possible to help pay for vehicles or college. These lessons give them the skills to be financially independent, making them much better off financially in the long run than if you simply give them cash whenever they need it. (See also: How to Help Your Kid Build Their First Budget)

5. Paying for your kid's college

With college costs rising to outlandish heights, many parents are making an effort to save for all or part of a child's education. This is a generous deed that could result in a child avoiding costly student loans.

It's important, however, to avoid taking away too much from your own savings goals. If you save for your children's college education instead of saving for your own retirement, this may impact the lifestyle you can afford after you stop working. It's always possible to borrow for college, if necessary. But no one's handing out loans to cover your 30-plus years of retirement. (See also: Why Saving Too Much for a College Fund Is a Bad Idea)

6. Socially responsible investing

There are many investors who want to make money in the stock market but don't want to go against some of their core beliefs. They may choose not to invest in energy companies that have gotten in trouble for polluting, for example. Or they stay away from investing in casinos for religious reasons. There's nothing wrong with this, and it's definitely possible to invest well without violating your principles.

But it's important to know how these choices impact your investment returns. For one thing, there are many well-performing stocks that you may find objectionable, so you need to be comfortable with the notion of giving up some potentially big returns. It's also not easy to find an index fund (an often-recommended type of fund that mirrors a particular stock index or market segment) that doesn't own shares of at least one company you might object to, though socially responsible index funds have become more plentiful. Just make your decision to abstain from certain investments with full knowledge of how it might cost you.

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Stocks to Buy If You Love the Earth

Erin C. O'Neil — Wed, 19 Apr 2017 08:00:08 +0000

Socially responsible investing (SRI) isn't a new concept, but it's an increasingly popular one in a world focused more on sustainability. The "green" subsection of SRI is environmentally-conscious investing, geared towards investment in companies that promote environmental stewardship. Think clean energy, sustainable resources, infrastructure, waste management, even consulting services.

Rolling in green doesn't have to mean a choice between fields or bills. You now can do both, all at once if you prefer. We picked five funds that successfully blend environmentally-conscious investments with performance.

(A note on tracking the performance of your "green" investments: Different sectors often use specialized indices to benchmark performance within their niche. Keep that in mind when choosing how to allocate your portfolio.)

1. Pax World Global Environmental Markets Fund [MUTF: PGRNX]

Beloved by the environmental community and investors alike, the Pax World Global Environmental Markets Fund focuses on long-term growth in sustainable investing. The fund evaluates financials along with environmental, social, and governance (ESG) analysis on its holdings, carefully balancing a stringent set of criteria to evaluate investments. And it's paid off. The fund has outperformed global market benchmarks, has an average five-year return of 10.77 percent, and Morningstar gives it a three-star rating. Plus, it's fossil-fuel free.

2. Guggenheim Solar ETF [NYSEARCA: TAN]

Guggenheim Investments' Guggenheim Solar ETF (with a very easy to remember ticker symbol) is an exchange-traded fund perfect for the investor who loves solar energy. The fund invests in solar energy-related segments across the industry, from supplies and lighting to raw materials and installers.

3. Pattern Energy Group Inc Class A [NASDAQ: PEGI]

Pattern Energy Group focuses on independent energy producers, with a specialization in wind and solar renewable energy. Pattern's newest wind farm is an impressive 150 acres, and it's not just the size that's impressive. The wind farm will generate 100 percent of the electricity for Amazon Web Services. PEGI outperformed its peers over a three year period. A lackluster 2014 for the independent energy sector overall hurt performance stats against the S&P 500, but the gains since then are impressive, and PEGI's potential for future earnings looks bright.

4. Etho Climate Leadership U.S. ETF [NYSEARCA: ETHO]

Here's an ETF that focuses on industry leaders with small carbon footprints. ETHO is "the first diversified index ETF that avoids fossil fuel companies and the first public investment product to select equities based primarily on an assessment of an equity's carbon footprint." Etho Capital, the fund manager, also provides the Etho Climate Leadership Index [ECLI], a performance benchmark for companies with the smallest carbon footprints in their industries.

5. Ameresco [NYSE: AMRC]

Ameresco focuses on asset sustainability and renewable energy resources, providing performance contracting and consulting. Helping government entities reduce energy bills helps in part to pay for the work, and they're growing rapidly. Ameresco surged past earnings predictions for 2016, and the company plans to build on that in 2017. A growing demand for services should help them on their path.

