Financial advisors who want to attract and retain younger investors may want to have their SRI ducks in a row.

Surveys and anecdotal trends are showing that many Gen Xers, roughly between the ages of 28 and 44, want their money invested in companies that don't damage the environment and do promote socially responsible policies.

In a January 2008 survey, Northern Trust found that "millionaires from Generation X, aged 28 to 42, are proving to be more sophisticated in their investment style than older millionaire generations because of their interest in alternative investments and new investment products, such as exchange-traded funds (ETFs) and structured notes,'' and "41 percent of the Gen X millionaires who are aware of socially responsible investments have some money in these accounts; in contrast, only 18% of baby boomer millionaires who are aware of socially responsible investments have actually made any."

"What you are starting to see is a generation that intuitively accepts the idea that there are opportunities for investing in a more responsible way, particularly on environmental issues. Younger clients are much more open to the idea of SRI investing than the previous generation.And you see, particularly with inherited wealth, that the young client is generally much more receptive to the idea of looking at their money and the impact it has on the world," says Matt Patsky, CEO of Trillium Asset Management, Boston, with about $1 billion in assets and about 1,000 accounts.

Patsky estimates that about one third of Trillium's investors are ages 28-44, but that the number is "growing rapidly."

"That age group has issues with inherited wealth. They come in and say, 'I don't want to hold a portfolio of ExxonMobil and a bunch of big companies I know haven't been taking positive steps to improve the environment. I want to invest in companies that are doing the right thing in terms of their footprint,'" Patsky says.

At New Ground Social Investment in Seattle, founded in 1993 and which has $100 million in assets under management, younger investors account for about 60% of the client list. These younger clients require their investments to mirror their personal values, says Bruce Herbert, New Ground's chief executive. Herbert says the firm's business has "increased exponentially, 1250%, in the last five-and-a-half years.

"The bad news of recent years-starting with Sept. 11 and including the accounting scandals and bank collapses-has propelled these clients into taking a deeper look at the global impact of their investment. But we're seeing that everybody who is investing is taking a more an active role in their investments."

Herbert says his younger clients are engaged in philanthropic activism, too. "They're saying, 'I want to give a lot of this away and make sure it has a good impact.' We show them it's better to build a portfolio that can give four or five times more over a reasonably long lifetime than if you were to give a sizeable portion right here and now. We're telling them these (SRI) issues need sustained attention because they don't get resolved right away."

Herbert and Larry Dohrs, New Ground's senior vice president, are 50. Although younger investors don't insist that their financial advisors be contemporaries, Herbert said, they are looking for advisors who share their values.

"What I have seen is that the younger investor asks a lot more questions about their advisor's activities and predilections. What are our volunteer activities? Whom do we support? They are looking at the whole picture because they believe that's an important part of SRI investing," Herbert says.

Gen Xers have access to more information about SRI investment choices than their parents did when they were young, says Carol Malnick, a managing director of Boston Common Asset Management LLC, headquartered in Boston and with about a $1 billion in assets. A 25-year veteran in the SRI investment business, Malnick is based in the company's Redwood City, Calif., office.

"The younger client has come forward to say, 'I don't want to do what my parents did,' or 'I want to do more than what my parents did,'" Malnick says. "I got a call yesterday from a 30-year-old woman who said she wanted to move her family inherited money, which had always been at Goldman [Sachs], because she wanted it to be in SRI. There is so much more information made available now, and news about options, alternatives and their impact, where 20 or even 10 years ago there was nothing or very little."

She adds, "The younger clients are excited that we take a very active advocacy role. They want us to engage with those companies to ensure they maintain that high level and that we find ways to show them they can improve.

"One of our [Boston Common] concerns right now is the human rights issue in Uzbekistan and what they can do, through their supply chain, to improve conditions for children working in the cotton fields. We can't change the Uzbekistan government, but as shareholders of these companies, we can ask, through suppliers, to try to make life better for these employees. This is attractive to our clients, especially our younger clients. A 30-something sitting on a family foundation board will be co-signatory on this initiative or sign a letter going to five corporations asking them to review and modify their policies."

Patsky at Trillium says younger investors are more aware than older clients of SRI issues such as climate change and the way in which daily activities affect the environment. "Not to say there are not older clients who don't get it, but all too often, the older generation is used to thinking from the perspective of the way things were 40 years ago," Patsky says.

"You can't disconnect anymore. You can't look back to GE cutting costs by dumping PCBs into the Hudson. There is a cost of being irresponsible. Generation X gets that. Generation X says, 'I want to invest in companies that do the right thing, reduce the carbon footprint and their impact on climate change.' Over time, that will have the cost advantage over companies that didn't do that. You can tell these younger investors that you can do the right thing with your money and do well with your money. These investors realize that is increasingly true," Patsky says.

"Mostly it's the younger investor saying, 'I want to look at this,' or 'I just read an article and I want to do this.' This is a fascinating trend, but most investment advisors in this country still have not done a lot of environmental or SRI investing and have limited knowledge of the area. Most financial advisors in the United States are not considering social or environmental factors. It's a generational issue: The older you are the less likely you are to consider that it could matter in investing. The younger generation, advisors and investors alike, tends to be more open-minded about the inclusion of these factors."