Good news for socially conscious investors: Greener 401(k) investment options are on the way. Currently, only one fifth of employees have access to socially responsible investing funds, according to this story. But survey data from the Social Investment Forum revealed that 60 percent of all plan sponsors anticipate adding SRI funds by 2010. (Currently, healthcare and government agencies are the most likely to offer SRI options, and most are funds from Calvert or Domini.)
What is SRI exactly? Funds that tout this philosophy typically invest according to social and environmental guidelines. For example, they may invest only in companies with sustainable business practices or with good environmental track records. But lumping all "green" or SRI funds together would be like ignoring the difference between vegetarians and vegans. As Morningstar points out, some green funds will own companies with human rights, labor, or environmental issues that might fail the screens of others.