Investing With a Conscience: 7 Things You Should Know

Climate change is a major growth catalyst. Although socially responsible investing has religious roots, the modern SRI movement grew out of antiwar sentiment in the 1960s, when investors objected to supporting companies that were supplying the Vietnam War. During the 1980s and 1990s, SRI strategies were embraced by investors opposed to apartheid in South Africa, as well as tobacco and alcohol. Today, concerns about climate change are a key driver of the SRI industry's growth, according to a recent TIAA-CREF report on socially responsible investing. "What's given climate change its widespread impetus is the impact of oil," says Tabuenca. "Today, people are more aware and more affected by this issue than ever before."

"Green" funds are winning over liberals and conservatives. According to a recent survey from Allianz Global Investors, nearly half of 1,003 investors surveyed said they were likely to invest in a company or fund that addresses environmental problems over the next year, and 17 percent said they have already done so. Of those who said they're likely to make an environmental investment, 41 percent described themselves as politically conservative and 36 percent said they are liberal.

Coming soon: SRI 401(k)'s. Socially conscious 401(k) investment options are on the way. Roughly one fifth of employees currently have access to socially responsible investing funds, according to a 2007 Mercer Investment Consulting survey. By 2010, 60 percent of retirement plan sponsors surveyed expect to add SRI funds. (Currently, healthcare and government agencies are the most likely to offer SRI options, and most are funds from Calvert or Domini.)