by JohnbySmRoanratgFre rieend, Ph.D.

Heart and Money

5 steps to making your investments consistent with your values

SOCIALLY RESPONSIBLE INVESTING, or SRI, which weapons. Today it also uses positive screens, searching for
includes earth-friendly investing, has become a three-tril- companies that are leaders on environmental issues. Such
lion-dollar industry. The field has grown out of a grassroots companies may use renewable energy, have programs for
movement of activists who have proved that you don’t have reducing toxics and waste in manufacturing, or be com-
to wall off your heart to grow your money. Today social mitted to cutting down on the use of resources such as
investors have a full array of investment options—mutual water and energy.
funds, bonds, stock portfolios—and specialist advisors Another way the SRI industry distinguishes itself is in its
who can help them manage their money. Here are five commitment to shareholder advocacy. It’s commonfor SRI
steps to getting started. mutual fund holders to co-sponsor resolutions at corporate
meetings and then work behind the scenes to help compa-
1. Understand how socially responsible nies change behaviors. Issues range from the fate of the
investing is different. Arctic National Wildlife Refuge to genetically engineered
In the early days, the SRI industry used only negative food, from climate change to wilderness preservation.
screens, rejecting companies that generated more than This year, green mutual fund Green Century persuaded
5 percent of revenue from tobacco, alcohol and military Whole Foods Market to label all private-label products for
genetically engineered content. Apple Computer agreed to

offer free, in-store recycling of its iPod music players, and ConocoPhillips bowed to pressure to withdraw its support from Arctic Power, a lobbying group that promotes drilling in the Arctic National Wildlife Refuge.

2. Stay diversified.

It’s exciting to invest in green pioneers, such as solar and wind companies. But these companies are often small, and though they have the potential for rapid growth, their stocks are volatile. Green investors need to stay diversified, investing in large, established companies as well as small, new ones—even if these larger companies are less than perfect when it comes to the environment

3. Set your environmental priorities. How stringent are your environmental standards? Every mutual fund evaluates companies differently—some look for pollution violations, for example, while others go much deeper in their analysis. Is it okay with you if a company is environmentally “neutral,” or do you want to stick with only the most forward-thinking?

4. Stay on top of the best companies and what they are doing. Take a look at the SB20 List: The World’s Top 20 Sustainable Business Stocks, compiled each year by a panel of leading analysts. One company on the current list is the Electrolux Group, the world’s largest appliance manufacturer. The