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This article is from Erin C. O'Neil of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

A Simple Guide to Socially Responsible Investing

Carrie Kirby — Wed, 25 May 2016 09:30:26 +0000

You may have heard that Stanford, Harvard, and other universities have divested certain stocks from their endowments, such as coal and oil companies. The idea is to make an anti-climate-change statement and deprive such industries of capital.

Increasingly, individuals are also realizing that their investments aren't just a way to save for retirement — but a way to boost companies we like, and withhold support from companies we don't.

But can you afford to think about the social impact of your investments? Before you decide whether socially responsible investing is for you, learn what it's about.

It's Not New

Socially responsible investing, also referred to as "green investing," "sustainable, responsible, and impact investing," or just plain "sustainable investing," was around long before we had these names for it. As far back as 1700s, some American churches urged their parishioners not to invest in slavery, alcohol, or war. During the Vietnam War, thousands divested from Dow Chemical after seeing a horrifying image of a Vietnamese child being burned by napalm. In the 1980s, investor pressure was a major force in ending South African apartheid.

It's Growing

Since the 1980s, socially responsible investing has become a greater part of mainstream investing, with mutual funds, index funds, and other vehicles available to the average investor. From 2012 to 2014, the number of assets managed using these strategies increased by 75% to $6.57 trillion, according to The Forum for Sustainable and Responsible Investment. That's about a buck out of every $6 invested in the United States.

It Screens Out Companies Based on Set Principles

An SRI fund manager doesn't simply decide what constitutes a "good" company based on their personal values. Based on a few main categories — such as environmental impact, social behavior, corporate governance, and the type of product or service offered — managers screen out companies that don't measure up to predetermined standards.

For instance, the TIAA-CREF Social Choice Equity Fund favors "companies that are strong stewards of the environment; devoted to serving local communities; committed to higher labor standards; dedicated to producing high-quality and safe products; and those managed in an exemplary or ethical manner." The Portfolio 21 Global Equity Fund "excludes companies directly engaged in fossil fuel exploration and production, weapons manufacturing, egregious labor practices," and other behaviors.

SRI Doesn't Mean Sacrificing Returns

"You do not have to assume you are making a financial sacrifice if you use mutual funds that do socially responsible investing screening," said J. Patrick Costello, founder of Green River Financial Services.

Socially responsible funds apply similar strategies to those of mainstream funds, with the same goal of maximizing returns. The only difference is that the SRI funds are picking their winners out of a pre-screened pool of companies they consider to be more responsible than the rest.

"Sustainable investing does not attempt to select just a few obscure companies that get a perfect record. We just try to narrow the group of companies, exclude the companies with the worst behaviors, and emphasize the companies with the better behaviors, within realistic bounds," Costello said.

In fact, there is evidence that some socially responsible moves, such as including more women in the corporate ranks, make for better returns, Costello said.

You Probably Don't Need to Change Investment Providers to Try It

If your retirement fund is with Vanguard, TIAA-CREF, or another large investment firm, they probably have one or more socially responsible funds to choose from.

It May Not Be for You

Despite the win-win appeal of doing good without giving up financial returns, not every investor buys into the promise of socially responsible investing. One problem with such funds is that the definition of socially responsible can vary, and any fund available may well include some companies that you personally find objectionable. For example, some funds include McDonald's, a company whose labor practices and history of pushing high-calorie, low-nutrient foods on children turn many socially conscious folks off.

If you choose to pursue socially responsible investing, you still have to do the standard due diligence that you would do before investing in any fund. Ultimately, the decision of how and where to invest remains yours alone.

Are you a socially responsible investor? How do you choose your investments?

This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Investing With Your Values

Matt Bell — Mon, 19 Dec 2011 10:48:24 +0000

If you care about the environment, you’d probably never throw something in the trash that could be recycled. But do you invest in companies that trash the environment? If spiritual matters are important to you, your faith probably influences many aspects of your life. But do you invest in companies that produce products or services that violate the principles of your faith?

Today there are more values-based investment products than ever. However, finding those that line up with your exact values, and that strike the balance between doing good and getting a good return, can be a challenge. (See also: Giving to Charity Is Great. But How Do You Pick One?)

