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Skip meat and donate, or divest shares of Exxon Mobil?

A protester looks on during a Greenpeace protest outside the Russian Embassy in Wellington, New Zealand.
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A protester looks on during a Greenpeace protest outside the Russian Embassy in Wellington, New Zealand.

Mary Beth Storjohann, founder of San Diego-based financial planning firm Workable Wealth, isn't a do-gooding investor. "I don't personally include socially responsible investments in my portfolio," said Storjohann, who is 29. But many of the financial planner's clients—she focuses on people like herself, in their 20s and 30s—come to Storjohann with questions about making good with, rather than simply making good on, their investments.

Storjohann said one downside of some socially responsible investing (SRI) funds is that they can carry higher fees, as a result of the work of screening the investments—detracting from the overall returns. She prefers to express her values through charitable giving and personal decisions like not eating meat. But Storjohann has her work cut out for her convincing her clients to take the same approach.

It's true that socially responsible funds typically have higher fees than the least expensive index funds—for example, Dimensional Fund Advisors' socially responsible index funds have fees between 30 and 40 basis points, the Calvert Group's domestic equity SRI fund has a management fee of 40 basis points, and this is versus the lowest equity index fund fees in the industry at 10 basis points.

Yet these SRI fund management fee levels are still well below most actively managed equity funds. And recent research shows that young investors desire to do good within their portfolios. Among wealthy U.S. adults ages 18 to 32, 69 percent believe investment decisions are a way to express social, environmental and political values, according to a recent study from private bank U.S. Trust. That compares with 45 percent of all respondents.

(Read more: Why saving for retirement is harder)

Sixty-one percent of younger investors said they'd be willing to accept a lower return from companies that make a positive impact on society and the environment—compared with 46 percent of all investors surveyed. And 72 percent of the young adults said they'd be willing to accept a higher risk for investments that have a positive impact on society or the environment—versus 44 percent of the total pool of respondents.

"There is a correlation that typically the companies that exhibit good corporate responsibility are more profitable—they're better managed companies." -Joyce E. Morningstar, Dynamic Wealth Advisors

"You have a tremendous awareness of how their dollars are being deployed. They are demanding transparency and accountability," said Vince Molinari, CEO of Gate Global Impact, a New York provider of technology in this space.

(Read more: Is a hedge fund in your future?)

Joyce Morningstar, senior wealth manager at Scottsdale, Ariz.-based Dynamic Wealth Advisors, doesn't think mutual fund fees are a primary hurdle—she said firms like the Calvert Group have done a good job and been in the SRI space for a long time. But when the valued-based investing question comes up, she isn't a proponent of SRI funds either. Her approach is to have a conversation with the client about the logic of well-run companies.

"There is a correlation that typically the companies that exhibit good corporate responsibility are more profitable—they're better managed companies. You don't have to invest in SRI funds, just well-run companies," Morningstar said. As proof that it's not just a feel-good trend lacking economic support, she pointed to a 2012 survey conducted by PwC showing private equity firms plan to increase their focus on socially responsible investing by a significant degree in the next few years—socially irresponsible business strategies can be linked to mismanaged companies. Consider the recent announcement from Tau Investment Management—it plans to raise $1 billion in private equity to buy out factories in what it dubs "unsustainable" garment and retail operations in countries including Bangladesh and China.

Financial services firms are making socially responsible investing easier, in a bid to pull in assets from affluent millennials, and to keep assets that will be transferred from Boomers to their children. Merrill Lynch and U.S. Trust now offer 180 investment vehicles tied into clients' concerns about environmental, social and governance issues—known in the field as ESG—through a program launched in late August. The ESG investments include mutual funds, exchange-traded funds and alternative investments.

"Investors in their 20s and 30s are extremely interested in purposeful investing," said Michael Liersch, director of behavioral finance for Merrill Lynch Wealth Management.

Merrill's strategy is to bring together generations within the same family in an investment strategy that reflects their shared values and sense of stewardship. "We've seen a lot of success across that domain," Liersch said.

(Read more: The money mindset of Generation Z)

In fact, it's not clear if socially minded millennial investors are really a new breed, or simply the children of the previous generation's socially minded wealthy.

Recent research from Merrill Lynch's Private Banking and Investment Group showed that 65 percent of wealthy investors age 18 to 35 are approaching investing the same way their parents do, and these younger high-net-worth investors want to continue their parents' approach to philanthropy and social impact. Twenty-nine percent of these younger investors said they want an advisor who specifically provides values-based investing.

Investors of all ages poured $3.74 trillion into values-based investing by the end of 2011, a 22 percent increase from 2009, according to the Forum for Sustainable and Responsible Investment's 2012 annual report. The survey also quoted the finding from Thomson Reuters Nelson that socially responsible investing had reached 11.3 percent of all fund assets under management.

The U.S. Trust survey indicated that while younger investors place a priority on social investing when asked, there's a significant decrease in turning belief into action when it comes time to invest—only 31 percent of those age 18 to 32 actually screen investments socially.

Morningstar said this doesn't surprise her. She previously worked for a business intelligence firm and knows firsthand the significance of how a question is asked. "You ask most people if they care about the environment and the answer is yes. You ask them if it's important to their investing approach and they say yes. You ask them if it actually affected their behavior, and, well," she said.

The same pattern holds true for institutions. In a recent report from Oxford University's Smith School of Enterprise and the Environment on the history of stock divestiture campaigns, the authors wrote: "Despite the huge interest in the media and a three-decade evolution only about 80 organisations and funds (out of a likely universe of over 1,000) have ever substantially divested from tobacco equity and even fewer from tobacco debt."

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General skepticism about stock market investing among younger Americans may also contribute to social justice sentiment not translating into actual investment decisions. Accenture found that 27 percent of millennials preferred "tried and tested" investment options, compared with 19 percent of baby boomers.

And younger Americans, by and large, may not have the luxury to invest at all, with or without social impact. Many are struggling to gain a financial foothold after starting their careers in a difficult job market, with staggering student loans.

For 54 percent of young adults, debt was the biggest financial concern expressed in a Wells Fargo survey. Some have had to put off retirement investment. The percentage of workers age 25 to 34 who had saved for retirement dove from 65 percent in 2003 to 56 percent in 2013, according to the Employee Benefit Research Institute.

For younger investors fortunate enough to have assets to invest, Storjohann recommends a balanced approach that will allow socially minded individuals to achieve their long-term investment goals. For instance, they might include socially responsible investments in a broader equities mix, but, "It's not something I'd recommend dumping half of their portfolio into," she said.

"In my experience, younger investors ask a lot of questions, but they're also curious about emerging markets," Morningstar said. Her researched-based answer doesn't vary: "I point them to the research on good, corporate stewards."

By Elaine Pofeldt, Special to CNBC.com.

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