For years, socially responsible investing (SRI) meant buying an indexed mutual fund with the alcohol, tobacco, and gaming stocks weeded out. Today, an explosion of research around corporate governance and an increased public awareness, has contributed to an evolution in the term. The definition has evolved to include environmental performance, human rights, labor rights, gay rights, animal rights, abortion rights, board diversity, community investing, and more. In fact, the first order of business for me, as a socially responsible investment adviser, is to determine your definition of social responsibility, because it is different for all people. For different groups, being socially responsible may be wholly irresponsible for others. Investors in the Ave Maria family of Catholic Values funds would not be at home in the Women's Equity Fund (FEMMX), and vice versa. This column, however, is about activist investing.

For many, making your voice heard with the management of companies or funds in your portfolio is best achieved by voting with your feet, or divesting your portfolio of any companies that conflict with your social criteria. XYZ pollutes the Hudson River, so you sell XYZ, theoretically depressing the stock price. For others, this method is too passive. How is management going to know that you sold because they are bad citizens? After a few decades of anti-tobacco investing, those executives have not come any closer to abandoning their lethal product.

The first step to becoming an activist investor is to vote your proxies. Most people do not even realize that by owning a fund or stock, you are entitled to vote at company meetings. Your broker should be forwarding you the company proxies which contain ballot items that affect the direction of the company, including who serves on the board of directors. Since frightfully few investors actually bother to vote, sending in your vote gives you a disproportionately strong voice.

Just like in our democracy, it is easy to wonder if a small fry investor's vote actually counts, and I am afraid to say that this is true on some levels. One share equals one vote, so in most large companies, management tends to ignore small investors. That is why you should pay attention to the large investors in a company. You can find out who are the top 10 institutional investors from many publicly available sites, such as Marketwatch and Morningstar. Pension funds, especially those benefitting public employees, are likely to agitate on moral grounds. Sadly, large fund complexes tend to vote with management. This is a scandal in itself, but that is the subject of another post. Aligning yourself with the actions of the larger investors helps you become part of a political party, so to speak, instead of the Ralph Nader "crazy voice in the wilderness".

Of course, voting your proxies are not that interesting if the issues that matter to you are not even on the ballot. Surprisingly, there is no uniformity among companies with regard to this issue. For some, you may find resistance to ballot initiatives, especially one that threatens management. Still, for others, getting on the ballot may just mean phoning the investor relations department and proving that you own at least one share. Annual company meetings, which are required of all public companies, are usually not that imposing. Coverage of the annual meeting of Berkshire Hathaway (NYSE: BRK.A) may make you think that all such meetings require the use of a convention center.  Actually, most annual meetings take place in a venue no bigger than a hotel ballroom, and some are so sparsely attended that they happen in the company cafeteria.   At these meetings, just raising your hand and speaking out is the best way to get your point across. Going to the meetings may also allow you to interface with the aforementioned large investors, too. There is no reason to be intimidated by these people. Management works for you, the shareholder.

Does any of this work? Does it matter to the issues? Does it matter to the share price? The answer to this is a resounding "yes". The winner of the 2006 Moskowitz Prize (a UC Berkeley prize for social research) found a measurable wealth creation effect for the beneficiaries of CALPERS, the California pension fund which happens to be the largest and most active institutional investor. Shareholder revolts are behind some of the biggest issues of our time. SRI forces can take credit for the divestment from South Africa, which in part, brought down Apartheid. Activist investors have forced electronics makers to enhance their recycling efforts. Activists have shamed sweatshop operators into changing their ways. Nike (NYSE: NKE), which once was a sweatshop pariah, is now a leader in the fight against sweatshops. These are but a few examples. It is clear that agitation is both effective and profitable.

Get out the vote.

Mark Brandon is the founder of socially responsible investing advisory First Sustainable, and the author of the Sustainable Log newsletter and blog.