Meeting SRI criteria makes for reliable investments ones that people should want and ones that China needs, said Melissa Brown, executive director of the Association for Sustainable and Responsible Investment in Asia.

But fund performance is the key, and although SRI funds often outperform regular mutual funds in the West, Brown said she doubts they will do as well in the current Chinese market.

SRI funds, like BOCIIM's, aim at slow, long-term growth in low-risk, stable companies.

"And obviously they won't be dumping sewage in a river and paying huge fees," she said.

Patience for investment is a problem in China, where high-risk, volatile profit-making is the norm. Brown said successful funds need to "attract capital that will stay in the country."

But if investors are patient, "as China does more work on the environment, there are going to be spectacular opportunities for Chinese companies in the environmental sector," Brown said.

China has recently enacted more environmental legislation, and that, coupled with a growing awareness among the middle class, has created a market for SRI funds among Chinese investors, which then opens the door for environmental companies in those funds to succeed.

That could explain the success so far of BOCIIM's Sustainable Growth Equity Fund: it launched at nearly 2.5 billion yuan (US$312 million) with nearly 60,000 investors mainly individuals.

The fund's assistant manager, Chen, said State-owned enterprises lag heavily behind foreign companies operating in China in terms of environmental protection. But Chen cites the Yueyang Paper Mill in Central China's Hunan Province as an example of the fund's clean, Chinese companies.

"Maybe it's not as good as international companies, but this company is better than its peers in China," he said, adding there was more room for long-term returns.

Turner notes that it all comes back to incentives.

"A lot of joint ventures tend to have cleaner technologies because the international companies know that they have their stockholders, and maybe their SRI funds, back home," Turner said. "They have criteria to meet."

But in China good corporate governance, which can help ensure transparency, can be hard to find. That's where people such as Martha Grossman come in.

"It's just not as effective for an organization to evaluate its CSR (corporate social responsibility) internally," said Grossman, general manager of RepuTex China. "It really needs the rigour of an external, independent party."

RepuTex evaluates CSR, which includes traits such as transparency and environmentalism. The Australian firm opened a Shanghai office earlier this year. On June 10, Grossman conducted a workshop in Shanghai with masters of business administration students from around Asia.

If the enthusiasm of Grossman's student audience is any indicator, it bodes well for ethics and values among Chinese companies. That would make the future of socially responsible investments brighter.