If you think that Microsoft is the Death Star--a nasty corporation that ruthlessly kills its competitors and dominates its markets like an old-fashioned monopoly--then you'll probably want to avoid most SRI funds, because MSFT is a key holding in most of these portfolios. And if you think Wal-Mart is a union-busting, community-destroying gun merchant (indeed, it's America's biggest retailer of rifles and shotguns) whose friendly face belies omnivorous appetites, then once again, stay away from SRIs, because they like Wal-Mart. A lot.
Of course, Microsoft and Wal-Mart have their admirers, too. These companies attract loyal employees and happy customers. They are original companies who between them have changed the way the software and retailing industries in this nation and the world operate.
The flip side of this devotion to companies like Microsoft and Wal-Mart is that most SRIs avoid manufacturers and heavy-industry companies. That's because steel companies and coal miners, to name two obvious examples of old-guard corporations, sometimes pollute our air and water. Moreover, old industries are often locked in troubled relationships with unions.
So SRI funds avoid the apparent villains of the old economy, but they don't scruple very hard about particular high-tech companies. That's partly because new-economy companies doFn't send plumes of smoke into the atmosphere. Of course, there's that unfortunate tainting of the soil that occurs during the manufacture of silicon chips, but if you rejected every company that has an unpleasant aspect, pretty soon, you wouldn't be able to invest in anything at all.
Many critics of SRIs accuse the funds of naked hypocrisy, turning their backs on value stocks and fawning over Internet companies--nothing wrong with that, is there?--while buying anything with "technology" in the name.
That strategy worked spectacularly as long as the boom lasted. Now that there's a retrenchment, however, SRI values have dropped, right along with the prices of their tech holdings.