Defining Your Values

The best-known approach to values investing is Socially Responsible Investing (SRI), which is also known as Sustainable and Responsible Investing. Under its broad umbrella you’ll find mutual funds, exchange-traded funds, and investment advisers that aim to generate profitable returns from investing in companies that are not involved in certain activities and/or are involved in others.

For example, today’s SRI investors can choose funds that exclude companies that make tobacco products, alcohol, or weapons; those involved in the gambling industry, hurt the environment, mistreat workers or animals, or infringe on the rights of indigenous peoples; and a host of other issues. By the same token, SRI funds often seek to invest in companies that excel in their employment and environmental practices, contribute to the good of the communities where they are based, or promote social and economic justice.

Choosing a Values-Based Fund

According to the Forum for Sustainable and Responsible Investment, a trade organization for the SRI industry, there were 250 SRI mutual funds in 2010 — up from just 55 in 1995. Its Socially Responsible Mutual Fund Charts can help you find an SRI fund that meets your criteria.

Social Funds, which describes itself as the largest personal finance site devoted to socially responsible investing, also has a free tool that sorts SRI funds, including numerous religious funds.

A Fund for Your Faith

An offshoot of Socially Responsible Investing is Faith-Based Investing. There are mutual and exchange-traded funds that follow the tenets of certain religions or have their roots in certain denominations, including:

Ave Maria and LKCM Aquinas (Catholic)
Eventide and The Timothy Plan (Judeo-Christian)
Amidex35 and American-Israeli Shared Values (Israel-focused investments)
Amana (Islam)
GuideStone (Southern Baptist)
New Covenant (Presbyterian)
Thrivent (Lutheran)
Praxis (Mennonite)

How Responsible Is Responsible Enough?

Just because a fund claims to be socially responsible doesn’t mean it includes or excludes investments in industries you may care about, or that it defines the issues as you do. You have to read the prospectuses closely.

There are free online tools that can help you analyze funds based on various social screens. Calvert Investments, which offers 40 SRI mutual funds, has a tool called Know What You Own. Just enter the name of a mutual fund, and you can see what companies held in the fund do not meet Calvert’s sustainability criteria related to the environment, governance, social issues, and more.

Vanguard’s FTSE Social Index Fund, for example, says it screens investments based on certain social, human rights, and environmental criteria. However, running it through Calvert’s Know What You Own tool finds that the fund holds investments in more than 20 companies that Calvert finds objectionable.

With Invested Interests’ Dashboard (you have to provide your e-mail address to use this tool), you can research mutual funds based on 19 issues. I used it to analyze the Domini Social Equity Fund, which says it invests in companies based on their social and environmental priorities. If you invested $5,000 in the fund, the tool says nearly half of the money would go toward companies that fail Invested Interests’ environmental screens.

Maximizing Your Values-Based Investments

As with any type of investing, in order to get the most from values-based investing you need to make sure you have the proper asset allocation for your age and goals.

You should also avoid paying too much for your investments. That can be especially challenging with values-based investing because such funds tend to have fairly high expense ratios. Still, if you want to put your money where your values are, perhaps that’s a price worth paying.

How do your values guide your investment decisions?

This article is from Matt Bell of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

15 Investing Tips From A #1 Wall Street Stock Picker

Julie Rains — Sat, 07 Feb 2009 18:27:14 +0000

I just finished reading “Put Your Money Where Your Heart Is” by Natalie Pace, who has been ranked as a #1 Wall Street Stock Picker by TipsTraders.com. She wants us to love investing not because we love number crunching or looking at what she calls “mind-numbing charts” but because we love shopping for bargains and making the world a better place!

Here are some of her simple, savvy tips.

