Green stocks and socially responsible investments are a niche market that is growing dramatically as investors are increasingly aware that decisions made with their money could have an impact on the future of the planet.

More publicly traded companies are adopting greener policies and there are now dozens of stocks, mutual funds, index funds and exchange traded funds available for individuals who want to invest in businesses that provide products and services related to the green movement.

"The type of investors we deal with, for the most part, have personal, moral or ethical values they want reflected in all parts of their lives, including their financial lives," said Steve Schueth, president of Colorado Springs-based First Affirmative Financial Network, an association of investment advisers who focus on socially responsible investing.

"They want to make money and make a difference," said Mr. Schueth, who manages $600 million in investments. "They don't want to give up performance just to do good. They want to make a competitive return at the same time their money is working for the common good."

An emerging sector in the financial world commonly referred to as green investing, socially responsible investing or Environmental, Social and Governance (ESG) investing, offers a range of opportunities to profit from companies that are socially and environmentally conscious.

Those companies include not just alternative or clean energy businesses. Others might include recycling, renewable materials, pollution control, energy and water efficiency, organic foods and environmental cleanup.

Richard Bookbinder, managing member of New York-based TerraVerde Capital Partners, an investment management firm focused on investments through hedge funds related to green technology, said his hedge fund managers allocate money to more than 1,000 companies across the entire supply chain of global green investing.

Those include companies that make wind turbines and gear boxes, and contractors who install turbines and connect them to the grid.

"Our view is using a hedge fund strategy to invest in renewable energy accomplishes a benefit to society and generates positive returns for investors," Mr. Bookbinder said. "We are in the process of a long technical revolution in this country that will last many decades."

The 75 stocks that compose the Huntington EcoLogical Portfolio returned 33.5 percent for its investors in 2009, three years after it was created, said Brian Salerno, a portfolio manager with Huntington Asset Advisors, a division of Huntington Bank.

Today, the fund is only available to high net worth investors with a minimum of $100,000 to invest. But he said the company is working to provide a packaged version of its green portfolio that will one day be available to retail investors with significantly smaller amounts of capital.

"The green movement is a lot broader than most people realize," Mr. Salerno said. "It touches our lives in a lot of ways that are investable. The notion that you lose your sights on profit when you are environmentally responsible is a false notion, a myth."

Green exchange traded funds offer broad exposure to the green industry without bearing the risks associated with individual company stocks. Green ETFs hold a basket of alternative energy stocks or stocks of companies that support energy production with lower environmental impact than fossil fuels produce.

A sampling of green ETFs on the market shows many have outperformed traditional companies in the past year.

PowerShares Cleantech Portfolio ETF (PZD) returned 35.5 percent last year. PowerShares Global Clean Energy Portfolio ETF (PBD) yielded an annual return of 31.84 percent. And Van Eck Market Vectors Environmental Services ETF (EVX) returned 22.32 percent.

Green and socially responsible mutual funds and ETFs, however, tend to have higher expense ratios than their less ideologically driven counterparts. All else being equal, this could translate to lower investment returns over the long term.

Various sorts of socially responsible investing have been around for decades, while the popularity of green investing is relatively new relative to traditional index funds so it's hard to make a true comparison.

The growing choices available in socially responsible investing increasingly empower individuals to choose which industries their money supports.

About half of socially responsible investors do not want discount retailer Wal-Mart in their portfolio, said Mr. Schueth. Although the retailer has made strides in using clean technology and energy efficiency in its business operations, the company still has serious perceived issues regarding paying decent wages and other work-related matters, he said.

Matt Patsky is CEO of Trillium Asset Management in Boston, which specializes in environmental, social and governance (ESG) investments.

"ESG companies are often better run companies," Mr. Patsky said, adding that Trillium currently manages $900 million in assets. "When you find companies that are lax on governmental, environmental or social factors, you will find weaknesses in other areas of their business.

"You will find that ESG factors are a great proxy for the quality of a company's management."

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