Since we all like to think of ourselves as good people, who would not want to be a social investor if the returns are as good or better by doing so? It turns out, though, per the AAII article, that things are a little more complicated than that. If one screens only for one criterion of social investing, for example focusing on companies that have good records for employee relations, the stocks of corporations like Starbucks that consistently in the past have been scored superior in terms of employee satisfaction, the returns do tend to be better than, say, the record of the S&P 500 Index. But if several socially responsible criteria are added into the mix and one screens out the companies that do not measure up, alas, the returns are often significantly lower than a major market average like the S&P 500.

Also, there are any number of combinations of criteria that can be used for the selection or rejection of socially responsible vs. socially irresponsible companies' stock. One person's socially responsible corporation, perhaps a start-up enterprise that turns guns into plowshares (the metal blade portion of a plow), may be lauded by some but decried by others, i.e. folks who believe more people ought to own guns. A nuclear plant utility might be considered good by those who believe we cannot reach state, national, or global green energy targets without a substantial portion of our electricity coming from the nuclear option, while others, maybe remembering Three Mile Island, Chernobyl, or that we still have no practical means of dealing with nuclear waste, might believe investments in nuclear utilities are about as responsible as a deal with the devil.

On the other hand, when one focuses on buying the shares of companies whose overall operations are regarded as "good," the happy consequence is that the performance of one's shares tends to be significantly better than the major market averages.

As a cynic might have opined before the article authors began to look into these issues, the benefits to one's returns of a strategy of picking "good" companies are essentially offset by the liabilities of screening out the "bad" companies, giving many social investing approaches a net "no effect" (neither an advantage nor a disadvantage over market averages) performance grade.

For those interested in trying out social investing, I have included in the table my own picks of the top-ten socially responsible companies. These are not necessarily the best in terms of their contributions to our health and well-being, but, among those meeting generally accepted social responsibility criteria, they appear to me to more profitable than average while also carrying less debt than is typical.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)