Invest in what you love. Buy shares of businesses that you want to succeed so that you can help create a better world by funding companies with worthwhile missions. Not everyone will have the same loves but Natalie uses examples such as investing in a manufacturer of solar energy panels so that you can support efforts to provide clean energy.
Apply your experiences as a consumer. Identify potential investments and continue evaluating the performance of a company by considering the products and services that you buy, the shops you frequent, the restaurants you patronize. You’ll have firsthand knowledge of the company, its product innovations, service levels, and more. Natalie mentions that you’ll see sales trends way before earnings reports show up on a stock analyst’s desk.
Leverage your friends’ knowledge as consumers and experts in their respective fields. If you want to learn more about an industry, company, or product, ask your friends what they know about the growth prospects of an industry, constraints to making money, problems with finding reliable supplies of raw materials, plans for expansion, etc. Natalie recommends that you ask about a company and its products, for example, but not necessarily about the value of a particular stock so that you can get business information and then do your own stock analysis.
Do research because it makes you happy. If you are buying ownership in companies that you admire and make products that you love, you are more likely to keep up with its news, analyze its performance, and understand its value, independent of short-term fluctuations in value.
Notice if companies you invest in have happy employees. Natalie believes that “Happy People Make Better Products Faster, Cheaper.” I had always thought of happy employees as being the result of a well-managed company that knows how to structure its organization, pick the most qualified people, equip them with the resources to do their jobs, and give them good benefits. Now I see that happiness can yield employees who outperform their competition, attract more customers, and reap more sales and profits.
Embrace companies that have the time, energy, and money to “dream up cool new things to offer their customers”; avoid those that expend too many resources dealing with internal struggles. Natalie particularly dislikes when CEOs are focused on winning lawsuits in the courtroom because then they aren’t figuring out how to outshine the competition in the marketplace.
Apply common sense to investing decisions. During the dot-com boom, Natalie saw e-businesses burning through cash rather than making money and didn’t think they could last long, similar to the sentiment of many conservative investors at the time who wanted to fund profitable companies rather than just fast-growing dot-coms. But it was her common-sense comment that resonated with me: “I also understood that it was going to be impossible to have the world go shopping online if everyone’s dial-up connection was as crappy as mine was.”
Judge a company’s leadership by its CEO. Read letters to shareholders in annual reports (find reports at the SEC's website) and speeches to get an understanding of his or her approach and priorities.
Don’t listen to a company’s hype as much as you pay attention to its performance. Public relations and investor relations departments exist to make you feel good about the company, so don’t be too influenced by rah-rah talk.
Love hot industries but invest after the initial boom-and-bust period. “The second surge of innovation tends to be longer, more sustained and yields products at attractive price points that help to attract mass consumers.” The early days for new industries may mean spending lots of money on research and testing, so waiting can be a way of avoiding spending money to fund a company's research rather than its profitable growth.
Pick a growing sector. Figuring out what is poised for growth in the near term is not simple. Talking with people can help to uncover what areas have the financial backing, infrastructure, and innovations to generate stellar profits.
Do some analysis. Natalie recommends using the information that you have as a consumer, shopper, and friend but at some point, you need to do some analytical work. She has a Stock Report Card (available online) to evaluate key players in chosen sectors.
Buy low, sell high. This advice isn’t new but Natalie acknowledges that “Buying low and selling high is completely against human nature. Buying low means that when everyone else is crying Apocalypse, you’re seeing opportunity.”
Lock in gains by selling. Unloading a winner, when you’re enjoying the increase in value, can seem counterintuitive; but to capture gains, you need to sell your investments.
Never pay retail. Buy good companies that you love but only at a good price. Use the Stock Report Card to figure out whether you are buying shares on sale.

In her book, Natalie offers general advice on money management as well as detailed stock analysis. She provides case studies (evaluating industries and products by Google and GM, for example). She helps investors to develop their own tools for discerning truth rather than being overly influenced by the hype and hysteria of headlines. And, she explores the idea that investing with your heart and socially responsible investing, though worthwhile, is not a sure-fire way to make money but rather an approach for beginning the stock selection process and enjoying your investments. It’s an easy and informative read, especially valuable to beginners and those overwhelmed with negative news reports.

Note: I received Put Your Money Where Your Heart Is: Investment Strategies For Lifetime Wealth in exchange for a book review.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Killin 'em Out There: The School Clothes Conundrum

Jabulani Leffall — Sat, 16 Feb 2008 17:24:50 +0000

How did my spending pie-chart become so lopsided? Oh that’s right. I remember like it was yesterday. That’s because it was yesterday. I laid out my clothes, an empty shell, and hollow with no man to fill them. I lay them on the bed like that first time lover, gently. I scrutinized them as a topographical engineer or geologist might survey a vast landscape. Perhaps I was a zoologist tip-toeing around an exotic rare animal. Then comes the lean, the chin stroking, “yeah that’ll do it,” I say.

