A new report compiled by a Californian environmental financial group charged socially responsible mutual funds (SRIs) with diluting their investment objectives by increasingly moving into mainstream stocks, like Microsoft and Wal-Mart, The Christian Science Monitor reports.

The San Francisco-based Natural Capital Institute (NCI) said some SRIs now own up to 90% of the stocks found on the Fortune 500 list, and the portfolios of successful mutual funds are increasingly following conventional investment strategies.

The same study also maligned Sierra Club Mutual Funds for loading up on chain steakhouses while steering clear of companies working to deliver alternative energy sources to coal and oil.

An SRI industry trade group known as SRI World Group fired back at NCI’s criticism by pointing out that some blue-chip companies have taken steps in recent years to embrace environmental concerns. An official from Sierra Club funds also noted that companies like Starbucks now address environmental concerns like water discharge and Dell Computer has stepped up recycling efforts.

NCI is calling for tougher industry standards regulating more than 600 mutual funds, 100 of which are in the U.S., now billed as SRIs. Regulatory guidelines varying from country to country where SRIs are sold can be confusing for investors looking for genuine SRIs, the report adds.

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