Socially conscious investments can double your payoff

It can pay to have a social conscience, especially if you think green.

Socially conscious investing, which factors environmental, social and corporate governance consequences into its selections, has been attracting more interest, growing from $40 billion in 1984 to $2.29 trillion today, according to the Social Investment Forum.

A performance leader in this group is the environmentally motivated Winslow Green Growth Fund (WGGFX). Though somewhat volatile, it has a three-year annualized return of 18 percent and a one-year return of 19 percent.

"Hurricane Katrina was an inflection point for more people understanding the correlation between carbon release, global warming and storms," said Jackson Robinson, president of Winslow Management Co. in Boston and co-portfolio manager. "People are now saying, 'Look, we've got a problem with energy and need big, bold, new green solutions.' "

The "Enron effect" has helped spark interest in socially responsible funds. More than 400 corporate governance resolutions and 180 social and environmental shareholder resolutions are being taken up at U.S. corporate meetings this year, some sponsored by socially responsible funds. Investors obviously care about what companies are up to these days.

Retirement accounts also are increasingly offering social investment fund choices and contributing to their asset growth. For example, retirement fund giant TIAA-CREF, whose CREF Social Choice Account has amassed more than $8 billion in assets, recently announced a new department dedicated to social investing.

"There's been a mainstreaming of social investing as investment firms respond to what their clients want," said Timothy Smith, president of the Social Investment Forum and senior vice president of Walden Asset Management, a division of Boston Trust and Investment Management Co. "Though social investing differs depending on your particular beliefs, you do find people from across the investor worlds rallying together behind a number of issues."

More than 200 socially screened funds operate in the United States. Stock, bond, money-market and balanced (stock and bond) choices use screens based on what each considers the preferred path. Originally religious beliefs and avoidance of tobacco, alcohol or defense companies dominated, but today funds take stands on a variety of lifestyle and other issues.