Americans may soon get the opportunity to invest more conscientiously in their workplace retirement accounts. A new survey shows that more and more employers are adding socially responsible investment choices to their plans.

Mercer and the US SIF Foundation (formerly known as the Social Investment Forum Foundation) recently predicted that the number of defined-contribution retirement plans in the U.S. -- think 401(k)s and 403(b)s -- offering socially responsible investment (SRI) choices could double in the next three years.

Of survey respondents, 14% already offer at least one SRI choice, and an additional 13% are either planning or discussing adding such options over the next three years. Even more interesting, 84% of the survey respondents believe that demand for socially responsible investment options will either increase or remain the same through 2016.

Beyond Booze, Smokes, and Guns

Socially responsible investing traditionally screens out companies that hurt or damage individuals and society on issues including the environment and overall economic well-being. Although SRI tends to avoid unhealthy "vice" companies like Smith & Wesson (SWHC) or Altria (MO), there are increasing numbers of socially responsible or environmentally conscious companies to direct money into, such as Whole Foods Market (WFM) or Google (GOOG), both of which have plentiful employee-friendly and green initiatives.

Investing for Generations to Come

It makes perfect sense that increasing numbers of Americans would demand investment vehicles that won't require their children and grandchildren to pay too high a price for past mistakes. The last several years have provided plentiful examples of disasters that can stick the rest of society with a big, fat bill. Take the financial crisis, which is still dragging on Americans in various ways.

It's not just arm's-length societal costs on the line when companies make antisocial business decisions: Real financial costs can erode these companies' bottom lines and hurt shareholders, too, and that doesn't always take years to come to pass.

Take the many lawsuits and regulatory changes leveled at tobacco companies like Altria; BP's (BP) costs related to the Deepwater Horizon disaster and subsequent Gulf of Mexico spill, or Goldman Sachs' (GS) many public relations problems tarnishing its brand and helping drum up American ire that results in things like the current Occupy Wall Street campaign.

Future Retirees Getting More of a Conscience

The more socially aware investment approach isn't as obscure or esoteric as you might think; there has been a flood of big money pouring into SRI.

According to US SIF, in early 2010, $3.07 trillion in assets was directed into SRI or sustainable strategies; that's almost five times the level in 1995. This more positive investment philosophy also flourished during the financial crisis, while the rest of the market universe remained flat.

The Mercer and US SIF Foundation report also highlights that this is still a relatively new area for many retirement plan sponsors. Mercer's head of responsible investment, Craig Metrick, said that many of the respondents admitted they still have little or no expertise when it comes to existing SRI products or indices, so education and heightened awareness of the investing philosophy are urgent, given signs of growing demand.

Motley Fool analyst Alyce Lomax owns shares of Whole Foods and runs a real-money portfolio on Fool.com that focuses on socially responsible investing. See her portfolio here. The Motley Fool owns shares of Google, Altria Group, and Whole Foods. Motley Fool newsletter services have recommended buying shares of Google and Whole Foods.



Increase your money and finance knowledge from home

Building Credit from Scratch

Start building credit...now.

View Course »

How to Buy a Car

How to get the best deal and buy a car with confidence.

View Course »

Add a Comment

*0 / 3000 Character Maximum

12 Comments

Filter by:
victorpaganucci

The socially responsible action is to build wealth throughout your lifetime, and not become dependent on others. The funds that you choose to invest in have little to do with your conscience. Be honest, lead a good life, and ignore advice life this.

October 03 2011 at 2:42 PM Report abuse rate up rate down Reply
dabrownman

Don't invest in them. They over promise and underperform just like alGore. Just look at what solar stocks have done.

October 03 2011 at 12:01 PM Report abuse -2 rate up rate down Reply
Jeanne Freedland

This is probably something like the "natural resources" funds of the '80's-simply nomenclature for a trendy topic and a way to grab your $$. Very little to do with natural resources as it turned out...

October 03 2011 at 9:35 AM Report abuse +2 rate up rate down Reply
Linda Murphy

The "socially conscious" funds in the past several years have been real losers, and even those particpants who initially enrol as part of their plan, drop them, Calvert comes to mind and was in a lot of 401k packages - always a laggard and people saving for retirement would cut their conscience some slack when it came to losing money. So new funds would have to watch for these problems.

