There was a thoughtful article in the New York Times Magazine yesterday by David Leonhardt, an economics columnist for the Times, which tries to bore in on Barack Obama’s view on the economy and policies he’d propose as president. Near the end of the article was a reference to a quote from a speech Robert F. Kennedy made at the University of Kansas in 1968. In it he spoke about the folly of measuring the health of a country simply by looking at its gross domestic product.

The article didn't include the full quote, so I dug it out and pasted it below. Kennedy was speaking about the economy, but his words can be applied to investing as well. They make the case for socially responsible investors that there is more to judging the success of an investment than merely looking at the numbers.

Our gross national product... if we should judge America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.

"Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans."

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There is a short article worth mentioning in the September issue of Conde Nast Portfolio about several state public employee pension funds that are divesting from energy companies that do business in Sudan and Iran. It’s worth mentioning because it raises the question of whether or not there’s money in virtue, a question that’s often meant to put socially responsible investors on the defensive.

The article points out that Florida is about to finish selling off about $1.3 billion in stocks in companies such as Repsol or Royal Dutch Shell, because Iran and Sudan have been connected to terrorism, not to mention human rights violations. But it also mentions that CalPERS, the California Public Employee Retirement System which happens to be the largest in the country, estimates that such a divestment from similar companies would have cost it about $725 million during the past five years.

That’s a viewpoint that is often taken when arguing against socially responsible investing. Because an investor chose not to put his or her money with corporations whose behavior offended their personal principles, that investor lost an opportunity to make money. And isn’t that what investing is all about?

The answer from socially responsible investors is “No.” People who practice SRI care about money. That’s why they put their cash in stocks or community development bonds and not under the mattress. But if an investment opportunity exists in a company that does business in a country considered a terrorist state, surely there must be opportunity investing in a company doing business with a country that has an open, free society.

That’s SRI in a nutshell. Which would you prefer?

At the Olympics, perhaps the only thing whose presence can rival that of Michael Phelps is the Nike logo on uniforms and athletic shoes. The athletic apparel giant had deals with dozens of Olympic teams across the globe, including many of the host country China. And with its share price down from its high of almost $68 per, investment pundits such as Jim Cramer are calling it a growth stock worth buying.

But Nike has a long history with socially responsible investors and human rights activists, who have challenged its practices since the early-1990s. The company was accused of contracting with companies in countries such as Vietnam, China and Indonesia that violated minimum wage and overtime laws, permitted poor working conditions in their factories and employed child labor. In 1997 Nike became the first company to be removed from the Domini 400 Social Index because of concerns over its international labor standards. In 2001 Wal-Mart was dropped for similar reasons. The Domini 400 was the first common stock index made up of socially responsible public companies.

If you visit the Nike web site, however, you’ll read about the efforts the company says it is making to improve its social record. The company says its “greatest responsibility” as a global company is to bring about positive systemic change for the nearly 800,000 workers in its contract supply chain. Nike says that its goal is to eliminate excessive overtime in its contract factories by 2011 and to implement other policies that will benefit its contract workers.

Nike goes on to describe several contract factory auditing tools; list the 700 companies it says are on its contract factories list; reveal the Beijing factory list; provide the names of the contract factories who produce college license products; and offer the names of the countries in which Nike contract companies operate.

For new socially responsible investors interested in doing a case study on the strategy of SRI, Nike would be a meaty choice. It’s beyond the reach of this blog to say whether Nike is now a stock that ethical investors would want to own. What is evident, however, is that the work of human rights groups and shareholder activists drove a multinational corporation to become a better world citizen. That in itself is an Olympian result.

Socially responsible investors are often the people you’ll see sitting before their computers wearing “Remember Chernobyl!” or “Hell no, we won’t glow,” tee shirts. Indeed, they’ve long steered clear of nuclear energy investments, citing the dangers of accidents at reactors or the pesky little problem of disposing of all that nuclear waste.

But there’s simply no denying that public opinion is becoming more favorable towards the use of nuclear energy to generate electricity. The argument is this: if you really want to get serious about global warming and eliminating carbon emissions, nuclear power needs to be among the alternatives to coal and oil. And so many major industrial countries are authorizing the construction of new nuclear plants.

A case in point is an article in today’s New York Times about the village of Flamanville, France and the direction the French government is heading with its energy program. Flamanville, located on the northwest coast of France, is the site of the country’s newest nuclear reactor, which is currently under construction. It’s the first new nuclear plant in 10 years in France.

But it won’t be the last. President Nicolas Sarkozy has already announced that France will build another plant like the one in Flamanville. The French see nuclear as a means to energy independence, particularly since they have little oil, coal or natural gas in the ground. Nuclear power provides 77 percent of the country’s energy, compared to 19.4 percent in the U.S.

If you’re a proponent of nuclear energy as an alternative in addressing the climate crisis, you point to France. According to the Times, each European Pressurized Reactor, the type being built in Flamanville, that replaces a coal plant means eliminating 11 million tons of carbon emissions that would otherwise be spewed into the atmosphere each year. Additionally, electrical power generation accounts for only 10 percent of France’s greenhouse gases, compared with an average of 40 percent in other industrialized countries.

Saying yes to nukes would be a big about-face for many socially responsible investors. Yet it will be interesting to watch the SRI community as the global warming crisis goes on. Will they believe that renewable energy sources can one day replace coal and oil or, ironically, will they decide that an investment in nuclear power is putting their money into positive action for the environment?