Before you embark on a mission to save the portfolio, don't jump at the first investment touted as socially responsible. Perhaps the most important criteria to keep in mind are your own. Individual social priorities vary widely, and it isn't enough to say "I want to invest only in good companies."
Suzanne Harvey, director of the Social Investment Research Service at Prudential Securities in Arlington, Virginia, says there are two ways to screen a portfolio: positive and negative. "A negative screen avoids particular companies or industries--no mining, oil or chemical manufacturers, for example," Harvey explains. "A positive screen looks for companies with above-average records in a particular area, like workplace practices or the environment." The key is to define your criteria, then build your portfolio as you like it. Do you care about cleaning up the environment, or do cigarette manufacturers burn you up? Would you prefer to avoid companies that manufacture nuclear weapons, or do you actively seek companies that are proactive in hiring minorities and have family-friendly policies?
If you want to reach your financial as well as social goals, you should avoid becoming so restrictive that you eliminate whole industry groups. By picking your battles carefully and avoiding the most rigid version of every conceivable SRI, you can find companies that are acceptable on more than one level and build a profitable portfolio.