Suddenly as an adult, each new clothing purchase transports me back to those nights every early September, when the wind was mistier, the leaves were browner, the promos for fall shows were on and I’d just come back from a mall, a swap meet, a retail store, someone else’s closet or the candy lady’s house where she also sold clothes. I’m more reserved as a man – sometimes -- but in my mind, I’m screaming, giggling and jumping up and down like I won a championship, like tomorrow is the first day of school and..... “Ahhh I’m going to kill ‘em out there with this tomorrow!”

It’s that awesome anticipation, that quest – oh mighty one that it is – to either belong or stand out, the rare chance to distinguish yourself in any case. That feeling has stuck with me from elementary, into junior high, high school and then early college. It was only exacerbated once I had money of my own and didn’t have to beg mama or “earn” a cash advance via chores or a “behavioral chart.” Suddenly I could make my own rules, do my own thing, “killin’ ‘em out there tomorrow,” everyday of my life.

Spending.

I call it the school clothes conundrum. For some people, it is grocery hoarding, for others, it’s electronic gadgets, rare wines, DVDs, classic cars, cigars, designer shoes, watches. For me it’s clothing. These are the purchases that define us, our tastes, our wants, our desires, and our self-imposed stratification. It is us saying individually and in unison, “nobody is going to have this,” and.....“Ahhhhh, I’m gonna kill em with this tomorrow!” Most of these purchases, while making us who we are in a sense; are, to put it mildly, unnecessary.

I realize this and suddenly I understand why the sum total book value of the contents of my closet is only several hundred dollars short of the sum total of my savings and investments, less my liabilities. It gives me chills even now thinking about it, the insanely conflicting and sensually ominous paradox. Unwrapping the ripened vines, the fresh packaging, popping the tag, basking in the newness, bathing in the satisfaction of examining a fabric -- what you and you alone chose. So you think. It called out to you, it said, “you” and you answered the call, something that’s uniquely you. How do you break freeeeeeeeeeeeee? And do you want to? That’s called wanton consumerism and everyone has a fetish.

I might be more contrite and saddened if there weren’t millions just like me. The mentality starts with us and we grow into it and pass it down to the children folk, the school children. Last fall (2007) for back-to-school season -- as it’s been called since retailers and designers got together in collusion to bleed consumers dry in one fiscal quarter beginning with the fall term, semester or whatever -- clothing and accessories retained their long-running title as the largest spending category. Clothing alone was $7.6 billion of a projected back-to-school total of $18.4 billion, according to the National Retail Federation.

You may say $18.4 billion? Why that's a day of fighting in Iraq or that's a bailout infusion for an investment bank or maybe even a power plant and food supply for a mid-sized city in a developing country. Actually, in America it’s just the amount of money spent on clothes in one category, for one part of the year at that. Further still, it’s almost more than half the average annual savings rate for more than 85 percent of some 300 million Americans. That says it all and this is the mentality that I personally had since I first turned two digits and it's difficult if not next to impossible to break after 20+years of the Duhhh, Duuuh, Duuuuh school clothes conundrum.

But I’m trying to with the help of a financial-coach-planner, holistic money hybrid person who essentially told me if things were tight and I was tempted to make myself feel better by picking up an item here, an accessory there, to “go shopping in my closet,” in other words create no new expenditures or debt unnecessarily.And here now it’s almost March and it won’t be long until it’s time to go back to school. I must fight the Jones to keep up with the Joneses because the only thing I’m “killin’ out there tomorrow,” is financial stability in my future. I must come out on the winning end of my decision apropos of the back to school conundrum and so must you whatever yours is.

This article is from Jabulani Leffall of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Socially Responsible Investing Goes Green

Julie Rains — Mon, 08 Oct 2007 17:20:31 +0000

You drive and drink responsibly, spend your money responsibly, and act responsibly, don’t you? But do you invest responsibly? Can you invest responsibly? Is there such a thing as investing in socially responsible companies and, more specifically, investing in companies that are environmentally responsible (aka green) and socially responsible? If so, what does being green mean and for that matter, what does being socially responsible mean?

When I think of green investing, I think of buying shares of companies or mutual funds that invest in companies that fulfill 2 or more of the following criteria:

design, market, sell, manufacture, and/or distribute products or services that harness or deliver renewable sources of energy;
design, market, sell, manufacture, and/or distribute products or services that deliver energy savings;
have passed some sort or environmentally-based selection process or “screen” in the lingo of mutual fund managers;
have embraced sustainability as a primary business concern;
are socially responsible.

