Are ethical investors deluding themselves? With so many choices and so few ways to validate performance data and to make comparisons between companies and funds, some experts are calling for a system overhaul in socially responsible investing. Just about everybody agrees that ethical investing means staying away from companies that make war, whiskey and cigarettes. But what about nuclear power? It creates cheap energy without churning out greenhouse gases. But there is the messy issue of radioactive waste.

Joe Nocera in The Trouble with Socially Responsible Investing in the International Herald Tribune explains the problem. He says ethical investment experts oversimplify the world's problems. They give investors a false sense that they're putting money into companies that consistently perform in ethical ways. They rarely do. "It allows investors to believe that their money is only being invested in the good guys, and they take foolish comfort in that belief," he writes.

To illustrate the dilemma Nocera points to the oil industry. Exxon Mobil Corp. (NYSE: XOM) -- the company that socially responsible investors love to hate -- has a strong worker safety record, but it employs executives who until recently failed to admit global warming existed. Then there's the Valdez, whose crash resulted in one of the largest human-made environmental disasters on record. Exxon still owes the state of Alaska a couple of billion dollars in punitive damages for that debacle.

Some may argue that investing is only about making money and scoff at the idea of socially-responsible investing. Others have a primary focus on how their money is used and will invest only in companies that comply with their personal ethics.

The best of both worlds is the chance to invest in companies that support one's ethical or personal beliefs but also happen to be strong investment vehicles; that is, offering the chance to earn good returns while feeling good about doing so.

One potential trend that falls in this category, according to Larry Edelson, editor of The Real Wealth Report, is the developing move towards "green funds" in the natural resource sector that focus on companies that are addressing environmental issues. He says, "I want you to get on board the early stages of this trend. I expect 'green funds' to outperform other funds in the months and years ahead."