When I first started investing with purpose in mind, I realized that how I invest is as important as how much I invest. It wasn’t just about returns anymore. I wanted my money to reflect my values—supporting companies that respect the environment, treat their workers fairly, and make a positive impact. That’s when I turned my attention to socially responsible investing (SRI), also known as ESG (Environmental, Social, and Governance) investing.
Table of Contents
What Does Socially Responsible Mean?
Socially responsible investing isn’t about being perfect. It’s about tilting your portfolio toward companies that lead on ESG factors and away from those that violate them.
Here’s how I break it down:
| ESG Factor | What It Includes |
|---|---|
| Environmental | Carbon footprint, renewable energy, pollution |
| Social | Labor practices, community engagement, diversity |
| Governance | Board independence, ethics, transparency |
These principles can be integrated passively (indexing ESG leaders) or actively (choosing companies with improvement potential).
Why I Use Mutual Funds for ESG Investing
I could pick individual stocks, but ESG data can be complex and subjective. Fund managers have access to research tools and corporate engagement opportunities that I don’t. They vote proxies and push for changes. With mutual funds, I can stay diversified and still invest ethically.
1. Parnassus Core Equity Fund (PRBLX)
This fund has been around since 1992 and is one of the pioneers in the SRI space. It uses a blend of financial and ESG screening to select large-cap U.S. stocks.
Fund Type: Actively Managed
Expense Ratio: 0.87%
Minimum Investment: $2000
Assets Under Management:$25 billion
Morningstar Sustainability Rating: 5 globes
What It Screens Out
Fossil fuels
Tobacco
Gambling
Weapons
Alcohol
Top Holdings (as of 2025)
| Company | Sector | ESG Focus |
|---|---|---|
| Microsoft | Tech | Carbon neutrality, privacy |
| Costco | Retail | Fair labor, sustainable sourcing |
| Alphabet | Tech | Renewable energy usage |
Sample Return Calculation
Assuming a 10-year annualized return of 10.1%:
(1 + \frac{10.1}{100})^{10} - 1 = 1.63 \text{ or } 63% \text{ total return}This matches the market while staying ethically grounded.
2. Calvert Equity Fund (CSIEX)
Calvert is one of the oldest names in responsible investing. The Equity Fund focuses on large, U.S.-based, ESG-leader companies.
Fund Type: Actively Managed
Expense Ratio: 0.92%
Minimum Investment:$1,000
Assets Under Management: $10 billion
Calvert uses proprietary ESG scoring to rank companies on over 200 indicators across E, S, and G pillars.
What Makes It Unique
Unlike exclusion-only strategies, Calvert also includes companies improving their ESG scores—even if they weren’t perfect before.
Sector Allocation
| Sector | Allocation (%) |
|---|---|
| Tech | 26% |
| Healthcare | 18% |
| Industrials | 13% |
| Financials | 12% |
3. Vanguard FTSE Social Index Fund (VFTAX)
This is one of my favorite passive ESG mutual funds. It tracks the FTSE4Good US Select Index, screening out companies based on ESG criteria.
Fund Type: Index
Expense Ratio: 0.14%
Minimum Investment: $3,000
Assets Under Management: $17 billion
What’s Excluded
Adult entertainment
Fossil fuels
Firearms
Tobacco
Nuclear power
What I Like
It’s low cost, broad-based, and provides exposure to over 400 ESG-aligned U.S. companies.
Performance Example
With a 5-year return of 11.6%, compare to a traditional S&P 500 index at 12.1%:
| Fund | Annualized Return (5Y) |
|---|---|
| VFTAX | 11.6% |
| S&P 500 Index | 12.1% |
You’re getting 95% of the performance with a cleaner conscience.
4. TIAA-CREF Social Choice Bond Fund (TSBFX)
Most people overlook ESG in the bond world. I include this fund to show that fixed-income investors can also invest responsibly.
Fund Type: Actively Managed Bond Fund
Expense Ratio: 0.55%
Minimum Investment: $2,500
Assets Under Management: $6 billion
Bond Types Held
Agency MBS
Green bonds
Corporate ESG bonds
Social impact bonds
Risk Metrics
| Metric | Value |
|---|---|
| Duration | 5.2 years |
| Yield to Maturity | 4.8% |
| Average Credit | A+ |
Return Calculation
For a $10000 investment:
\text{Annual Income} = \$10{,}000 \times \frac{4.8}{100} = \$480Not bad for a fund doing good.
5. Domini Impact Equity Fund (DOMIX)
Domini focuses purely on sustainable impact. It selects companies not just for ESG compliance, but for real-world results in sustainability and human rights.
Fund Type: Actively Managed
Expense Ratio: 1.08%
Minimum Investment: $2,500
Assets Under Management: $3 billion
Impact Themes
Gender equity
Climate action
Diversity & inclusion
Affordable housing
Returns vs Peers
| Fund | 5Y Annual Return | Std. Dev | ESG Rating |
|---|---|---|---|
| DOMIX | 10.3% | 13.4% | 5 Globes |
| S&P 500 | 12.1% | 14.8% | N/A |
You trade some return for more alignment with impact.
How These Funds Compare
| Fund | Type | ESG Focus | Expense Ratio | 5Y Return | AUM (B) |
|---|---|---|---|---|---|
| PRBLX | Active | Broad ESG | 0.87% | 10.1% | 25 |
| CSIEX | Active | ESG scoring | 0.92% | 10.8% | 10 |
| VFTAX | Index | Passive Exclusion | 0.14% | 11.6% | 17 |
| TSBFX | Bond | ESG Bonds | 0.55% | 4.2% | 6 |
| DOMIX | Active | Impact-driven | 1.08% | 10.3% | 3 |
Final Thoughts
I believe values and returns don’t have to be at odds. With these funds, I’ve built a portfolio that reflects my ethics while still growing my wealth. Sure, some of these funds charge higher fees, and some underperform broad indexes slightly, but I consider that a cost of conscience—and in many cases, they outperform during crises due to better governance and risk awareness.
