When you picture investors involved with socially responsible investing (SRI), you probably conjure images of hippies at Woodstock rather than the sharks on Wall Street. In some ways, you wouldn’t be too far off the mark.

SRI investors typically use a variety of positive and negative screens to flag companies engaged in what they consider objectionable businesses and practices. Negative screens typically exclude companies that have interests in alcohol, gambling or weapons production. Positive screens favor companies that encourage workforce diversity, exhibit shareholder friendly corporate governance practices and adopt clean technology to address climate issues.

The screens employed by SRI funds vary widely. Some systems exclude companies with any interest in objectionable industries; others simply assign them a lower ranking in the investable universe.

Many folks still view SRI as a fringe strategy used by investors who, due to religious or moral strictures, avoid certain industries. But it’s an approach that’s quickly gaining acceptance.

According to the Social Investment Forum, an industry group that tracks SRI trends, 55 SRI funds existed in 1995 and their assets totaled $12 billion. The industry now involves $2.71 trillion in total assets–almost $1 out of every $9 in the hands of professional money managers.

But you’re probably wondering what exactly this has to do with you. The goal of Portfolio 2020 is to identify the trends of tomorrow today, enabling you to position your portfolio to take advantage of innovative companies that are moving boldly into the dynamic global marketplace. And that’s precisely what SRI funds strive to do in their own way.

Climate change is a perfect example. Regardless of whether you believe global warming is hokum or hard science, the global political climate is geared towards lowering carbon dioxide emissions and slowing the perceived effects of global warming.

Although many pundits have derided the Copenhagen Climate Conference as ineffectual, most governments are pushing for the wide adoption of alternative energy sources.

A recent study by the Pew Environment Group found that for the first time, China leads the world in green-energy investment. It has sunk $34.6 billion of private funds into these initiatives over the past five years–more than double the investment here in America.

According to the same report, China intends to spend 34 percent of its USD586 billion stimulus program on green projects and $100 billion to upgrade rail systems and its electricity grid. Brazil has invested USD11 billion in ethanol production. India is widely expected to mandate that the country’s electric utilities purchase a minimum of 5 percent of their energy from renewable energy sources.

It’s tough to argue that green energy is a fad when emerging economies are willing to sink that kind of cash into it.

Although going green is the ostensible reason for the shift, the real motivation is much more pragmatic–it’s good national policy and even better business. In many instance, “green” investing goes hand in hand with energy independence and smart industrial expansion.

In the case of China, the green revolution translates into more jobs for the populace and the opportunity to become in the global leader in the industry. It’s already one of the top producers of photovoltaic cells for use in solar installations, and, based on spending projections, the green energy industry will likely amount to over $1 trillion in the next decade.

These are key trends that SRI funds often pursue. Many investors have realized that SRI philosophy aside, some of these funds generate attractive returns.

What to Buy

Exchange-traded funds (ETF) have becoming an increasingly popular method of investing with an eye toward social responsibility.

Typically a high-cost strategy given the high level of hands-on management required, SRI mutual funds can carry annual expense ratios as high 1.5 percent. In some instances, the expenses of comparable ETFs are just a fraction of this amount.

This publication’s model Portfolios can be closely replicated using two SRI ETFs.

iShares KLD Select Social Index (NYSE: KLD) is a broad-based fund that mimics the risk profile of the Russell 1000 and is used by many SRI investors to form the base of their portfolios. Based primarily on positive screens that rank the fund’s investable universe, the tobacco industry is the only outright exclusion.

The fund holds 257 blue chip names, including Qualcomm (NSDQ: QCOM), Freeport McMoRan Copper & Gold (NYSE: FCX) and several other companies that have graced the pages of Portfolio2020.

With an expense ratio of 0.5 percent, it’s also the cheapest SRI ETF available. Buy iShares KLD Select Social Index up to 56.

Given the heavy focus Portfolio 2020 places on technology, PowerShares Cleantech Portfolio (NYSE: PZD) captures the bulk of the remaining portfolio holdings with the exception of the Metals and Minerals Portfolio.

Tracking the Cleantech Group’s proprietary index, PowerShares Cleantech Portfolio isn’t technically an SRI fund, though it passes all of the typical SRI screens. Tracking cleantech leaders from a multitude of industries, companies involved in alcohol, pornography and weapons simply aren’t eligible for inclusion in the index.

Buy PowerShares Cleantech Portfolio up to 27.

Benjamin Shepherd is the editor of Louis Rukeyser’s Wall Street and the newly launched Global ETF Profits advisory.