Some excellent reporting by Ilana Polya, who finds Smith & Hawkin co-founder Paul G. Hawken "appalled" that top holdings of North American so-called "socially responsible" investment funds "are almost identical to the Dow Jones" industrial average.

"Why do I need the socially responsible funds to buy the Dow Jones?", Hawken asks rhetorically. Polya reports that Hawken is introducing his own socially responsible portfolio "for investors of high net worth" later this year. In a study of 600 socially responsible funds, online at (http://www.naturalcapital.org), of which Hawken is unpaid executive director, all but seven of the Fortune 400 companies were held by at least some funds. Hawken and his analysis have their critics: Polyak quotes a Calvert Funds senior adviser, Joe Keefe, as pointing to "a rather broad brush." Anita Green, vice president for social research for another fund studied by Hawken, Pax World Funds, says, "We would like to have neat little boxes that all the funds could fit into. So far we haven't found a method that will do it." And Domini Equity's founder and CEO, Amyh Domini, has this to say about her fund's holdings in McDonald's: "When I look at McDonald's versus the fast-food industry, I see them on a path toward human dignity and environmental sustainability.... I can live with myself for investing in McDonald's."

Polya reports that some of those challenging Hawken's study find him "pushing for a purist approach to investing that is not compatible with most investment objectives." Polyak's reporting also explains that some funds use a "best-in-class approach" that weeds out offending companies but not entire industries: "BP Amoco, the petroleum company, often makes the cut on this basis because of its work in renewable energy," Polyak reports. The article reports also that Sierra Club Mutual Funds holds shares in Outback Steakhouse. The rationale there is left to Garbin Jabush of the fund: "Outback isn't a rancher, it's an end user." Excluding it for environmental reasons "is like avoiding anyone who uses gasoline." Polyak reported that Hawken would not disclose stocks he is considering for his upcoming socially responsible portfolio because it isn"t expected to become available until later this year. Polyak wrote that 60 percent of the fund"s holdings will be invested abroad and that holdings "will include mainstream companies that are positive for the planet."