Socially responsible investing (SRI) conjures up images of buying shares in companies with well-treated employees of diverse backgrounds who are paid a fair wage, and are paid and promoted based on merit and contribution. Depending on the SRI criteria, these companies may also not design, market, sell, manufacture and/or distribute products or services that include tobacco, weapons, and gambling.

So, how do you find an SRI mutual fund or green fund? And once found, how do you evaluate its social responsibility and greenness? I've done some research and found 3 funds with varying interpretations of green. I found Winslow Green Growth through an article on Kiplinger.com and came upon Portfolio 21 and New Alternatives via mentions on a user forum of Wesabe, a community of people who share information about money.

Information presented below has been gathered from fund and company websites in October 2007:

Winslow Green Growth (WGGFX)

Environmental Screen: positive or neutral impact on the environment;
Definition of Green: provide environmental solutions and/or pioneer green business practices often in the areas of renewable energy, healthy living, energy-efficiency, and green solutions;
Investment Focus: small cap, growth, domestic;
Social Responsibility Screen: none that I could find;
Holdings include:
1. SurModics Inc., provider of surface modification and drug delivery solutions for medical device and biomedical applications;
2. Green Mountain Coffee Roasters Inc., company engaged in the sourcing, roasting, and sale of estate, certified organic, Fair Trade Certified™ signature blends, and flavored coffee through wholesale, direct mail, and e-commerce distribution channels;
3. Fuel-Tech Inc., provider of solutions to meet the pollution control, efficiency improvement, and operational optimization needs of energy-related facilities;
4. Orbcomm, global satellite data communications company with machine-to-machine (M2M) communications;
5. WFI Industries, provider of geothermal heating and cooling systems for residential, institutional, and commercial applications.

Portfolio 21 (PORTX)

Environmental Screen: complex Company Evaluation Criteria; companies that "understand ecological risks and opportunities” and are “taking positive action to integrate sustainability strategies in their business models”;
Definition of Green: companies that create ecologically superior products, use renewable energy, develop efficient production methods, and/or recognize environmental sustainability as a challenge and opportunity.
Investment Focus: primarily large cap, international;
Social Responsibility Screen: excludes companies with negative performance in employee relations, human rights, community involvement, or product safety; and those with significant business activities relating to nuclear energy, tobacco, gambling, or weapons;
Holdings include:
1. Nokia, telecommunications company;
2. Novo Nordisk, healthcare company with core business of pharmaceutical drug development;
3. IBM, technology company focusing on business services;
4. HSBC Holdings, financial services company providing personal, business & commercial, corporate & institutional, and private banking services;
5. Novartis, pharmaceuticals and nutritional products company.

New Alternatives Fund (NALFX)

Environmental Screen: emphasis on alternative energy sources but includes companies with products and services associated with recycling, natural foods, clean water, clean air, and natural gas;
Definition of Green: positive impact on the environment;
Investment Focus: subjective but includes evaluation of price and risk;
Social Responsibility Screen: does not invest in oil, nuclear power, weapons, or tobacco or companies with business practices that allow discriminatory hiring, unfair labor, detrimental environmental, or animal testing activities.
Holdings include:
1. Renewable Energy Corp. AS, producer of silicon for solar cells;
2. Acciona SA, construction and infrastructure company with activities that include renewable energy including wind, small hydro, biomass, biodiesel and solar sources;
3. Abengoa SA, engaged in biomass (ethanol cellosic project), solar projects, and aluminum recycling;
4. Vestas Wind Systems Abengoa SA, wind turbine manufacturer;
5. Schneider Electric SA, distributor of efficient electrical devices.

I enjoyed visiting Portfolio 21's website for a few reasons: 1) its perspective on what "green" is with a recognition that though companies strive for sustainability, nearly all create some (negative) impact on the environment; 2) profiles on all companies selected for investment with explanations of why these were chosen; and 3) some information on companies that have not passed its sustainability evaluations.

Oh, you might want to know about the financial performance of these funds; here are 5-year returns (as of October 8, 2007):

Winslow Green Growth: 29.28%
Portfolio 21: 21.63%
New Alternatives: 24.59%

If you want to align your investing values with personal values, you can check out socially responsible funds and/or green funds such as these. For more on SRI, visit Social Funds.

Disclosure: I do not own shares in Winslow Green Growth, Portfolio 21, or New Alternatives funds.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: