Is the buyer of a global mutual fund responsible for how the companies in that fund treat their employees and the environment?

That question was tackled last week in New York by a panel of industry experts brought together by Harper's magazine. The publication devoted its February cover to the ethics of investing in emerging markets-that is, whether it's possible to make money while satisfying one's social conscience.

With $264 billion in 658 global and international funds-accounting for one in eight mutual fund dollars-the debate had the potential to be lively.

"You have to look at your moral compass versus your fiduciary duty" to shareholders, said Don Phillips, president of Morningstar Inc., the Chicago-based mutual fund rating service.

Citizens Trust, a group of seven "socially responsible" mutual funds with $400 million under management, starts by looking for countries with free-market economies, said its president and trustee, Sophia Collier.

When it finds a worthwhile company, Citizens Trust combs through annual reports, stories from more than 400 newspapers, and labor and environmental records. If the company is abroad, the investment firm would get the assessment of a local consultant with language skills and background in the region.

But social responsibility means different things to different investors- and fund managers.

Mr. Phillips cited extremes in two such funds: one that included Lockheed Corp. and Dow Chemical and a second that would not even buy U.S. Treasury bonds because of their perceived support of defense spending.

"You don't see money managers run in when someone's burning rain forests. ... That's generally when they're getting out," said Mr. Phillips.

For many, the ethics debate centers on companies based in Burma, where forced labor is reportedly widely used, even by foreign companies with interests there, according to Ted C. Fishman, author of the Harper's article.

Mr. Fishman was prompted to write after talk show host Kathie Lee Gifford drew criticism for endorsing a line of clothing sewn in Honduras by girls as young as 13.

Indeed, the issue isn't limited to global funds or foreign companies, Ms. Collier said.

"Half of regulated textile companies in the U.S. don't pay prevailing wage," she said. "Investors don't want to make socially conscious funds; it's hard enough to pick a stock that will go up."

Jim Rogers, former Quantum Fund manager and author of "Investment Biker," was the panel's bad hat-a staunch foreign investor who seeks investment opportunities in countries with abundant resources and few regulations.

Democracy, he said, often goes hand in hand with open borders and, in turn, a surge of foreign investment. But even under the most brutal regimes, investment dollars are likely to flow, he said, citing South Africa under apartheid.

"Everyone was in there, including the Germans and black African nations," said Mr. Rogers. "By the time the U.S. came in, there was no money to make."

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