October 03 2011 at 8:52 AM Report abuse +1 rate up rate down Reply
jmetcalf1955

all you smelly liberals protesting wall st. investment firms can move to china.

October 03 2011 at 8:14 AM Report abuse -3 rate up rate down Reply
1 reply to jmetcalf1955's comment
dabrownman

I have to admit that these are most stupid Marxist posing as socialist, liberal, progressive democrat protesters I have ever seen. These insane whack jobs keep telling us how smart they are but they turn out to be the worst of the unfix-able stupid - not that any stupid can be fixed.

October 03 2011 at 12:09 PM Report abuse -2 rate up rate down Reply
marine1942

Was this written by Al Gore and Al Sharpton ?

October 03 2011 at 7:50 AM Report abuse +2 rate up rate down Reply
cavepeter4

It does not matter, the bankers and the governments will figure a way to take the retirement funds. The people will in the end get the shaft and the bankers and the government will get the gold!

October 03 2011 at 7:08 AM Report abuse -1 rate up rate down Reply
2 replies to cavepeter4's comment
carol lowery

They have already figured that out and are doing it. Seniors are being double taxed on a lot of things. We have to add muni dividents and all 401K withdrawals to our SS formula in order to make 85% of our SS taxable and that tax goes into the general fund instead of back into SS to keep it strong. They just don't get it that we and our employers paid SS/Medicare taxes on every dime we put into our 401K plans and thanks to Gore, he made them more taxable and raise the taxable part of SS up from 50% to 85%. Who said that the Dems are for the little guy??????

October 03 2011 at 11:44 AM Report abuse rate up rate down Reply
1 reply to carol lowery's comment
dabrownman

Munis are tax free at the state and local level if you live in the state where the munis are issued. All munis are federal tax free, That is how John Kerry's wife avoids all taxes at the state and Federal level - even though she is likely a billionaire. When you are very rich you can put everything in munis, live the multi multi millionaire high life and pay no taxes,

October 03 2011 at 12:15 PM Report abuse -1 rate up rate down
dabrownman

That is why we have guns and can carry them concealed legally in AZ without a permit. No one would ever try to do that here. AZ is the way the USA used to be everywhere.

October 03 2011 at 12:12 PM Report abuse rate up rate down Reply
anthonygolfbones

Its really hard to plan for retirement when you watch a company like general motors file bankruptsy and reduce the benefits that were promised in writting to the retiree,s make all their stock worthless then get a big bailout from the goverment, become partners with the UAW, then a year leter give big bonuses to everyone but the retiree's. Now September of 2011 a new contract is is bargained by GM and the UAW with no mention of anything for the retiree's, the people who got hurt the most by the bankruptsy. The UAW web site for retiree's has no imformation about the new contract concerning the retiree's and no way to find out anything, we are not even allowed to vote on a contract even though it affects our future just as much as anyone eleses.I would like to warn people before they retire, contracts are not worth the paper they use to write them on.

October 01 2011 at 6:39 PM Report abuse +7 rate up rate down Reply
2 replies to anthonygolfbones's comment
cpo1514

Tony.... sounds like another satisfied Ohmama supporter???? Screw the bond holders and get kickbacks from the unions????

October 03 2011 at 9:54 AM Report abuse -2 rate up rate down Reply
1 reply to cpo1514's comment
marcanagnos

How about the fact that the SECU Union pension is buying up crude oil contracts? Think about that when you fill your tank next time. Unions couldn't care less about you, anything to put the most money in their pockets.



MARC

October 03 2011 at 11:30 AM Report abuse -1 rate up rate down
dabrownman

No union retirees benefits were cuts. That is why Obama bailed them out - to make sure no unions were hurt in any way. Their Messiah ended up giving half of GM to the unions - breaking 100 years of law where the senior bond holders were to be first in line. This was mega theft by the government for union benefit and will likely put many in prison once Obama is out of office.

October 03 2011 at 12:20 PM Report abuse rate up rate down Reply