There is a lot of barking about green energy, sustainable lifestyles, and all things eco. In the end though, it's far more important to be local than green. Supporting local economies, especially agriculture, would save far more energy than any green solution. The cost of travel for a tomato out of season versus buying tomatoes locally during the season and canning them yourself is obvious, but even the externalities are obvious: more pollution, greater infrastructure strain, more exposure to disease (like the recent salmonella scare) when not buying local.
As an investor, I like the idea of having a small portion of my stock allocation in "local only" companies. Even when it means I own some volatile small cap stocks, it gives you a proxy vote and allows you to help shape your local community as a shareholder. Plus, you have a local knowledge of the companies you invest in: you may have friends that work there, you can see their expansions (or retractions), you know their community involvement... it's like rooting for a sports team. Investing locally is VERY HARD, takes a lot of research, and can be a money losing proposal - especially in tiny tiny markets or states. But there's no reason "local" can't be expanded to a more regional presence (ie, a Rhode Island native investing in Connecticut and Massachusetts companies as well). For more info on local investing, check this awesome listing on PBS's Nightly Business Report website.
On a macro level, you may not be able to invest locally quite the same way, but you can at least try the CRA Qualified Investment Fund:
Inception: March 1, 2007 (officially, but CRA Shares have longer track record)
Asset Type: Mutual Fund - Bonds
Smug Category: Bond
Included in Smug Asset Pool?: Yes
Min Investment: $2,500
Min Retirement Investment: $2,500
Minimum Additional: $1,000
$2,500 to $24,999.99: 0.00% of offering price
$25,000 to $99,999.99: 0.00% of offering price
$100,000 or more: 0.00% of offering price
Management Fees: 0.40% for 2007
12b-1 Fees: 0.25%
Other fees: 0.31%
Total Annual Fee: 0.96% for 2007
Another no-load no-redemption-fee fund, CRA fund actually has a 7+ year track record, but they changed their name and ticker last year, hence the shortened record. CRATX invests entirely in debt that qualifies for the Community Reinvestment Act of 1977. Now, the CR Act has its detractors, and one could even argue that it helped perpetuate (some say "caused, which in my opinion is ridiculous) the subprime issue. In the end, CRA does a good job (if not bureaucratic job) of building housing in local communities for those who need it. CRA detractors usually forget that it's not the individuals to whom loans are made at fault, it's the securitization of loans, poor rating system, and Wall Street greed that caused subprime. But why take responsibility when you can pass the buck to poor folks?
As debt funds go, CRATX offers a good deal of leg on its income at 4.25% SEC yield, and they have some really nice details about the effect the fund has on local communities (see the charts in the PDF): 140,000 affordable rental units, 4,660 mortgages, $27.3M in affordable healthcare, $121.4M in community redevelopment, etc.
So feel smug and give it a look - another nice compliment to your socially responsible, sustainable portfolio. As always, see my disclaimer to the right of the page.