Darin McLeskey plants a vegetable garden in 2013 in the backyard of one of the Detroit properties he purchased at a Wayne County auction to refurbish. McLeskey is one of millions of millennial-generation Americans who should begin soon to think about saving for retirement. For socially conscious investors, there are more options than ever. Rebecca Cook/Reuters

When the global financial crisis struck in 2008, Dustyn Lanz was in his mid-20s. It was sobering, the Toronto native says, to watch capital markets inflict so much damage on national economies and cost millions of people their jobs.

“I was frustrated by the irresponsible actors in the world of finance, and how [their actions] could have such broad consequences,” said Lanz, 33, who pursued studies in political science and economics to learn how to help avert future financial catastrophes.

Like many millennial-age adults who witnessed the global recession as teens and young adults, Lanz was turned off by the financial system. He felt the only way to prevent financial markets from behaving badly was for governments to leash them. He postponed investing for retirement, too, even as he heard financial advisers telling young people to start socking away what they could, as early as possible.

“Initially I focused my work on regulation and governance, but trying to fix the global financial system exclusively through regulations is daunting” said Lanz, who now works as a director at the Canadian Responsible Investment Association, or RIA, which helps investors use their money to improve society, as well as their own finances. “I wondered if somehow there were other ways to make good.”

Lanz -- a devout environmentalist -- plugged the first $500 toward his retirement into a mutual fund devoted to clean technology, one of a growing number of products out there designed to correspond with the investor’s personal values, from environmental stewardship and consumer protection, to boardroom diversity and human rights. Socially responsible investment, or SRI, is an increasingly popular strategy that steers investors’ money toward companies that match their values, and away from businesses that don’t, such as companies involved with pornography, tobacco, labor abuses or weapons.

Wind turbines at the Infigen Energy wind farm can be seen on the hills surrounding Lake George, on the outskirts of the Australian capital city of Canberra, Oct. 15, 2014. Young, socially and environmentally aware investors can pick mutual funds that focus on clean energy and avoid oil stocks. David Gray/Reuters

For young people who want to begin saving for retirement without profiting from practices they oppose, the first step is to investigate the basics of investing. Learn the terminology and understand how retirement savings plans work. Next, dive into research on the many SRI products available, says Lisa Woll, CEO of the Forum for Sustainable and Responsible Investment.

“Being an SRI investor without understanding different asset classes and returns on investment -- it's not a good idea,” said Woll, whose Washington, D.C., investment industry association promotes strategies that focus on environmental, social and corporate governance (ESG) criteria. “It's important for young people to take the time to understand the ramifications of investing.”

The Cautious, Sympathetic Generation

SRI dates back centuries and has religious roots -- think of Colonial-era Quakers who refused to do business with companies involved in the slave trade. Modern responsible investment began in the U.S. in the early 20th century, when the first mutual funds screened out companies involved in gambling, tobacco and alcohol.

Millennials’ interest in SRI is a reflection of how society has changed in the 21st century. Growing up in the 24/7 global news cycle and the age of social connectivity, millennials -- people born between 1980 and 2000 -- have a heightened sense of awareness regarding the world around them. They’re also able to make investment choices based on the immense amount of information available online, giving them greater access to financial knowledge than previous generations.

The oldest millennials are in their 30s, and many have children and are making important life decisions, like buying a home or planning for retirement. Having watched the economic crisis caused in part by irresponsible behavior among traders in capital markets, millennials are conservative, even skeptical, investors -- far more so than their parents, according to a UBS survey.

While financial security is important to them, many are willing to sacrifice returns on investment in order to contribute positively to society and the environment. A U.S. Trust Bank report last year found that 69 percent of high net worth millennials place great value on investing in such companies. Nearly a third of young investors have reviewed their portfolios for nonfinancial issues.

A Responsible Investing Renaissance

The 80 million careful-but-idealistic millennial investors in the U.S. have more SRI choices than ever before.

“There are lot of good socially responsible investment options are out there,” says Dan Apfel, senior associate of the North Carolina-based Croatan Institute, which focuses on responsible investment strategies. ”Some are targeted to specific issues, like environmental concerns, or women’s issues, or labor-focused funds.”

According to the Forum for Sustainable and Responsible Investment, the number of investment funds that apply environmental, social or corporate governance criteria has ballooned form 200 in 2013 to over 900 last year. There’s now about $4.3 trillion in U.S.-based assets under management that apply environmental, social and/or governance criteria in picking stocks, up from about $179 billion a decade earlier.

The reason for this intense growth is simple: More than ever before, companies are under immense pressure to focus on issues such as sustainability and labor practices, according to George Serafeim, associate professor of business administration at Harvard Business School.

And contrary to conventional wisdom, making investment decisions based on your personal values doesn’t necessarily mean sacrificing returns.

“For a very long time, there was this idea of the difference between value and values, that if you apply your values you sacrifice returns on investment,” said Serafeim, who studies the role of corporations in society. “But perceptions of the corporation’s role are shifting, and values and value are aligning.”

Out of 88 mutual funds built around companies with the best environmental, social and corporate governance practices, 32 have given average annual returns higher than the Standard & Poor’s 500 Index of the largest U.S. companies over the last decade, according to data from Morningstar.

Laborers work near an unreserved forest in the village of Igbatoro, southwest Nigeria. Forests are shrinking due to demand for wood products from wealthy countries. Lumber Liquidators, a U.S. provider of wood flooring, recently settled with federal prosecutors by paying $10 million for sourcing wood from Russia that had been illegally harvested. Socially responsible investment funds often scrutinize supply chain management to screen out companies that don’t do enough to ensure their suppliers are legitimate. Akintunde Akinleye/Reuters

Responsible Investment companies that have outpaced the S&P 500 include Parnassus Investments and Calvert Investments, which apply various degrees of ESG criteria; and Timothy Plan and Ave Maria Mutual Funds, religion-centered fund managers that aggressively exclude companies linked to abortion services, pornography, labor abuse or armaments.

What Are Your SRI Retirement Savings Options?

For most millennials, the first dip into capital markets will be through a workplace retirement savings plan, like a 401(k) or Roth savings account. Both share the advantage of being tax free -- the money is taken out before it appears on your paycheck, lowering your reported annual income for tax purposes. Some workplaces offer shared contributions to your savings. If yours doesn’t, then you might be better off opening your own individual retirement account, which can give you more SRI options.

If your employer doesn’t offer SRI options through your workplace plan, then ask for one. “Chat with colleagues about what interest they might have,” said Woll. “Then talk to the HR department or whoever handles retirement accounts. It’s very possible that your employer can offer SRI investment options by request.”

Financial advisers agree the best way to begin investing is to set up a retirement savings account, or invest in a mutual fund. Later, as the nest egg begins to grow, you may consider buying and selling company stocks directly. The best way to steer investment toward companies that are strong in environmental, social and corporate governance issues is to go to the websites of SRI mutual funds to see which companies they have screened, and focus on those stocks.

To be sure, many millennials, racked with debt and suffering from pernicious wage stagnation, don’t have extra funds to invest in SRI mutual funds or stocks. More than half of U.S. millennials are living paycheck to paycheck, according to a 2014 survey by Wells Fargo. But for those who have even a small amount to invest, the most common piece of advice out there is to get started early. “If you're 22 and can only put away $10 a week, that $10 a week in 50 years is a lot of money,” says Woll.

That message is getting through to some millennials. “I think 32 is a late age to begin investing,” says Lanz, referring to his initial $500 investment. “You don’t need to be rich to start investing in a socially responsible manner. That’s hugely important to understand.”