Socially responsible investing (SRI) means different things to different people. For many, it's simply avoiding investment in firms with disagreeable policies. But according to Seattle-based Newground Social Investment, screening is only the first part of a strong SRI strategy.

In addition to supporting firms with clean social and environmental records, Newground clients hold small 'advocacy' positions in companies whose policies may be controversial--then use shareholder influence to create change from the inside. 

The practice of shareholder engagement can yield impressive results. For example, in 2003 Newground led shareholders in convincing DuPont to cancel its plans to strip-mine alongside Georgia's Okefenokee National Wildlife Refuge. DuPont instead gifted its 16,000 acres to The Conservation Fund, permanently protecting the Okefenokee.

"It's the difference between feel-good investing and do-good investing," says Newground President Bruce Herbert. "It might feel better not to own DuPont, but the process of negotiation had a much better outcome than selling the shares, walking away and letting the company mine."

Community investing, the third leg of the SRI strategy, generates finances for small businesses, affordable housing and other initiatives in low-income communities in the U.S. and abroad, while generating competitive returns.

But practically speaking, does social investing pay? Generally, SRI funds perform about as well as conventional funds--a Santa Clara University study even found that they did a little better. But there's no hard-and-fast rule that they perform better or worse. SRI returns, like conventional ones, depend on good management.

Socially minded money managers use financial criteria first to determine which stocks are the wisest investments. They then go further, screening for more thoughtful, responsible management overall. As Herbert points out, this could mean that SRI stocks may actually be less vulnerable to scandal-induced drops in value during volatile times. 

The strategy seems to be working. Currently measured at $2.3 trillion, SRI investments continue to grow. And Newground Social Investment has been recognized by Seattle Magazine as one of the region's "Top Personal Wealth Managers," a designation reserved for the top-performing 3% of firms in our area.

Want to learn more? Read Newground's concise tutorial on social investing. Find news and resources for social investors from the Social Investment Forum, SocialFunds.com and the Interfaith Center on Corporate Responsibility.

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