This article is part of our Rising Stars Portfolio series.
For the latest purchase for my socially responsible Rising Stars portfolio, I wanted to include a green energy stock, specifically in the beaten-down solar sector. Last week, I finally decided to pull the trigger on SunPower
As I perused stocks in the sector, I considered Trina Solar
But when I learned that Trina is based in Changzhou, China, I dashed it from my list of potential picks. Here's why.
The regulatory climate is very, very different in countries like China. Cultural differences also make China's ways of doing business very different from American practices.
Furthermore, China's political stance includes troubling views on human rights, and authoritarian responses to rights we hold dear here in the U.S., like free speech. In my socially responsible portfolio, I find it hard to justify investing in a company that resides in a country with such policies.
Granted, Americans support China in many different ways. It's hard to turn around in any retail store without finding merchandise that's made in China. Many American companies like Starbucks and Yum! Brands are also hot to expand there. Still, even if China is evolving, it still has its problematic moments. (Revisit Google's Sergey Brin's views on China, for example.)
The Wall Street Journal recently reported that socially responsible funds are beginning to tackle emerging markets like China, but the paper also cited the many reasons why this can be a thorny issue. Chinese environmental regulations are more lax than in the U.S. or many European countries, and many emerging-market companies aren't required to disclose much about their finances or their environmental and labor policies. These elements can make it difficult to gauge which international companies can comfortably reside in SRI portfolios, much less make good investments.
So Trina won't end up in my SRI Rising Stars portfolio. Nor will fellow Chinese solar companies like Solarfun Power
Socially responsible investing isn't simple, and it often comes down to the preferences of each individual investor. If you disagree on my thoughts on Trina and its Chinese peers, sound off in the comments box below.
This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. See all of our Rising Star analysts (and their portfolios).
