Editor's Note: Our columnist Steve Schueth, president of First Affirmative Financial Network, interviews five leaders in socially responsible investing to get their take on the investing outlook for the coming year. They include Scott Budde, managing director, TIAA-CREF; Amy Domini, founder and CEO of Domini Social Investments; Joe Keefe, president of Pax World Management Corp.; Barbara Krumsiek, president and CEO of Calvert Group; and Jackson Robinson, founder and portfolio manager, Winslow Management Company.

The ancient Chinese proverb and curse, "May you live in interesting times," may have never been more applicable to the financial services industry than during the last 18 months. As 2009 ground to a close, stock markets were mostly up for the year, but flat to down for the decade; interest rates were about as low as they can go, but credit, especially for homeowners and small businesses, was tight; gold and other important commodities were highly volatile; and the national political scene seemed dominated by whirling dervishes.

For many investors, particularly those who approach the markets with an eye toward making money and making a difference with their money at the same time, it's all a bit confusing.

So, to help answer the question, "Am I doing the right thing with my investments?" I interviewed a few of the best minds in the sustainable and responsible investment industry and asked these business leaders to share their thoughts on what's happened, and what might happen next.

Of course, there are no easy answers to any of these questions, but the following observations and predictions may help you make more informed investment decisions in the weeks and months ahead.

Schueth: Has the outsized market volatility over the last 18 months helped or hindered socially responsible investments?

Domini:  Using the FTSE KLD 400 as a proxy, these past three years have been relatively good for SRI investors. That index outperformed the S&P quite significantly.

Robinson: SRI has held up better in aggregate than more traditional approaches because of the rapidly increasing interest in environmental solutions and sustainability on the part of the investment community. I think we will see this trend continue. Growth is increasingly hard for the economy to come by, but the interest in green will continue to drive revenues and, subsequently, profit. We are really optimistic about the space.

Our socially screened funds have actually done relatively well, but on an absolute basis have suffered along with their respective asset classes. There is some evidence that impact investing programs-largely in private markets like microfinance and domestic community banks and real estate-are somewhat more removed from the mainstream turmoil.

We had several products that held up well during the last 18 months, but there is no question that we, like the industry as a whole, felt the impact of the quick drop in assets under management that hit all equity products.

Schueth: Do you think investors' experience over the last year will lead to a larger recognition of SRI concerns?

Keefe: To the degree that the financial crisis resulted in some part from misaligned incentives, excessive risk taking, outlandish executive compensation, predatory lending and other unsustainable financial practices, this creates opportunities for investment strategies focused on integrating environmental, social and governance (ESG) factors into investment analysis and decision making.

Market volatility over the past 12 months highlighted the kind of ESG-related problems in "mainstream" business models that SRI strategies have long recognized. I'm hopeful investors will gain a more realistic perspective on what long-term returns can be expected from different asset classes. This recognition will help SRI-related strategies look even more competitive.

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